Jamie Started His Own Plumbing Business and Put £3000 in the Bank

question 7

Multiple Choice

Jamie started his own plumbing business and put £3000 in the bank account and then used £ 2 500 to buy a van. Which of the following represent the correct entries in relation to these transactions?

• A) Increase the bank account by £3000 and the van account by £ 2 500
• B) Increase the bank account by £3000 and the van account by £ 2 500 and put £5 500 in the owners' equity account
• C) Increase the bank account by £3000 and the owners' equity account by £3000 then reduce the bank account by £2 500 and increase the van account by £ 2 500
• D) Increase the bank account by £3000, the van account by £2 500 and decrease the bank account by £2 500
• E) Increase the bank account by £3000 and owners' equity account by £3000 and put the £2 500 in the van account

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Definitions:

Residual Dividend Policy

A strategy where a company pays dividends out of the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratio

Amount of cash paid out to shareholders divided by net income.

Ex-dividend Date

The date on which a stock begins trading without the right to receive the next declared dividend, effectively setting the cut-off for new investors to benefit from the upcoming dividend payment.

Date Of Record

The date set by a corporation on which the shareholders must be registered to be eligible to receive dividend payments.