Net worth is defined as the market value of assets minus liabilities. Which option best describes this?

Net worth is defined as the market value of assets minus liabilities. Which option best describes this?

• A. Total Cash in the Bank
• B. Market Value of Assets Minus Liabilities
• C. Revenue Minus Expenses
• D. Cash Inflow from Financing Activities

Answer: (B)

Net worth is what remains after you subtract what you owe from what you own, representing the owner's or business's claim on assets after liabilities are settled. In accounting terms, that residual is equity, and it’s described as the market value of assets minus liabilities. The other statements describe different concepts: cash in the bank is just one asset, revenue minus expenses is net income, and cash inflow from financing activities is a cash-flow item, not net worth. For example, if assets are worth 600,000 and liabilities are 250,000, net worth is 350,000.

Net worth is what remains after you subtract what you owe from what you own, representing the owner's or business's claim on assets after liabilities are settled. In accounting terms, that residual is equity, and it’s described as the market value of assets minus liabilities. The other statements describe different concepts: cash in the bank is just one asset, revenue minus expenses is net income, and cash inflow from financing activities is a cash-flow item, not net worth. For example, if assets are worth 600,000 and liabilities are 250,000, net worth is 350,000.