BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Owner’s equity is the owner’s claim to the asset of the business. It is NEVER referred to as the owner’s capital in the business.
A
True
B
False
Explanation: 

Detailed explanation-1: -Business Fair Value. The amount of owners’ equity does not necessarily represent the fair value of a business, so the sale of a business in the exact amount of owners’ equity would be purely coincidental.

Detailed explanation-2: -Key Takeaways. Shareholder equity is the owner’s claim after subtracting total liabilities from total assets. You can calculate shareholder equity by adding together all assets and all liabilities from a company’s balance sheet.

Detailed explanation-3: -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-4: -1) Equity is owners’ claim to assets. 2) Equity is also called net assets or residual interest.

There is 1 question to complete.