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Welcome MyBGSU Click here to access MindaMindTap- O https/ngcengage.com/static/nb/uijevo/index.htmi?depl MINDTAP Assignment 03-Financial Statements, Cash Flow, and Taxes C Back to Assignment Average: 1/2 Attempts: 5. Stockholders equity The right side of the balance sheet shows the firm's Sabililties and stockholders' equity Which of the following best describes shareholders' equity? O Equity is the difference between the company's assets and liabilities. O Equity is the initial ctaim on value of the assets before the firm pays off its liabilities NOW Inc. relessed its annual results and finandat statements Grace is reading the summary in the business pages of today's paper. In its enmual report this year, NOW Inc reported a net income of S148 million.Last yeary the company reported a retained eamings much was paid out in dividends this year? balance of $595 mitsion, whereas this year it increesed to $700 mition How O $43 mitlion O s220 miltion O $5 milion O $253 milion Type here to search

Explanation / Answer

Question 1 - Correct option is Option 1.

Mathematically, the moat fundamental accounting relation states that

Shareholders' equity = Total Assets - Total Liabilities

Statement 2 is incorrect because first claim on assets is always held by liabilities and equity has subordinate claim on assets.

Question 2. Answer is Retained earnings

Net Income earned after payment of dividends adds up in retained earnings on balance sheet. Mathematically,

Closing retained earning - Opening retained earning = Net Income - Dividend

700 - 695 = 148 - Dividend

Dividend = 43

Hence answer is 43 mil

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