Which of the Following Statements Is Correct

question 11

Multiple Choice

Which of the following statements is correct?

• A) Equity is defined as 'the residual interest in the assets of the entity after deducting all its expenses'.
• B) Equity is increased by profit and owner contributions.
• C) Equity is decreased by an entity's income.
• D) Equity cannot be sub-classified in the statement of financial position.

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government.

Consolidated Income

The total net income of a parent company and its subsidiaries, after accounting for the ownership interest of noncontrolling shareholders.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.