Question

Select the correct answer. Help Please!!!

Mr. Chopra decides to sell his business shares to the public to acquire additional finance. Under which component in the balance sheet should Mr. Chopra show the money he obtained from the shareholders?

A.
fixed assets
B.
current assets
C.
long-term liabilities
D.
owners’ equity

Answer 1

Option D.

Step-by-step explanation:

Owner's equity refers to the amount which belongs to the owners (in this case, the public investors) of the business, and it is shown on the capital side of the balance sheet.

Examples of owners' equity include:

-common stock and preferred stock

- retained earnings

- accumulated profits

- general reserves and other reserves, etc.

Therefore, in the scenario presented above, Mr. Chopra will record the money he obtained from the shareholders under the Owners' Equity component.