Under Which Condition Is Owners' Equity Negative

question 134

Multiple Choice

Under which condition is owners' equity negative?

• A) Credits exceed debits.
• B) Assets are greater than liabilities.
• C) Assets and liabilities are equal.
• D) Debits exceed credits.
• E) Liabilities are greater than assets.

---

Definitions:

Call Option

is a financial contract that gives the holder the right, but not the obligation, to buy an asset at a specified price within a specific time period.

Strike Price

The set price at which the holder of an options contract can buy or sell the underlying asset.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.

Conversion Price

The predetermined price at which convertible security, such as a convertible bond or preferred stock, can be converted into a specified number of shares of common stock.