7.13 C Net Worth Assets and Liabilities

Front

What is net worth?

Back

Net worth is the difference between total assets and total liabilities. It represents the value of an individual's or entity's financial position.

Front

How do you calculate liabilities?

Back

Liabilities can be calculated by subtracting net worth from total assets. Formula: Liabilities = Assets - Net Worth.

Front

What are assets?

Back

Assets are resources owned by an individual or entity that have economic value, such as cash, property, and investments.

Front

What are liabilities?

Back

Liabilities are financial obligations or debts that an individual or entity owes to others, such as loans, mortgages, and credit card balances.

Front

If Maxine has assets worth $77,000 and a net worth of $35,000, what are her liabilities?

Back

$42,000

Front

Monica owns a home worth $175,000 and has various debts. How do you find her total liabilities?

Back

Add all her debts together, including the mortgage, car loan, credit card balances, and any other obligations.

Front

What is the formula for calculating net worth?

Back

Net Worth = Total Assets - Total Liabilities.

Front

If Arlie has a home worth $135,000 and owes $88,000 on her mortgage, what is her equity in the home?

Back

Equity = Home Value - Mortgage Owed = $135,000 - $88,000 = $47,000.

Front

What is the significance of knowing your net worth?

Back

Knowing your net worth helps you understand your financial health and make informed decisions about spending, saving, and investing.

Front

If a person has $10,000 in assets and $4,000 in liabilities, what is their net worth?

Back

Net Worth = $10,000 - $4,000 = $6,000.