Using the net worth method, calculate an individual’s income from unknown sources. the following information is available: increase in net worth $100,000, known income $80,000, salary $60,000
1. $0
2. $10,000
3. $20,000
4. $40,000

3. $20,000

Explanation:

Given,

Net worth increase = $100,000,

Since, Net worth increase + living expenses = income,

If there are no living expenses,

Net worth increase = income

Thus, income = $100,000,

Now, income = income from unknown sources + income from known sources,

We have, income from known sources = $80,000,

By substituting the values,

$100,000 = income from unknown sources + $80,000,

⇒ Income from unknown sources = $100,000 - $80,000 = $20,000

Hence, option 3 is correct.

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