EQUITY

Define Equity

• ownership interest or claims of shareholders in a company's assets.

• Money the business owes to other people or organisations.

• It is when you treat people fairly

• All of the above

Formula owner's equity

• Asset ÷ Liability

• Net income ÷ Shareholders equity

• Gross profit- Expenses

• Asset - Liability

Types of Private Equity Financing

• Venture Capitalist (VC)

• Home Equity

• Brand Equity

• All of above

Which one is classify as owner's equity

• Building

• A bank loan

• A drawing account

• All of above

Mention three other factors that assist in maintaining equity.

• Be honest, trustworthy and simple in your ways

• verification and intending truthfulness,distancing oneself from fanaticism, and beneficial dialogue.

• verification and intending biased,distancing oneself from fanaticism, and beneficial dialogue.

• All of above

When an owner withdraws cash from a business for personal use it is a reduction of

• Asset

• Liability

• Owner's equity

• Expenses

Investing in equity is considered to be more risky than investing in bonds.

• False

• True

Ali Inc has total assets of RM 1,000 and total liabilities of RM 450 on December 31, 2013. Assume that assets increased by RM 130 and liabilities decreased by RM 25 during 2014. What would owner's equity be as of December 31,2014?

• RM 550

• RM 705

• RM680

• RM 525

Answer explanation

Assets will be RM 1,130 and liabilities will be RM 425 as of December 31, 2014. Thus, the accounting question is: RM1,130 = RM 425 + Owner's equity, resulting in RM 705 as the owner's equity balance at the end of 2014.

Assets = Liabilities + owner's equity.

1000 = 425 + ?

+130 = 0 + ?

1130 = 425 ?

1130 - 425 = RM 705.

Which one include on the balance sheet?

• Asset

• Liabilities

• Owner's equity

• All of above

under the equity method of accounting for a stock investment, cash dividends received are considered a reduction of the investee's net assts.

• True

• False