Question

9. Kenneth won a lottery prize of $2,000. He used

$500 to pay off his final car payment, spent $400
for a pair of tickets to a ball game, gave his
nephew a $50 gift card he bought from Target,
and put the rest in his bank account. After
completing his Income Statement, what is the item
that shows what Kenneth has left?
[A] Net Worth: $2,000
[B] Net Worth: $1,050
[C] Net Cash: $2,000
[D] Net Income: $2,050
[E] Net Income: $1,050

Answer 1

Net worth is the answer

Answer 2

The item that shows what Kenneth has left is [B] Net Worth: $1,050.

Net worth is a person's assets minus their liabilities. In this case, Kenneth's assets include the $2,000 lottery prize and the money he deposited in his bank account. His liabilities include the car payment he paid off and the gift card he bought for his nephew. Subtracting these liabilities from his assets gives us his net worth of $1,050.

Net cash is the amount of cash a person has available, which would not include any assets such as the money in Kenneth's bank account. Net income is the total amount of income a person has earned, which would not include the lottery prize in this case.