Final answer:
The residual interest in a company's assets after deducting liabilities is known as net worth or shareholders' equity. In a T-account, net worth balances the accounts by being included on the liabilities side. Positive net worth indicates a healthy company, while negative net worth can signal bankruptcy or financial distress.
Step-by-step explanation:
The residual interest in the assets of a company that remains after deducting its liabilities is called net worth or shareholders' equity. Shareholders are people who own at least some shares of stock in a firm, representing a firm's stock divided into individual portions, and collectively, their shares make up the company's equity. When using a T-account, which separates the assets of a firm on the left from its liabilities on the right, net worth is included on the liabilities side to balance the account. If a company is healthy and profitable, its net worth will be positive, whereas if a company is bankrupt or in financial trouble, the net worth may be negative. For banks, net worth also includes reserves, often maintained to satisfy the reserve requirements set by the Federal Reserve and any additional reserves the bank chooses to hold.