Asked by Syecia Johnson on May 02, 2024
Verified
A bank's net worth is:
A) equal to assets plus liabilities.
B) sometimes called the owners' equity.
C) equal to assets minus reserves.
D) the same thing as net profits.
E) the amount of interest charged by the bank for short-term loans.
Net Worth
Assets minus liabilities; also called owners’ equity.
Owners' Equity
The residual interest in the assets of a business after deducting its liabilities, representing the ownership interest of shareholders or proprietors.
Assets
Economic resources owned or controlled by an individual, corporation, or country, valued for their potential to provide future benefits.
- Familiarize yourself with the foundational operations within banks, particularly the connections between assets, liabilities, and capital.
Verified Answer
ZK
Zybrea KnightMay 08, 2024
Final Answer :
B
Explanation :
A bank's net worth is sometimes called the owners' equity, as it represents the difference between a bank's assets and liabilities that are owed to its owners. So, option B is the correct choice. The other options are incorrect as net worth is not equal to assets plus liabilities (option A), not equal to assets minus reserves (option C), not the same thing as net profits (option D), and not the amount of interest charged by the bank for short-term loans (option E).
Learning Objectives
- Familiarize yourself with the foundational operations within banks, particularly the connections between assets, liabilities, and capital.