Which measure equals total assets minus total liabilities?

Which measure equals total assets minus total liabilities?

• A. Net Income/Loss
• B. Net Worth
• C. Need
• D. Money

Answer: (B)

The measure you’re looking at is net worth, which is the amount remaining for the owners after all debts are paid. In accounting terms, this is also called owner’s equity. On a balance sheet, assets equal liabilities plus equity, so rearranging gives equity (net worth) = assets minus liabilities. This residual value shows what the entity truly owns free of its obligations. For example, if total assets are 500 and total liabilities are 300, net worth is 200. Net income, money, and need refer to profitability, a general sum, and a nonstandard metric, respectively, and don’t represent the leftover value after debts.

The measure you’re looking at is net worth, which is the amount remaining for the owners after all debts are paid. In accounting terms, this is also called owner’s equity. On a balance sheet, assets equal liabilities plus equity, so rearranging gives equity (net worth) = assets minus liabilities. This residual value shows what the entity truly owns free of its obligations. For example, if total assets are 500 and total liabilities are 300, net worth is 200. Net income, money, and need refer to profitability, a general sum, and a nonstandard metric, respectively, and don’t represent the leftover value after debts.