Which of the following statements concerning equity is true?
A) It is the owner's claim to the assets of the entity after deducting liabilities.
B) It is fixed at the amount initially contributed when the business was established.
C) It is decreased by profit.
D) Assets + liabilities = equity.

Question

Quizplus · Accepted Answer

Equity represents the owner's claim to the assets of the entity after deducting liabilities. Option B is incorrect as equity can change based on various factors such as profit or loss, change in market value of assets, etc. Option C is also incorrect as profit adds to the equity, and not decreases it. Option D is incorrect as equity is calculated as Assets - Liabilities, and not Assets + Liabilities.

Which of the Following Statements Concerning Equity Is True