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

Question

BlackTom AI · Accepted Answer

First, let's restate the problem to set the stage: What is NOT another term for 'Owner's Equity' among the given options?
Option 1: Shareholder's Equity. In several accounting contexts, these terms are used interchangeably with Owner's Equity to describe the owners' claim on assets after liabilities are subtracted. This option aligns with common terminology, so it is not the one that is different.
Option 2: Stockholder's Equity. Similar to Shareholder's Equity, this term is widely used to denote the owners' (stockholders') claim in a corporation, making it another common synonym for Owner's Equity.
Option 3: Net Worth. In many financial discussions, Net Worth is used to represent the residual value of assets minus liabilities for an individual or entity, which mirrors the concept of Owner's Equity in accounting statements. This is another acceptable equivalent term in broader usage.
Option 4: Cash. Cash is a current asset, not an owners’ claim on the business. It does not represent the owners' residual interest in the company after liabilities are settled, and thus it is not a synonym for Owner's Equity.
To differentiate correctly, consider what each term represents: the first three describe the owners' equity interest in the company, while Cash denotes available liquid assets and is part of the asset side of the balance sheet, not equity.
In summary, understanding the distinction between asset accounts (like Cash) and equity accounts (like Shareholder's/Stockholder's Equity or Net Worth) clarifies why Cash does not fit as another name for Owner's Equity.

ORLJ4002001 Exam 1: Accounting

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

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