Stockholders' equity in a corporation consists of:
A) Amounts invested and reinvested by a company's owners.
B) Resources presently owned by a business that generate future economic benefits.
C) Amounts invested in assets that will be used for one or more years.
D) Amounts presently owed by a business.

Question

Quizplus · Accepted Answer

Stockholders' equity represents the residual interest in the assets of a corporation after deducting liabilities, and it consists of the amounts that investors have contributed to the company plus any profits that have been reinvested rather than paid out as dividends. Therefore, Choice A accurately describes the composition of stockholders' equity.

B, C, and D are inaccurate because they suggest other types of financial statements items, respectively: assets, long-term assets, and liabilities.

Stockholders' Equity in a Corporation Consists Of