Final answer:
Stockholders' equity is known as both shareholders' equity and owners' equity. It represents the residual interest in the assets of a company after debts are paid off. Equity reflects ownership and can be influenced by factors such as initial investments and retained earnings. The correct option is 1.
Step-by-step explanation:
The term stockholders' equity is also known as shareholders' equity and owners' equity. This reflects the amount of money that would be returned to shareholders if all the assets of a company were liquidated and all its debts were paid off. Stockholders' equity can be found on a company's balance sheet and is the result of the initial investment by the shareholders plus any retained earnings over time.
Companies can raise financial capital in several ways, including using owners' or managers' personal savings, credit cards, and investments from angel investors or venture capital firms. Profitable companies may also issue dividends, which are direct payments to shareholders from the firm's profits. The concept of equity broadly represents ownership interest in a firm or property.