The term owner's equity is preferred over the term net worth because most assets are carried at original cost rather than at current value.

Question

Quizplus · Accepted Answer

Owner's equity reflects the residual value of a company's assets after liabilities are deducted. It is a more accurate term than net worth because most assets are recorded at their original cost, rather than their current market value. Using the term net worth can overstate the true value of a company's assets, especially if those assets have appreciated significantly in value over time.

The Term Owner's Equity Is Preferred Over the Term Net