The book value of the shareholders' equity is represented by:
A) the total assets minus the current liabilities.
B) the sum of the par value of common stock and the accumulated retained earnings.
C) the sum of preferred stock, retained earnings, and common equity.
D) the total assets minus equity.

Question

Quizplus · Accepted Answer

The book value of the shareholders' equity is equal to the sum of the par value of common stock and the accumulated retained earnings. This is because the par value of common stock represents the initial investment by the shareholders, while the accumulated retained earnings represent the profits that have been retained by the company over time. Preferred stock is not necessarily included in the calculation of book value, as it is typically seen as a separate class of equity.

The Book Value of the Shareholders' Equity Is Represented By