What is equity?
Correct answer: C. Owner's claim on total assets
- A. Cash from the business
- B. liability of a business
- C. Owner's claim on total assets
- D. Owner's claim on total liabilities
Explanation
Equity is the owner's residual claim after liabilities are deducted from total assets, expressed as Assets − Liabilities. It is therefore a claim on assets, not directly on liabilities.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
Identify the asset from the following:
_______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use?
Double entry implies that
Which of the following is a liability?
What is the basic accounting equation?
Which is the most important characteristic that all assets of a business have?