How are the differing claims of creditors and investors recognized by a corporation?

A. The claims of creditors are liabilities; those of investors are assets.
B. The claims of both creditors and investors are liabilities, but only the claims of investors are considered to be long term.
C. The claims of creditors are liabilities; the claims of investors are recorded as stockholders' equity.
D. The claims of creditors and investors are considered to be essentially equivalent.

Ans: C. The claims of creditors are liabilities; the claims of investors are recorded as stockholders' equity.