The amount of a business owner's money currently invested in their own business is referred to as what?

The amount of a business owner's money currently invested in their own business is referred to as what?

• A. Equity
• B. Debt
• C. Revenue
• D. Assets

Answer: (A)

Owner's equity is the owner's stake in the business—the portion funded by the owner's own money. On the balance sheet, it equals assets minus liabilities, showing what the business would be worth to the owner after debts are paid. In farming terms, this includes the initial capital the owner puts in plus any profits kept in the business (retained earnings) and minus any withdrawals. It grows when the owner adds capital or when profits are kept in the business, and it falls with withdrawals or losses. Debt is borrowed money and a liability, revenue is income from operations, and assets are the resources the business owns, so they are not the owner’s current invested share.

Owner's equity is the owner's stake in the business—the portion funded by the owner's own money. On the balance sheet, it equals assets minus liabilities, showing what the business would be worth to the owner after debts are paid. In farming terms, this includes the initial capital the owner puts in plus any profits kept in the business (retained earnings) and minus any withdrawals. It grows when the owner adds capital or when profits are kept in the business, and it falls with withdrawals or losses. Debt is borrowed money and a liability, revenue is income from operations, and assets are the resources the business owns, so they are not the owner’s current invested share.