In reviewing a client's prior-year financial statements, you observe that their total assets grew from $750,000 to $800,000, while their total liabilities increased from $200,000 to $275,000 in the same period. What is the trend in their Net Worth, and what is their current Net Worth?

Question: In reviewing a client's prior-year financial statements, you observe that their total assets grew from $750,000 to $800,000, while their total liabilities increased from $200,000 to $275,000 in the same period. What is the trend in their Net Worth, and what is their current Net Worth?

Answer options: ✅ Net Worth decreased by $25,000; Current Net Worth: $525,000

• Net Worth increased by $50,000; Current Net Worth: $525,000
• Net Worth decreased by $25,000; Current Net Worth: $575,000
• Net Worth increased by $50,000; Current Net Worth: $575,000

Correct answer: Net Worth decreased by $25,000; Current Net Worth: $525,000

Explanation: Previous Net Worth = $750,000 (Assets) - $200,000 (Liabilities) = $550,000. Current Net Worth = $800,000 (Assets) - $275,000 (Liabilities) = $525,000. The Net Worth decreased by $550,000 - $525,000 = $25,000.