Another common term for stockholders' equity is:

• A. Total assets
• B. Net income
• C. Owner's equity
• D. Retained earnings

Answer: (C)

Verified step by step guidance

1. Understand the concept of stockholders' equity: Stockholders' equity represents the owners' claim on the assets of a corporation after all liabilities have been deducted. It is essentially the residual interest in the company.
2. Recognize that stockholders' equity is also referred to as 'owner's equity' in the context of sole proprietorships or partnerships. In corporations, the term 'stockholders' equity' is used because ownership is divided among shareholders.
3. Differentiate stockholders' equity from other terms in the problem: Total assets refer to everything the company owns, net income refers to the profit earned during a specific period, and retained earnings are a component of stockholders' equity representing accumulated profits not distributed as dividends.
4. Identify that the correct synonym for stockholders' equity in this context is 'owner's equity,' as it represents the ownership interest in the company.
5. Conclude that while stockholders' equity and owner's equity are similar concepts, the terminology varies depending on the type of business entity (corporation vs. sole proprietorship/partnership).