Question

in the context of balance sheets, which of the following is a difference between liabilities and owners' equity? liabilities refer to the claims internal stakeholders have against the external stakeholders, whereas owners' equity refers to claims external stakeholders have against the internal stakeholders. liabilities indicate the claims outsiders have against the firm's assets, whereas owners' equity refers to the claims the owners have against their firm's assets. owners' equity indicates the claims internal stakeholders have against the firm's assets, whereas liabilities refer to the claims external stakeholders have against the firm's assets. owners' equity indicates the claims outsiders have against the firm's assets, whereas liabilities refer to the claims the owners have against their firm's assets.

Answer 1

Liabilities represent the claims outsiders have against a firm's assets, while owners' equity refers to the claims that the owners or shareholders have against a firm's assets, often termed as net worth.

Step-by-step explanation:

In the context of balance sheets, liabilities and owners' equity represent two distinct types of claims on a firm's assets. Liabilities indicate the claims that outsiders, such as lenders or suppliers, have against the firm's assets. This is money or resources the company owes to external parties. On the other hand, owners' equity refers to the claims that internal stakeholders, which are the owners or shareholders, have against the firm's assets.

This represents the residual interest in the assets of the entity after deducting liabilities and is also known as the net worth of the company. To clarify, liabilities refer to what the company owes to others, whereas owners' equity represents the portion of the company's assets that the owners themselves can lay claim to after all debts have been paid.