Final answer:
A net loss of $22,000 for Chuck Norris MD would decrease the company's net worth. Net worth is the difference between total assets and total liabilities, and losses generally decrease assets or retained earnings, both of which impact net worth negatively. The answer is D.
Step-by-step explanation:
If Chuck Norris MD reports a net loss of $22,000, this would decrease the company's net worth. The net worth of a company is calculated as the company's total assets minus its total liabilities.
Since a net loss reduces the company's retained earnings, which is a component of owner's equity, it consequently reduces the company's net worth. This net loss does not directly affect the company's liabilities unless those losses are covered by taking on more debt. Additionally, if the loss results in using assets to cover expenses, the company's assets would decrease as well.
To understand how a net loss affects a bank's balance sheet, one can consider a simple example: If a bank's total assets are $11 million and its total liabilities are $10 million, the bank's net worth would be $1 million. If the bank then experiences a net loss, reducing its total assets and its retained earnings, its net worth would decrease accordingly.