The book value of the shareholders' ownership is represented by:
A) the sum of the par value of common stock, the capital surplus and the accumulated retained earnings.
B) the total assets minus the net worth.
C) the sum of the preferred stock, debt and the capital surplus.
D) the sum of the total assets minus the current liabilities.
E) None of these.

Question

Quizplus · Accepted Answer

The book value of the shareholders' ownership is represented by the sum of the par value of common stock, the capital surplus and the accumulated retained earnings. This represents the amount of money that would be distributed to shareholders if the company were to be liquidated. Option B represents the net worth of the company, while option C includes debt and preferred stock, neither of which are part of shareholders' ownership. Option D only takes into account current liabilities and does not consider other factors such as long-term debt, inventory, or property, plant, and equipment.

The Book Value of the Shareholders' Ownership Is Represented By