Ag Mech one 2.02

Net worth is:

• current assets minus current liabilities.

• inventory plus depreciation.

• total assets minus total liabilities.

• total assets plus total liabilities.

Answer explanation

Net worth is defined as total assets minus total liabilities. This calculation provides a clear picture of an individual's or entity's financial position, making the correct choice total assets minus total liabilities.

Something of value that a person or business owns is:

• a liability.

• an asset.

• debt.

• net worth.

Answer explanation

An asset is something of value that a person or business owns, such as property or equipment. In contrast, liabilities are obligations, debt refers to borrowed money, and net worth is the difference between assets and liabilities.

Debts that a business owes are:

• assets.

• liabilities.

• equity.

• revenue.

Answer explanation

Debts that a business owes are classified as liabilities. Liabilities represent the financial obligations of a business, distinguishing them from assets, equity, and revenue.

Which of the following is considered an asset?

• Accounts payable.

• Bank loan.

• Owner's equity.

• Cash in hand.

Answer explanation

Cash in hand is considered an asset because it represents liquid funds available for use. In contrast, accounts payable and bank loans are liabilities, while owner's equity reflects the owner's stake in the business.

What is the term for the owner's claim on the assets of a business?

• Equity.

• Liabilities.

• Expenses.

• Revenue.

Answer explanation

The term 'Equity' refers to the owner's claim on the assets of a business, representing their ownership interest. In contrast, 'Liabilities' are obligations, 'Expenses' are costs incurred, and 'Revenue' is income generated.