Which measure represents the owners' residual interest after liabilities are deducted?

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Multiple Choice

Which measure represents the owners' residual interest after liabilities are deducted?

Net worth reflects the owners’ claim on the company after all debts are paid. It’s calculated as assets minus liabilities, which on a balance sheet represents the owners’ residual interest or owners’ equity. Net income, assets, and revenue describe different aspects of financial performance or position but do not represent that remaining claim after obligations are settled. Net worth is the correct measure.

Net worth reflects the owners’ claim on the company after all debts are paid. It’s calculated as assets minus liabilities, which on a balance sheet represents the owners’ residual interest or owners’ equity. Net income, assets, and revenue describe different aspects of financial performance or position but do not represent that remaining claim after obligations are settled. Net worth is the correct measure.

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