A Level Accounting (9706)•9706/13/M/J/22
Explanation
Equity impacts from share issuance and dividend proposal
Steps:
- Identify share issuance: 20 each increase share capital by par value and share premium by $19 per share.
- Note dividend proposal: Declared final dividend reduces retained earnings and creates a liability, affecting equity via profit distribution.
- Link to statement of changes in equity: Tracks changes in share capital, reserves (like premium), and retained earnings.
- Conclude affected balances: Share capital, share premium, and retained earnings.
Why A is correct:
- A lists share capital, share premium, and retained earnings, matching equity components directly altered per IFRS standards on share issuance (IAS 1) and dividends (IAS 10).
Why the others are wrong:
- B omits share premium, ignoring premium on issuance.
- C excludes retained earnings, missing dividend's profit reduction.
- D focuses only on total equity, not specific affected balances.
Not enough information on exact choices, but A aligns with transactions.
Final answer: A
Topic: Preparation of financial statements
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