Which of the Following Is Correct with Respect to the Issue

question 127

Multiple Choice

Which of the following is correct with respect to the issue of owners' equity?

• A) Owners' equity is meaningful for investors,but not for lenders.
• B) If a company's assets exceed its liabilities,owners' equity will be negative.
• C) Owners' equity consists of two sources of capital: the amount the owners originally invested and the amount of government loans the company has received.
• D) Even if a company operates profitably,its liabilities may increase faster than its assets.
• E) The basic accounting equation can be rewritten as follows: owners' equity equals assets minus liabilities.

---

Definitions:

Negligent

Failure to take proper care in doing something, leading to damage or harm to another person.

Agency

A relationship between two parties, where one, the agent, is authorized to act on behalf of the other, the principal, in legal or business matters.

Modern Firms

Refers to contemporary businesses characterized by innovative practices, technology use, and agile structures.

Foreign Countries

Nations or territories outside one's own country, governed by distinct legal, political, and cultural systems.