Q2RQ. - Horngren'S Financial And Managerial Accounting

Question

What is equity security?

Step-by-Step Solution

Answer

The security providing ownership rights to its holder is known as equity security.

Step 1: Definition of Common Stock

Common stock can be defined as the collection of securities issued by the business entity that provides ownership and voting rights.

Step 2: Equity Securities

The security that reflects ownership in the business organization is equity security. It includes securities such as shares of common stock and preferred stock. Such securities are rewarded with profit in cash and stock dividend.