Net worth is also known as what?

Net worth is also known as what?

• A. Equity
• B. Assets
• C. Liabilities
• D. Revenue

Answer: (A)

Net worth is the residual claim of the owners after all debts are paid. In accounting terms, this is called equity (often shown as owner’s equity or shareholders’ equity on the balance sheet). It’s calculated as assets minus liabilities, so net worth and equity mean the same thing. Assets are what you own, liabilities are what you owe, and revenue is income—neither of those alone captures the owners’ claim after debts, so they aren’t the right term.

Net worth is the residual claim of the owners after all debts are paid. In accounting terms, this is called equity (often shown as owner’s equity or shareholders’ equity on the balance sheet). It’s calculated as assets minus liabilities, so net worth and equity mean the same thing. Assets are what you own, liabilities are what you owe, and revenue is income—neither of those alone captures the owners’ claim after debts, so they aren’t the right term.