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Question
Which of the following items would not form part of the shareholder's equity of a company on the statement of financial position?
Which of the following items would not form part of the shareholder's equity of a company on the statement of financial position?
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Solution
The correct option is B Trade payables
Shareholders’
equity is an account on a company’s balance sheet that consists of share
capital plus retained earnings. It also represents the residual value of assets
minus liabilities. Shareholders fund basically accumulated funds of shareholders
that’s why is it the major head under equity and liabilities part of company
balance sheet. Accounting equation: Shareholders’ fund = Assets-Liabilities. On
the other hand trade payables are short term liabilities of the company shown
under the head of current liabilities.
Shareholders’ equity is an account on a company’s balance sheet that consists of share capital plus retained earnings. It also represents the residual value of assets minus liabilities. Shareholders fund basically accumulated funds of shareholders that’s why is it the major head under equity and liabilities part of company balance sheet. Accounting equation: Shareholders’ fund = Assets-Liabilities. On the other hand trade payables are short term liabilities of the company shown under the head of current liabilities.
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