What term describes resources provided to an organization by a person in exchange for a position of ownership?

What term describes resources provided to an organization by a person in exchange for a position of ownership?

• A. Liabilities
• B. Owners Equity
• C. Retained Earnings
• D. Assets

Answer: (B)

The correct term that describes resources provided to an organization by a person in exchange for a position of ownership is owners equity. This represents the ownership interest in a company, which includes funds contributed by the owners and any accumulated profits that have been reinvested into the business. When an individual invests in a company, they provide capital in return for ownership stakes, which is reflected in the owners equity section of the balance sheet. This equity reflects not only the initial investment but also any additional contributions or retained earnings, thereby indicating the wealth of the owners in relation to the company. In contrast, liabilities refer to the obligations or debts that a company owes to external parties, which do not convey ownership. Retained earnings show the portion of profits that are not distributed as dividends but rather reinvested in the business, and while they contribute to owners equity, they are specific to profits rather than the initial investment. Assets are resources owned by the company but do not pertain specifically to ownership provided by individuals.

The correct term that describes resources provided to an organization by a person in exchange for a position of ownership is owners equity. This represents the ownership interest in a company, which includes funds contributed by the owners and any accumulated profits that have been reinvested into the business.

When an individual invests in a company, they provide capital in return for ownership stakes, which is reflected in the owners equity section of the balance sheet. This equity reflects not only the initial investment but also any additional contributions or retained earnings, thereby indicating the wealth of the owners in relation to the company.

In contrast, liabilities refer to the obligations or debts that a company owes to external parties, which do not convey ownership. Retained earnings show the portion of profits that are not distributed as dividends but rather reinvested in the business, and while they contribute to owners equity, they are specific to profits rather than the initial investment. Assets are resources owned by the company but do not pertain specifically to ownership provided by individuals.