Practice Quiz

CPA Accountant Review Questions

Category - Accounting

Start a Study Session Sign up for Question of the Day
Which of the following is true regarding the difference between book value and shareholder’s equity?
  1. There is no difference; these terms are synonymous.
  2. Book value excludes intangibles such as goodwill.
  3. Shareholder’s equity measures net assets.
  4. Shareholder’s equity is an asset; book value is a liability.
  5. Book value is an asset; shareholder’s equity is a liability.
Explanation
Answer - B - Book value differs from shareholder’s equity in that book value excludes intangibles, such as goodwill.

Key Takeaway: Shareholder’s equity is Total Assets − Total Liabilities. Book value is the net tangible assets of a corporation and does not include items such as goodwill, patents, etc., that are considered intangible. The terms are not synonymous.
Previous Next
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz