Question

question 16 of 20
which is true about net worth?

a. it includes both assets and liabilities.

b. liabilities can add value to net worth.

c. retirement accounts can become liabilities.

d. it only includes assets.

Explanation:

To determine the correct answer, we analyze each option:

• Option A: Net worth is calculated as Assets - Liabilities, so it inherently involves both assets and liabilities (since liabilities are subtracted from assets). This is correct.
• Option B: Liabilities are amounts owed and reduce net worth (as Net Worth = Assets - Liabilities), so they do not add value. Eliminate B.
• Option C: Retirement accounts are assets (savings for the future), not liabilities. Eliminate C.
• Option D: Net worth requires considering liabilities (Net Worth = Assets - Liabilities), so it is not just assets. Eliminate D.

Answer:

A. It includes both assets and liabilities.