Net Worth is defined as which of the following?

Net Worth is defined as which of the following?

• A. Income
• B. Solvency
• C. Capital
• D. Assets minus Liabilities

Answer: (D)

Net worth is the value of what you own after subtracting what you owe. It is calculated by taking all of your assets—cash, investments, real estate, and other valuable items—and subtracting all of your liabilities—loans, mortgages, and other debts. This gives a single number that reflects your financial position at a specific moment. Income is money earned over a period and doesn’t represent current wealth, so it isn’t net worth. Solvency is about the ability to meet long-term obligations and is related, but broader than the exact net worth figure. Capital refers to resources or funds available, but it isn’t the precise calculation of assets minus liabilities. So, the correct description is assets minus liabilities.

Net worth is the value of what you own after subtracting what you owe. It is calculated by taking all of your assets—cash, investments, real estate, and other valuable items—and subtracting all of your liabilities—loans, mortgages, and other debts. This gives a single number that reflects your financial position at a specific moment.

Income is money earned over a period and doesn’t represent current wealth, so it isn’t net worth. Solvency is about the ability to meet long-term obligations and is related, but broader than the exact net worth figure. Capital refers to resources or funds available, but it isn’t the precise calculation of assets minus liabilities.

So, the correct description is assets minus liabilities.