Equity can be described as claims ofGroup of answer choicescreditors on total assets.owners on total assets.customers on total assets.auditors on total assets.
Question
Equity can be described as claims of
- Group of answer choices
- creditors on total assets.
- owners on total assets.
- customers on total assets.
- auditors on total assets.
Solution
Equity can be described as claims of owners on total assets.
Here's why:
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Equity, in financial terms, refers to the ownership interest in a company. It represents the residual interest in the assets of an entity after deducting liabilities. In other words, equity represents the value of an asset after all debts and other obligations have been paid.
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It is the amount that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debts were paid off.
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Therefore, equity can be described as the claims of owners (shareholders) on the total assets of the company. It is not related to the claims of creditors, customers, or auditors.
So, the correct answer is "owners on total assets."
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