BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Equity presents the financial interests of the owners of the business.
|
|
|
Equity presents the financial objectives of the owners of the business.
|
|
|
Equity is the total liabilities plus the total assets combined.
|
|
|
Equity shows the performance of the business.
|
Detailed explanation-1: -What Is Equity? Equity, typically referred to as shareholders’ equity (or owners’ equity for privately held companies), represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debt was paid off in the case of liquidation.
Detailed explanation-2: -Equity is the amount of money that a company’s owner has put into it or owns. On a company’s balance sheet, the difference between its liabilities and assets shows how much equity the company has. The share price or a value set by valuation experts or investors is used to figure out the equity value.
Detailed explanation-3: -Owner’s Equity is defined as the proportion of the total value of a company’s assets that can be claimed by its owners (sole proprietorship or partnership) and by its shareholders (if it is a corporation). It is calculated by deducting all liabilities from the total value of an asset (Equity = Assets – Liabilities).
Detailed explanation-4: -Equity interest is the ownership share of a shareholder in a business. For example, having a 15% equity interest in a company means that a shareholder owns 15% of the business.
Detailed explanation-5: -The term “equity” refers to fairness and justice and is distinguished from equality: Whereas equality means providing the same to all, equity means recognizing that we do not all start from the same place and must acknowledge and make adjustments to imbalances.