Which one of the following items does not accurately describe stockholders' equity?
A)Stockholders' equity is created when a company issues stock to an investor.
B)Total stockholders' equity should be equal to assets in a publicly held entity.
C)Stockholders' equity represents amounts contributed by the owners to the company.
D)As owners of shares in a corporation,stockholders have claims on the assets of a business when it is profitable.

Question

Quizplus · Accepted Answer

While stockholders' equity represents the portion of a company's assets that is owned by the shareholders, it is not necessarily equal to the total assets. There may be other liabilities and claims against the company's assets, such as debt or outstanding expenses, that reduce the amount of stockholders' equity. Therefore, B is the statement that does not accurately describe stockholders' equity.

Which One of the Following Items Does Not Accurately Describe