It is true that the change in shareholders’ equity during a year is equal to the

Question

It is true that the change in shareholders’ equity during a year is equal to the change in net assets in that year. This equation is important because:

a.      net income is the change in shareholders’ equity that is due to distributions of capital

b.      net income is the change in shareholders’ equity that is due to contributions of capital

c.      GAAP defines net income implicitly, based on the change in shareholders’ equity

d.      GAAP defines net income explicitly, based on the change in shareholders’ equity

Explanation / Answer

It is true that the change in shareholders’ equity during a year is equal to the change in net assets in that year. This equation is important because:

c.      GAAP defines net income implicitly, based on the change in shareholders’ equity

Note : GAAP defines a firm’s income to be the change in its net assets, excluding stock issuances and dividends i.e implicitly & not through explicitly

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.