Question

Using the data below, calculate living expenses.Assets$100,000Liabilities37,500Prior years's net worth32,500Income55,000A. $57,500B. $17,500C. $20,000D.$25,000

Answer 1

Answer:$ 25,000

Explanation:

The net worth of the business is $ 62,500, (Assets $ 100,000 - Liabilities $ 37,500). The increase in net worth compared to last year is $ 30,000.

Since the income was $ 55,000 and increase in net worth is $ 30,000, the remaining balance was used for expenses i.e. $ 25,000