Shareholders' equity:

Question

Quizplus · Accepted Answer

Shareholders' equity represents the residual value of a firm - the amount of assets that remains after all liabilities have been paid off. It includes items such as common and preferred stock, retained earnings, and other equity accounts. It is not financial leverage (A), which is the amount of debt a firm uses relative to its equity; it is not equal to total assets plus total liabilities (B), as it represents the portion of assets that is owned by the shareholders; it does not necessarily decrease when new shares of stock are issued (C); and it may include patents, but not exclusively (D).

Shareholders' Equity