Why Doesn't Stockholders' Equity Equal the Market Value of Equity

question 22

Multiple Choice

Why doesn't stockholders' equity equal the market value of equity?

• A)Stockholders' equity usually does equal the market value of equity.
• B)Investors tend to incorrectly price the market value of equity.
• C)It's related to the use of historical cost to report many long-term assets and the expensing of value generating costs such as research and development and advertising.
• D)It's due to incorrect entries prepared by accountants.

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