If a company has stockholders' equity of $60,000 at the end of the year,which of the following statements must be true?
A)The company's assets exceed liabilities by $60,000.
B)The company has issued $60,000 of common stock.
C)Net income for the year equals $60,000.

Question

Quizplus · Accepted Answer

Stockholders' equity represents the residual interest in the assets of a company after deducting liabilities. Therefore, if the company has stockholders' equity of $60,000, it means that the assets of the company exceed its liabilities by $60,000. Option B is not necessarily true as the company may have issued common stock as well as other types of equity, and option C is not necessarily true as stockholders' equity can be affected by factors other than net income, such as changes in retained earnings due to dividends or stock repurchases.

If a Company Has Stockholders' Equity of $60,000 at the End