ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements
Dalton Co had opening equity of $200,000 and closing equity of $245,000. During the year the owners introduced $30,000 of new capital and Dalton paid dividends of $12,000. What was the total comprehensive income for the year?
Total comprehensive income was $27,000. Equity rose by $45,000, but $30,000 came from owners' contributions, which are not income, and dividends of $12,000 reduced equity as a distribution rather than an expense, so they are added back.
- A$27,000Correct
- B$15,000
- C$57,000
- D$45,000
Explanation
Change in equity = 245,000 − 200,000 = 45,000. Remove capital introduced (30,000) and add back distributions (12,000): 45,000 − 30,000 + 12,000 = 27,000. Option B subtracts the dividends instead of adding them back, giving 45,000 − 30,000 = 15,000 only if dividends are ignored.
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