Assets and Liabilities

Front

What is an Asset?

Back

An asset is property owned by an individual that has value and can provide future economic benefits.

Front

What is a Liability?

Back

A liability is a financial obligation or debt that an individual or organization owes to another party.

Front

What does Positive Net Worth mean?

Back

Positive net worth means that an individual's assets are greater than their liabilities.

Front

What does Negative Net Worth mean?

Back

Negative net worth means that an individual's liabilities are greater than their assets.

Front

Give examples of Assets.

Back

Examples of assets include cash, real estate, vehicles, jewelry, and bank accounts.

Front

Give examples of Liabilities.

Back

Examples of liabilities include loans, mortgages, credit card debt, and unpaid bills.

Front

What is the relationship between Assets and Liabilities?

Back

The relationship is that assets are what you own, while liabilities are what you owe. Net worth is calculated by subtracting liabilities from assets.

Front

How do you calculate Net Worth?

Back

Net worth is calculated by subtracting total liabilities from total assets.

Front

What is the significance of having a positive net worth?

Back

Having a positive net worth indicates financial stability and the ability to cover debts with assets.

Front

What is the significance of having a negative net worth?

Back

Having a negative net worth indicates financial distress, meaning liabilities exceed assets.