CFA Practice Question

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CFA Practice Question

Assume a company's beginning shareholders' equity is $100 million, its net income for the year is $15 million, its cash dividends for the year are $7 million, and there was no issuance or repurchases of common stock. The company's actual ending shareholders' equity is $115 million. What amount has bypassed the net income calculation by being classified as other comprehensive income?

A. $0
B. $7 million
C. $15 million
Correct Answer: B

$115 - (100 + 15 - 7) = $7

User Contributed Comments 4

User Comment
schweitzdm I am not quite sure about what is at play here. Anyone care to explain? It seems so simple, I must be over thinking it
bgbigelow The shareholders equity should be previous period equity + net income minus dividends. Since the total reported is 115 M then there must have been an additional 7 million not reported in net income that shows up in shareholders equity.
tomalot $8m? 7+8 =15
farhan92 end equity=begin equity +ni -divs
115 = 100 +15 -7
the difference of 7 not included must be reported in comp inc.
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