Which item from Alliah's data represents owner's equity?

Which item from Alliah's data represents owner's equity?

• A. Capital Stock (Paid-in Capital)
• B. Revenue
• C. Loans Payable
• D. Building

Answer: (A)

Owner's equity is the owner's claim on the business after all liabilities are subtracted from assets, and it includes the capital the owner has invested in the company. Capital Stock (Paid-in Capital) is the part of equity that represents the owner's contributed capital—money or other assets the owner has put into the business in exchange for ownership shares. This account sits squarely in owners’ equity on the balance sheet and increases when new capital is contributed or stock is issued. Revenue, while it eventually boosts equity through net income and retained earnings, is an income statement item, not an equity account itself. Loans payable is a liability, the amount the business owes to lenders. Building is an asset, something the business owns. So the item that represents owner’s equity is Capital Stock (Paid-in Capital).

Owner's equity is the owner's claim on the business after all liabilities are subtracted from assets, and it includes the capital the owner has invested in the company. Capital Stock (Paid-in Capital) is the part of equity that represents the owner's contributed capital—money or other assets the owner has put into the business in exchange for ownership shares. This account sits squarely in owners’ equity on the balance sheet and increases when new capital is contributed or stock is issued.

Revenue, while it eventually boosts equity through net income and retained earnings, is an income statement item, not an equity account itself. Loans payable is a liability, the amount the business owes to lenders. Building is an asset, something the business owns. So the item that represents owner’s equity is Capital Stock (Paid-in Capital).