Brady totaled all of his personal assets and subtracted his liabilities. What is the name for what he has left?
A. net worth
B. wealth
C. equity
D. net income
Answer (2)
Brady calculates his total assets and subtracts his liabilities.
Net worth is defined as assets minus liabilities.
Brady's calculation matches the definition of net worth.
The correct answer is A .
Explanation
Understanding the Calculation Let's analyze what Brady did. He added up everything he owns (his assets) and then subtracted everything he owes (his liabilities). We need to figure out what that final number is called.
Defining the Terms Let's look at the definitions of the answer choices:
Net worth: The value of assets minus liabilities.
Wealth: The total value of possessions.
Equity: The value of ownership in an asset after subtracting any debts against it.
Net income: A company's total earnings (or profit).
Matching the Definition Brady's calculation (assets minus liabilities) perfectly matches the definition of net worth .
The Answer Therefore, the correct answer is A net worth .
Examples
Imagine you're saving up to buy a car. Your assets might include your savings account balance and the value of your current bicycle. Your liabilities could be any outstanding loans you have. Calculating your net worth helps you understand your overall financial position and how close you are to reaching your goal of buying the car. Knowing your net worth is a great way to keep track of your financial health! It's like a financial report card that shows whether you're making progress or need to adjust your financial habits.
Brady's calculation of his assets minus his liabilities is known as net worth. Thus, the correct answer is A. net worth. This calculation helps individuals understand their overall financial position.
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