over the period of a year, julies net worth decreased. which of the following could be true? a. julies…
over the period of a year, julies net worth decreased. which of the following could be true? a. julies assets and liabilities decreased by the same amount. b. julies assets and liabilities increased by the same amount. c. julies assets increased by more than her liabilities. d. julies assets decreased by more than her liabilities. please select the best answer from the choices provided
Answer
Explanation:
Step1: Recall net - worth formula
Net worth = Assets - Liabilities
Step2: Analyze option a
If Assets and Liabilities decrease by the same amount, say $x$. New net worth=(Assets - $x$)-(Liabilities - $x$)=Assets - Liabilities. Net worth remains the same.
Step3: Analyze option b
If Assets and Liabilities increase by the same amount, say $y$. New net worth=(Assets + $y$)-(Liabilities + $y$)=Assets - Liabilities. Net worth remains the same.
Step4: Analyze option c
If Assets increase by more than Liabilities, say Assets increase by $m$ and Liabilities increase by $n$ where $m>n$. New net worth=(Assets + $m$)-(Liabilities + $n$)=(Assets - Liabilities)+($m - n$). Net worth increases.
Step5: Analyze option d
If Assets decrease by more than Liabilities, say Assets decrease by $p$ and Liabilities decrease by $q$ where $p>q$. New net worth=(Assets - $p$)-(Liabilities - $q$)=(Assets - Liabilities)-( $p - q$). Since $p>q$, net worth decreases.
Answer:
D. Julie's assets decreased by more than her liabilities.