Which of the following represents ownership interest in a company?

Which of the following represents ownership interest in a company?

• A. Debts
• B. Stockholder's Equity
• C. Income
• D. Liabilities

Answer: (B)

Ownership interest in a company is best represented by stockholder's equity. This term refers to the residual interest in the assets of the business after deducting liabilities. Essentially, it reflects the net worth of the company that is attributable to the shareholders. Stockholder's equity comprises several components, including issued common stock, preferred stock, retained earnings, and additional paid-in capital. Debts, income, and liabilities do not represent ownership interest. Debts generally indicate what the company owes to creditors, while liabilities represent obligations to pay off debts. Income pertains to earnings generated by the company during a specific period but does not reflect ownership. Therefore, stockholder's equity is the correct choice as it directly relates to the value that shareholders hold in the business.

Ownership interest in a company is best represented by stockholder's equity. This term refers to the residual interest in the assets of the business after deducting liabilities. Essentially, it reflects the net worth of the company that is attributable to the shareholders. Stockholder's equity comprises several components, including issued common stock, preferred stock, retained earnings, and additional paid-in capital.

Debts, income, and liabilities do not represent ownership interest. Debts generally indicate what the company owes to creditors, while liabilities represent obligations to pay off debts. Income pertains to earnings generated by the company during a specific period but does not reflect ownership. Therefore, stockholder's equity is the correct choice as it directly relates to the value that shareholders hold in the business.