Owner's equity is also called ________.

Question

BlackTom AI · Accepted Answer

To tackle the question, we start by identifying what owner's equity represents in financial terms.
Option 1: 'net worth' — This aligns with the standard definition: owner’s equity is the residual interest in the assets of an entity after deducting liabilities, effectively the owner's claim or net worth. This is the correct conceptual match for owner’s equity.
Option 2: 'debt' — Debt refers to amounts owed and generally represents a liability or obligation of the business, not the owner's residual claim. It is something the company must repay, not the owner's equity stake. This is a mischaracterization of owner’s equity.
Option 3: 'liabilities' — Liabilities are obligations the company owes to external parties. They reduce assets and are separate from owner’s equity; they do not describe the owner's stake in the company. This is incorrect in identifying owner’s equity.
Option 4: 'assets' — Assets are resources controlled by the entity that have future economic value. While owner’s equity is linked to assets via the accounting equation (Assets = Liabilities + Equity), assets themselves belong to the company and are not the owner’s equity; equating the two would ignore the claim of liabilities and the ownership interest. This is another common conflation and thus incorrect.

Overall, the correct concept is that owner’s equity corresponds to net worth, representing the owner's claim after liabilities are accounted for, which is why Option 1 is the accurate choice. The other terms describe different parts of the financial structure (debt, liabilities, assets) and do not define owner’s equity.

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Owner's equity is also called ________.

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GBUS*4330*W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Owner's equity is also called ________.

View Explanation

Log in for full answers

Similar Questions

True or False? Owner's equity (also called net worth) is essentially what would be left for the owners from company assets after paying off all liabilities.

Zia Company reports the following balance sheet information for 2021:

Which of the following best describes capital in the context of equity?

Chandler Corporation had assets equal to $330,500 and liabilities equal to $250,250 for a recent year-end. What was the total equity for Chandler's business at year-end?

What is NOT another term for “Owner's Equity”?

On 1 January 2026, Jim’s Musical Instruments had Assets of $200 000 and Owner's Equity of $80 000.On 2 January 2026 the owner withdrew inventory of $1 000. What would Assets equal after this transaction?

Jul 5 A customer returned stock to the business that was sold for $400 (cost price $200) (Credit note 67). State the effect to Owner's Equity of the above transaction.

More Practical Tools for Students Powered by AI Study Helper

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GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser