Which of the Following Actions Will Decrease Your Net Worth

question 4

Multiple Choice

Which of the following actions will decrease your net worth?

• A)Fitness club dues paid monthly
• B)Contributions to a mutual fund paid monthly
• C)Student loan payments paid monthly
• D)Home mortgage payments paid monthly

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Definitions:

Ordinary Income

Income earned from providing services or the sale of goods, as opposed to capital gains or investment income, taxed at standard rates.

Section 179 Expense

A tax deduction that allows businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, decay, or decline in value.

Distribution

The payment of assets from a fund or account to its beneficiaries or shareholders, such as dividends or withdrawals.