The statement regarding equity that is true is:
A)It is decreased by profit
B)It is fixed at the amount initially contributed by the owners
C)It is the owners' claim on the net assets of the entity
D)It arises solely from the retained earnings of the entity

Question

Quizplus · Accepted Answer

Equity represents the owners' claim on the net assets of the entity, which includes both contributed capital and retained earnings. It is not decreased by profit (in fact, profit may increase equity), and it is not necessarily fixed at the amount initially contributed by the owners.

The Statement Regarding Equity That Is True Is