Which term describes the amount by which total assets exceed total liabilities?

The correct term that describes the amount by which total assets exceed total liabilities is owner's equity. Owner's equity represents the residual interest in the assets of an entity after deducting liabilities and is a crucial component of the balance sheet. It indicates the net worth of the owner(s) in the business, reflecting what is left for the owner after all debts have been settled.

This concept is central to understanding financial health and stability in both personal finance and business accounting. In the context of a business, if the total assets are greater than its total liabilities, it means that the business has positive equity, which is a favorable sign of financial health.

Terms like debt and capital may relate to financial aspects but do not specifically refer to the relationship of total assets exceeding total liabilities. Debt indicates obligations that the entity owes, while capital often refers to the financial resources or funds that are available for investment or business operation, but it is not a direct measure of the net worth in the context requested. Net worth could be considered synonymous with owner’s equity in personal finance, but it is not specifically used in the context of business valuation as owner's equity is.