Which item(s) can be a component of shareholders' equity?Question 8Select one:a.Retained profits.b.Share capital.c.Reserves.d.All of the above.
Question
Which item(s) can be a component of shareholders' equity?
Question 8
Select one:
- a. Retained profits.
- b. Share capital.
- c. Reserves.
- d. All of the above.
Solution
d. All of the above.
Explanation:
a. Retained profits: These are the net earnings that are not distributed as dividends to shareholders but are instead reinvested back into the company.
b. Share capital: This is the total amount that a company receives from its shareholders in exchange for its shares.
c. Reserves: These are profits that have been put aside to strengthen the company's financial position or to plan for future projects or investments.
Therefore, all of these items (retained profits, share capital, and reserves) can be components of shareholders' equity.
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