Which of the following statements is true about net worth?
A) A firm's net worth should be higher than the stockholders' equity.
B) A firm's net worth should be equal to 50 percent of the value of the total assets of the firm.
C) A firm's net worth is equal to total assets minus total liabilities.
D) On liquidation of a firm, the common stockholders' will receive the exact amount shown in the equity section of the balance sheet.
E) The net worth of a firm is the amount to be paid by the shareholders to the firm on liquidation of the firm.

Question

Quizplus · Accepted Answer

Net worth is calculated by subtracting total liabilities from total assets. It represents the amount of assets that will remain in the business after all liabilities are paid off. Options A, B, D, and E are incorrect because they do not accurately define net worth.

Which of the Following Statements Is True About Net Worth