Net worth of a farm or agricultural business is equal to

Net worth of a farm or agricultural business is equal to

• A. Equity
• B. Assets
• C. Liabilities
• D. Revenue

Answer: (A)

Net worth represents the owners’ stake in the business after all debts are settled. In farming, that stake is called equity. It’s calculated as total assets minus total liabilities. For example, if a farm has assets of $2,000,000 and liabilities of $1,200,000, the net worth is $800,000, which is the owners’ equity in the business. Revenue is the income from selling products and affects profit over time, not the immediate net worth. Liabilities are what the farm owes, and assets are what it owns. So net worth aligns with equity.

Net worth represents the owners’ stake in the business after all debts are settled. In farming, that stake is called equity. It’s calculated as total assets minus total liabilities. For example, if a farm has assets of $2,000,000 and liabilities of $1,200,000, the net worth is $800,000, which is the owners’ equity in the business. Revenue is the income from selling products and affects profit over time, not the immediate net worth. Liabilities are what the farm owes, and assets are what it owns. So net worth aligns with equity.