Which of the following statements best defines equity (capital) of a business? A Equity represents the value of the business B Equity is equivalent to the value of the business’s assets C Equity is represented by the total assets of the business D Equity is represented by the net assets (assets minus liabilities) of the business

Which of the following statements best defines equity (capital) of a business? A Equity represents the value of the business B Equity is equivalent to the value of the business’s assets C Equity is represented by the total assets of the business D Equity is represented by the net assets (assets minus liabilities) of the business

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 34MCQ: Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c....

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Owners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assets
Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Sales
Why does the combined total of the companys liabilities and equity always equal the total of the companys assets?
The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
Retained earnings is accurately described by all except which of the following statements? A. Retained earnings is the primary component of a companys earned capital. B. Dividends declared are added to retained earnings. C. Net income is added to retained earnings. D. Net losses are accumulated in the retained earnings account.
As per the accounting equation, equity can be represented as __________________. Excess of assets over liabilities of the business Total of assets and liabilities of the business Excess of liabilities over assets of the business Product of assets and liabilities of the business
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If a business earns a Net Income it mneans: * Capital > Revenue Revenue > Expenses Drawings > Capital Revenue > Drawings
Assets = Liability+ Capital where 'assets' are resources of the business; 'liabilities' are external claims against these resources; ' capital' is an internal or residual claim against these resources. Discuss the accounting equation considering the statement provided.
What is the enterprise value of a business?* The market value of equity of the business The book value of equity of the business The entire value of the business without giving consideration to its capital structure The entire value of the business considering its capital structure
Distributions of the net income of a business to its owners are called: O dividends O monetary unit O auditing O earnings
The......of a business is the amount of income A-Revenue B-venture C-assest D-fund