Question

Megan’s balance sheet shows that on February 7, 2010 she had assets totaling $27,600 and debts totaling $32,500. Which of the following statements best describes her situation?Select one:
a. She had equity.b. She had positive cash flow.c. She had negative net worth.d. She had liabilities.e. She had liquidity.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Given that,

Megan’s balance sheet shows:

Total assets = $27,600

Total debts = $32,500

Net worth is the difference between total assets and total liability.

Net worth = Total assets - Total debts

                 = $27,600 - $32,500

                 = -$4,900

Therefore,

Megan’s balance sheet shows the negative worth of $4,900.