Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 41 - No. 21)
What does the term 'equity' represent in the accounting equation?
The total amount of assets owned by the business.
The amount owed to creditors.
The owners' stake in the business.
The cost of goods sold.
Explanation
Equity represents the owners' or shareholders' stake in the business after all liabilities have been paid. It is the residual value of the assets after deducting the liabilities.
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