Who Uses Information About "Equity" and What Information About Equity

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The Answer is As equity has legal priority below that of liabilities in general-meaning that available funds go toward paying off liabilities prior to paying equity claims should the enterprise be liquidated-equity holders are more concerned about the equity accounts than creditors.Equity holders who do have residual claims on the enterprise are concerned about the size of their claims,and they need to be aware of changes to their share of profits.Consequently,accounting reports need to provide detailed information about the composition of equity and changes in equity that can result in the dilution of owners' stakes in the business.Equity holders are interested in distinguishing (i)changes in equity due to direct contributions or withdrawals of capital from (ii)changes in equity derived from return on equity capital (i.e.,income).This categorization is natural because it separates capital transactions with owners from the entity's income generating transactions with non-owners such as customers,employees,and suppliers.

Who Uses Information About "Equity" and What Information About Equity

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