The book value of the shareholders' equity is represented by:
A)total assets minus the current liabilities.
B)the sum of preferred stock, retained earnings, and common equity.
C)the sum of common share capital and retained earnings.
D)the total assets minus equity.

Question

Quizplus · Accepted Answer

The book value of the shareholders' equity is represented by the sum of common share capital and retained earnings, which are the two components of the shareholders' equity section of the balance sheet. Option A is incorrect as it subtracts the current liabilities from total assets which does not give the shareholders' equity. Option B is also incorrect, as while it includes preferred stock and common equity, it misses the retained earnings. Option D subtracts equity from total assets which gives the remaining liabilities, not shareholders' equity.

The Book Value of the Shareholders' Equity Is Represented By