Raffles Ltd Began the Financial Year on 1 January with Retained

question 64

Multiple Choice

Raffles Ltd began the financial year on 1 January with retained profits of $10 000 and by year end on 31 December retained profits had risen to $30 000. If a profit of $60 000 was earned during the year, then the amount declared and/or paid in dividends during the period would be:

• A) $20 000.
• B) $30 000.
• C) $40 000.
• D) $50 000.

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Definitions:

Indirect Method

The indirect method is a way to calculate cash flow from operations by adjusting net income for changes in non-cash accounts and non-operating items.

Journal

The initial record in which the effects of a transaction are recorded.

Free Cash Flow

The cash that a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Financing Activities

Transactions that involve raising funds for the company through borrowing or issuing equity.