Owners' equity is:
A) the owners' interest in the total assets of the firm.
B) only profits retained in the business.
C) the contributions by the proprietor plus all profits retained by the business.
D) only contributions by the proprietor.

Question

Quizplus · Accepted Answer

Owners' equity is the residual interest in assets after deducting liabilities. In other words, it is the amount of assets owned by the owners of the business. This includes the contributions made by the proprietor as well as all profits retained by the business. Option A is incorrect as it only refers to the owners' interest in total assets, and does not consider liabilities. Option B is incorrect as it only refers to profits retained and does not include contributions. Option D is incorrect as it only refers to contributions and does not consider profits retained.

Owners' Equity Is