What Would Happen to Your Net Worth If You Sold

question 38

Multiple Choice

What would happen to your net worth if you sold a tangible asset you owned for $1,000 and used the money to pay off your credit card balance for $1,000?

• A)Since your liabilities decreased,your net worth would increase by $1,000.
• B)Since your assets decreased,your net worth would decrease by $1,000.
• C)Your net worth would increase by $500.
• D)Your net worth would remain the same.

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Definitions:

Operating Reserves

Funds set aside by an organization to support operations and ensure financial stability in the event of unexpected circumstances or emergencies.

Short-Term Instruments

Financial tools or securities that have a short maturity period, often less than one year, used for investment purposes.

Bookkeeping

The routine recording and organization of financial transactions in a systematic manner, essential for effective financial management.

Record Keeping

The maintenance of accurate and systematic records, particularly for the purposes of managing information and complying with legal requirements.