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30 January, 02:29

Shareholders' equity:

a. is equal to total assets plus total liabilities.

b. decreases whenever new shares of stock are issued.

c. represents the residual value of a firm.

d. includes long-term debt, preferred stock, and common stock.

e. increases in value anytime total assets increases.

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  1. 30 January, 02:51
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    c. represents the residual value of a firm.

    Explanation:

    The residual value of a firm is the value of firm's all asset after paying all liabilities of the firms. It is also known as the net worth of the firm.

    Example:

    Total Asset of the firm = $100,000

    Total Liabilities of the firm = $45,000

    Accounting Equation:

    Assets = Equity + Liabilities

    Equity = Assets - Liabilities

    So

    Residual value = Total Asset of the firm - Total Liabilities of the firm

    Residual value = $100,000 - $55,000

    Residual value / Equity = $55,000
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