Question

25 when calculating net worth, which of the following must be subtracted from assets?

dividends and taxes
loans and debts
worth of jewelry and art work
cost of houses and cars

Explanation:

Define net worth calculation

Using the Net Worth Calculation knowledge point

$$ \text{Net Worth} = \text{Total Assets} - \text{Total Liabilities} $$

Identify liabilities from the options

Using the Net Worth Calculation knowledge point

• Dividends and taxes are income and periodic expenses, not direct balance sheet liabilities.
• Loans and debts represent money owed to others, which are liabilities.
• Jewelry, art work, houses, and cars are physical items of value, which are assets.
• Therefore, loans and debts must be subtracted from assets.

Answer:

• Dividends and taxes
• Loans and debts (Correct answer)
• Worth of jewelry and art work
• Cost of houses and cars