Which of the following mathematical expressions computes the net worth of a firm?
A)Net worth = Current assets minus current liabilities
B)Net worth = Total assets minus current liabilities
C)Net worth = Total liabilities minus current assets
D)Net worth = Total assets minus total liabilities
E)Net worth = Total liabilities minus current liabilities

Question

Quizplus · Accepted Answer

Net worth is calculated by subtracting total liabilities from total assets. This gives an accurate representation of the value of the firm, as it takes into account both assets and liabilities. Option A only considers current assets and liabilities, while option B subtracts only current liabilities. Option C has the incorrect order of terms, subtracting assets from liabilities. Option E subtracts only current liabilities from total liabilities, excluding other long-term liabilities.

Which of the Following Mathematical Expressions Computes the Net Worth