On the balance sheet, which term represents the owner's claim to assets after liabilities are paid?

On the balance sheet, which term represents the owner's claim to assets after liabilities are paid?

• A. Owner's Equity
• B. Liabilities
• C. Assets
• D. Revenues

Answer: (A)

The balance sheet shows assets on one side and the claims against those assets on the other: liabilities plus owner’s equity. After all liabilities are paid, what remains for the owner is the owner’s equity—the residual claim or interest in the assets. This reflects the owner’s investment and any profits kept in the business (retained earnings in a corporation, or the owner’s capital in a sole proprietorship). The other terms don’t describe that remaining claim: liabilities are what the business owes to others, assets are what the business owns, and revenues are the income earned that increases equity but is not the final claim itself.

The balance sheet shows assets on one side and the claims against those assets on the other: liabilities plus owner’s equity. After all liabilities are paid, what remains for the owner is the owner’s equity—the residual claim or interest in the assets. This reflects the owner’s investment and any profits kept in the business (retained earnings in a corporation, or the owner’s capital in a sole proprietorship). The other terms don’t describe that remaining claim: liabilities are what the business owes to others, assets are what the business owns, and revenues are the income earned that increases equity but is not the final claim itself.