Which of the following is true regarding the difference between book value and shareholder’s equity?

Which of the following is true regarding the

Multiple choice — select the best answer

AShareholder’s equity measures net assets.
BBook value excludes intangibles such as goodwill.
CShareholder’s equity is an asset; book value is a liability.
DBook value is an asset; shareholder’s equity is a liability.
EThere is no difference; these terms are synonymous.

✓ Correct answer: B. Book value excludes intangibles such as goodwill. Book value differs from shareholder’s equity in that book value excludes intangibles, such as goodwill.<br/><br/><b>Key Takeaway: </b>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.

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