Which of the following is equity?
1) investments
2) additional paid‑in capital
3) retained earnings
A)1 and 2
B)1 and 3
C)2 and 3
D)1, 2, and 3

Question

Which of the following is equity?
1) investments
2) additional paid‑in capital
3) retained earnings
A)​1 and 2
B)​1 and 3
C)​2 and 3
D)​1, 2, and 3

Quizplus · Accepted Answer

Equity refers to the portion of a company's value or assets that is owned by shareholders or investors. In accounting, equity is represented by various accounts on the balance sheet, including investments, additional paid-in capital, and retained earnings. Therefore, options 2 and 3, which are additional paid-in capital and retained earnings, respectively, represent equity. Option 1, which is investments, could be equity or an asset depending on the nature of the investment, but it is not always considered equity. Therefore, option C, which includes 2 and 3, is the best choice for equity.

Which of the Following Is Equity