Equity in Accounting

What is equity in accounting?

• The value of a business's assets after deducting its liabilities

• The value of a business's liabilities minus its assets

• The value of a business's liabilities after deducting its assets

• The value of a business's assets plus its liabilities

Which term is used to describe assets minus liabilities?

• Retained Earnings

• Net Assets

• Withdrawals

• Capital Contributions

What does equity represent?

• The net expenses of a business

• The net profits of a business

• The net liabilities of a business

• The net assets of a business

What is another term for capital contributions?

• Retained Earnings

• Partner Contributions

• Owner's Equity

• Shareholders Equity

What are retained earnings?

• Accumulated expenses held for future use

• Accumulated liabilities held for future use

• Accumulated profit held for future use

• Accumulated assets held for future use

What do withdrawals represent?

• Money invested into the business by its owners

• Money taken out of the business and distributed to its owners

• Money used to cover the business's expenses

• Money borrowed from third-party lenders

What is the accounting equation?

• Assets = Liabilities + Equity

• Assets - Liabilities = Equity

• Assets + Liabilities = Equity

• Assets = Liabilities - Equity

What is the balance sheet?

• A financial report that shows a business's cash flow

• A financial report that tracks revenues and expenses over a period of time

• A financial report that shows a business's assets, liabilities, and equity at a single point in time

• A financial report that shows a business's net income or loss

What is the term for profits distributed to shareholders?

• Dividends

• Retained Earnings

• Partner Drawings

• Drawings

What are the two main components of equity?

• Capital Contributions and Retained Earnings

• Assets and Liabilities

• Revenues and Expenses

• Withdrawals and Net Assets