International Association of Accessibility Professionals (IAAP) Certified Administrative Professional (CAP) Practice Exam

What term describes an ownership interest in a company, whether privately held or publicly traded?

1. Equity

2. Liability

3. Asset

4. Revenue

The correct answer is: Equity

The term that describes an ownership interest in a company, whether privately held or publicly traded, is equity. Equity represents the value of the shares issued by a company, which signifies ownership. When individuals or entities own shares of a company's stock, they possess a claim on the assets and earnings of that company proportional to their ownership stake. In essence, equity reflects the residual interest in the assets of the company after all liabilities have been settled. Liability refers to a company's financial obligations or debts owed to external parties, which is the opposite of ownership interest. An asset is something of value owned by a company, while revenue pertains to the income generated from the company's business activities. Therefore, equity stands out as the correct term that specifically relates to ownership in the context of both private and public companies.