Net worth is defined as which of the following?

Net worth is defined as which of the following?

• A. Total liabilities minus total assets
• B. Total assets minus total liabilities
• C. Total assets plus total liabilities
• D. Total assets multiplied by total liabilities

Answer: (B)

Net worth shows the value you actually own after settling all debts. It’s calculated by subtracting total liabilities from total assets, giving the owner’s equity. If assets exceed liabilities, net worth is positive; if liabilities exceed assets, it’s negative. For example, having 200,000 in assets and 150,000 in liabilities results in a net worth of 50,000. The other options don’t reflect ownership: subtracting liabilities from assets would reverse the sign, adding assets and liabilities blends resources with obligations, and multiplying them has no meaningful interpretation for net worth.

Net worth shows the value you actually own after settling all debts. It’s calculated by subtracting total liabilities from total assets, giving the owner’s equity. If assets exceed liabilities, net worth is positive; if liabilities exceed assets, it’s negative. For example, having 200,000 in assets and 150,000 in liabilities results in a net worth of 50,000. The other options don’t reflect ownership: subtracting liabilities from assets would reverse the sign, adding assets and liabilities blends resources with obligations, and multiplying them has no meaningful interpretation for net worth.