Understanding 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 what you own minus what you owe.

Front

How do you calculate total assets?

Back

Total assets can be calculated using the formula: Total Assets = Net Worth + Liabilities.

Front

If your net worth is $15,000 and your liabilities are $5,000, what are your total assets?

Back

$20,000

Front

What is a liability?

Back

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

Front

Give an example of a liability.

Back

A personal loan is an example of a liability.

Front

What is an asset?

Back

An asset is anything of value or a resource owned by an individual or entity that can provide future economic benefits.

Front

Give an example of an asset.

Back

A checking account is an example of an asset.

Front

If you have assets of $8,000 and liabilities of $3,000, what is your net worth?

Back

$5,000

Front

If your net worth is $10,000 and your liabilities are $2,000, what are your total assets?

Back

$12,000

Front

What is the formula for calculating net worth?

Back

Net Worth = Total Assets - Total Liabilities.