Which item is commonly listed as equity on a balance sheet?

• A. Net worth
• B. Long term liabilities
• C. Current assets
• D. Cost of goods sold

Answer: (A)

Equity on a balance sheet is the owners’ claim to the assets after all debts are paid. Net worth is the everyday way to name that residual value—assets minus liabilities—so it directly represents the ownership stake. That’s why net worth is commonly listed as equity on a balance sheet: it captures exactly what owners effectively own after obligations are settled.

The other items aren’t equity: long-term liabilities are debts the company owes, current assets are resources the company expects to convert to cash within a year, and cost of goods sold is an expense shown on the income statement, not on the balance sheet. For example, if assets total 500,000 and liabilities total 200,000, the equity (net worth) would be 300,000.