Shareholders' equity:

a. is equal to total assets plus total liabilities.

b. decreases whenever new shares of stock are issued.

c. represents the residual value of a firm.

d. includes long-term debt, preferred stock, and common stock.

e. increases in value anytime total assets increases.

Question

Angelica Salas

Business

16 January, 22:44

Shareholders' equity:

a. is equal to total assets plus total liabilities.

b. decreases whenever new shares of stock are issued.

c. represents the residual value of a firm.

d. includes long-term debt, preferred stock, and common stock.

e. increases in value anytime total assets increases.

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Answers (1)

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Benjamin Barton · Answer 1

c. represents the residual value of a firm.

Explanation:

The residual value of a firm is the value of firm's all asset after paying all liabilities of the firms. It is also known as the net worth of the firm.

Example:

Total Asset of the firm = $100,000

Total Liabilities of the firm = $45,000

Accounting Equation:

Assets = Equity + Liabilities

Equity = Assets - Liabilities

So

Residual value = Total Asset of the firm - Total Liabilities of the firm

Residual value = $100,000 - $55,000

Residual value / Equity = $55,000

Shareholders' equity:a. is equal to total assets plus total liabilities.b. decreases whenever new shares of stock are issued.c. represents the residual value of a firm.d. includes long-term debt, preferred stock, and common stock.e. increases in value anytime total assets increases.

Shareholders' equity:

a. is equal to total assets plus total liabilities.

b. decreases whenever new shares of stock are issued.

c. represents the residual value of a firm.

d. includes long-term debt, preferred stock, and common stock.

e. increases in value anytime total assets increases.