Owners' equity consists of two sources of capital. They are
A) the amount that the owners originally invested and profits earned by and reinvested in the company.
B) bank loans and money received from factoring accounts receivable.
C) bank loans and proceeds from the sale of stock.
D) trade credit and bank loans.
E) dividends received by investors and bank loans.

Question

Quizplus · Accepted Answer

Owners' equity represents the residual interest in the assets of the company after deducting liabilities. It consists of the amount initially invested by the owners and any profits earned by and reinvested in the business. Option B, C, D, and E include external sources of capital and not owners' equity.

Owners' Equity Consists of Two Sources of Capital