Understanding Assets and Liabilities

Why is it important to understand the concepts of assets and liabilities?

• To become a better athlete

• To enhance your financial management

• To learn a new language

• To improve your cooking skills

Which of the following is considered an asset?

• Credit card debt

• Paid-off car

• Student loan

• Mortgage

What is the primary characteristic of a liability?

• It increases your wealth

• It generates income

• It is always tax-free

• It takes money out of your pocket

How can you determine your net worth?

• By dividing your assets by your liabilities

• By multiplying your income by your expenses

• By subtracting your liabilities from your assets

• By adding up all your expenses

What is a key strategy for managing liabilities effectively?

• Taking on as many liabilities as possible

• Investing in low-interest liabilities

• Paying down high-interest debts quickly

• Ignoring high-interest debts