CAF-1 · Chapter 8 · Question 8 of 15
A company issues a 10% bonus share to its existing shareholders out of retained earnings. What is the net effect on total equity?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Total equity remains unchanged.
Explanation
A bonus issue capitalizes reserves (e.g., retained earnings decrease while share capital increases), resulting in zero net change to total equity.
More Statement of Changes in Equity MCQs
- Q10Which document explicitly presents the reconciliation between the carrying amount of each component of equity at the beginning and end of…
- Q11In the statement of changes in equity, what is the effect of transferring Rs. 20 million from retained earnings to a general reserve?
- Q12A company issues 1 million ordinary shares of Rs. 10 each at a price of Rs. 15 per share. How is the Rs. 5 per share excess recorded?
- Q13Which of the following is an example of an item that is recognized in 'Other Comprehensive Income' and subsequently appears in the…
- Q14Which of the following statements about irredeemable preference shares is true in the context of equity?