The Difference Between Total Assets of a Firm and Its

question 9

Multiple Choice

The difference between total assets of a firm and its total liabilities is called

• A)net working capital.
• B)net current assets.
• C)net worth.
• D)net liabilities.

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Definitions:

Effective Tax Rate

is the average rate at which an individual or corporation is taxed, calculated by dividing the total tax paid by the taxable income.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Goodwill

Represents the intangible asset arising when a company acquires another business for more than the fair value of its net identifiable assets.

Equity Method

An accounting technique used when an investing company holds significant influence over the investee but does not have full control over it, involving the recognition of income on the investment based on the investee’s net income.