ABC Restaurant Pty Ltd Started the Year with Total Assets

question 45

Multiple Choice

ABC Restaurant Pty Ltd started the year with total assets of $90 000 and total liabilities of $40 000.During the year the business earned $100 000 in income and incurred $55 000 in expenses.Dividends paid were $10 000.
The profit for ABC for the period was:

• A)$35 000.
• B)$45 000.
• C)$20 000.
• D)$90 000.

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Definitions:

Shareholder Level

Reference to the status or position of shareholders, including their rights and obligations within a corporation.

S Corporation

A type of corporation that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.

Subchapter S

A designation of corporations in the United States that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

Federal Income Tax

Tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.