Accounting · Conceptual Framework
Which of the following correctly defines 'equity' according to the IASB's Conceptual Framework for Financial Reporting?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Equity is the increase in economic benefits during the accounting period in the form of inflows or enhancements of assets.
- 2Equity is the residual interest in the assets of the entity after deducting all its liabilities.✓
- 3Equity is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.
- 4Equity is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits.
Correct answer
Equity is the residual interest in the assets of the entity after deducting all its liabilities.
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