Answered

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Which is true about net worth?

A. Liabilities can add value to net worth.
B. Retirement accounts can become liabilities.
C. It includes both assets and liabilities.
D. It only includes assets.

Sagot :

GinnyAnswer

Final answer:

Net worth is the total wealth calculated by subtracting liabilities from assets, crucial for financial health monitoring and decision-making.


Explanation:

Net worth in a financial context represents the total measure of wealth by subtracting liabilities from assets. It is crucial for both individuals and businesses to monitor their net worth regularly to track financial health and make strategic decisions.

For instance, a bank's net worth is calculated by deducting total liabilities from total assets, reflecting the institution's financial stability. A positive net worth signifies a healthy financial situation, while a negative net worth may indicate financial distress.

Understanding net worth is fundamental in financial planning and assessing one's financial progress over time by growing assets and reducing liabilities.


Learn more about Net worth calculation here:

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