The amount of stockholders' equity in a business is not affected by
A) The percentage of total assets held in cash.
B) Assets consumed in the process of earning revenues.
C) The profitability of the business.
D) The amount of dividends declared and paid to stockholders.

Question

Quizplus · Accepted Answer

The percentage of total assets held in cash does not affect the amount of stockholders' equity in a business, as cash is already a part of the assets included in the equity calculation. The other options (B, C, and D) can affect the stockholders' equity. Assets consumed in the process of earning revenues can decrease equity if it is not replaced, profitability can increase equity through retained earnings, and dividends paid out to stockholders decrease equity.

The Amount of Stockholders' Equity in a Business Is Not