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Answer :
To determine the overall value of a company's resources—often referred to as its net worth—we use the fundamental accounting equation:
[tex]$$
\text{Net Worth} = \text{Assets} - \text{Liabilities}
$$[/tex]
Here's the step-by-step reasoning:
1. A company's assets include everything it owns that has value, such as cash, inventory, property, and equipment.
2. A company's liabilities include all its debts and obligations, such as loans, accounts payable, and other financial commitments.
3. By subtracting the liabilities from the assets, we obtain the net value of the company's resources. This net value is what a buyer would essentially evaluate when considering a purchase.
Given the available options, the formula that best represents this concept is:
[tex]$$
\text{assets minus liabilities}
$$[/tex]
Therefore, the answer is option 4.
[tex]$$
\text{Net Worth} = \text{Assets} - \text{Liabilities}
$$[/tex]
Here's the step-by-step reasoning:
1. A company's assets include everything it owns that has value, such as cash, inventory, property, and equipment.
2. A company's liabilities include all its debts and obligations, such as loans, accounts payable, and other financial commitments.
3. By subtracting the liabilities from the assets, we obtain the net value of the company's resources. This net value is what a buyer would essentially evaluate when considering a purchase.
Given the available options, the formula that best represents this concept is:
[tex]$$
\text{assets minus liabilities}
$$[/tex]
Therefore, the answer is option 4.
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