Which statement best defines net worth?

Which statement best defines net worth?

• A. The net assets of the business
• B. The total assets minus total liabilities
• C. The difference between assets and liabilities
• D. The amount of cash on hand

Answer: (C)

Net worth is the value remaining after you subtract what you owe from what you own. It’s calculated by assets minus liabilities, showing the amount of your resources that aren’t tied up in debts. Think of it as the equity you have in your finances or business. For example, if you own 120,000 in assets and owe 85,000 in liabilities, your net worth is 35,000. Cash on hand alone isn’t net worth because it is just one asset; you need to account for all assets and all liabilities to determine the true net worth. The statement that best defines net worth is the difference between assets and liabilities.

Net worth is the value remaining after you subtract what you owe from what you own. It’s calculated by assets minus liabilities, showing the amount of your resources that aren’t tied up in debts. Think of it as the equity you have in your finances or business.

For example, if you own 120,000 in assets and owe 85,000 in liabilities, your net worth is 35,000. Cash on hand alone isn’t net worth because it is just one asset; you need to account for all assets and all liabilities to determine the true net worth.

The statement that best defines net worth is the difference between assets and liabilities.