Accounting Week 2

Adam recently purchased a house worth $200,000 in which he took out a $100,000 mortgage. The mortgage is his only debt. If Adam has a net worth of $450,000 what is the total dollar value of his assets?

• $200,000

• $300,000

• $350,000

• $550,000

An expense always decreases net worth, even when it has not yet been paid.

• True

• False

Rachel has $6,000 cash in the bank, owns a car valued at $15,000 and has a net worth of $11,000. What is her total debt?

• $21,000

• $32,000

• $11,000

• $10,000

An increase to net worth caused by providing goods or services in exchange for an asset, usually cash, is called:

• Assets

• Revenue

• Expenses

• Liabilities

Revenue - Expenses = Profit/Loss is the equation for the balance sheet

• True

• False