What does "Firms' Capital" represent?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- The net assets of the firm.
"Firms' Capital" represents the net assets of the firm. Net assets are calculated by deducting outside liabilities from the total assets (excluding goodwill and fictitious assets). It reflects the residual value of the assets owned by the firm after deducting its liabilities.