Which of the following best describes the term "equity"?
A)The amount of total profits earned by a business since it began operations
B)The amount of interest or claim that the owners have in the business
C)The economic resources of a business entity
D)The cumulative profits earned by a business less any dividends distributed

Question

Quizplus · Accepted Answer

Equity refers to the interest or claim that the owners have in a business. It represents the residual value of assets after all liabilities have been satisfied. This means that if the business were to sell all its assets and pay off all its debts, equity would be what remains for the owners.

Which of the Following Best Describes the Term "Equity