ECONOMICS
ENTREPRENEURS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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subtracting total liabilities from total assets
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dividing total liabilities by total assets
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subtracting total assets from total liabilities
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dividing total assets by total liabilities
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Detailed explanation-1: -Owner’s Equity is defined as the proportion of the total value of a company’s assets that can be claimed by its owners (sole proprietorship or partnership) and by its shareholders (if it is a corporation). It is calculated by deducting all liabilities from the total value of an asset (Equity = Assets – Liabilities).
Detailed explanation-2: -Net worth is calculated by subtracting all liabilities from assets. An asset is anything owned that has monetary value, while liabilities are obligations that deplete resources, such as loans, accounts payable (AP), and mortgages.
Detailed explanation-3: -The formula for owner’s equity is: Owner’s Equity = Assets – Liabilities. Assets, liabilities and subsequently the owner’s equity can be derived from a balance sheet.
Detailed explanation-4: -You can calculate it by deducting all liabilities from the total value of an asset: (Equity = Assets – Liabilities). In accounting, the company’s total equity value is the sum of owners equity-the value of the assets contributed by the owner(s)-and the total income that the company earns and retains.
Detailed explanation-5: -Equity is a common financial term used in business operations, investing and more. All assets minus total liabilities equals total equity. This balance can be used to determine the profitability of a company or to determine an investor’s stake of ownership.