ScienceEconomicsNet worth example #45504
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Net worth example #45504

Daphne Smith avatar Daphne Smith
19 April 2023
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question
What is the difference between assets and liquid assets?
answer
NOT Assets are money gained from your job, while liquid assets are money gained from sources such as investments or inheritances.
question
Which of the following is an example of increasing both current liability and use assets?
answer
NOT selling a motorcycle to pay off a debt
question
Which of the following modifications to the list of assets and liabilities below would result in a net worth of $100,000? Recreational Vehicle valued at $110,000. Car valued at $27,000. Medical bills totaling $8,700. Loan balance of $80,000. Savings of $5,000. Retirement fund of $50,000. Credit card balance of $2,300.
answer
NOT recreational vehicle value decreasing to $100,000
question
Which of the following is a liability?
answer
Credit card balance
question
Over the period of a year, Julie's net worth decreased. Which of the following could be true?
answer
Julie's assets decreased by more than her liabilities.
question
The amount of money in a savings account is an example of which of the following?
answer
NOT long term asset
question
Which of the following could be true if one decreases their long term liability and increases their liquid assets?
answer
Paid down mortgage and received a cash prize.
question
The car owned by a person is part of his or her ____.
answer
Use assets
question
Mr. Chavez has assets of $250,000 and liabilities of $18,000. He decides to finance the entire amount of the purchase of a car valued at $26,000. Which of the following is true?
answer
NOT Mr. Chavez increased both his assets and net worth.
question
Which of the following modifications to the list of assets and liabilities below would result in a positive net worth? Home owned $105,000. Mortgage owed $100,000. Car valued at $26,000. Car loan of $22,000. Investment fund of $4,500. Savings of $1,500. Credit card balance of $15,000.
answer
NOT Lowering mortgage by $1,000.
question
Asset
answer
An asset is an item that is owned and has value.
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Liability
answer
Liability is a responsibility, an obligation, or a debt
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Net worth
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Net worth is the difference between assets and liabilities. Assets - liabilities = net worth
question
Determine your current financial situation
answer
Do you have a job? What are your expenses? Do you owe people money? Do you have money saved in the bank?
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Liquid assets
answer
Cash and savings
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Investment assets
answer
Securities and invested funds
question
Use assets
answer
Home, auto, personal possessions, durable goods
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Current liabilities
answer
Medical bills, taxes, credit card and charge accounts
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Long-term liabilities
answer
Home mortgage, auto loan
question
Over the period of a year, Sam's net worth increased. Which of the following could be true?
answer
Sam's assets increased by more than his liabilities.
question
Mary took out a loan to buy a $30,000 boat but had $2,000 cash to put down.Which of the following is true?
answer
Mary increased both assets and liabilities.
question
Which of the following modifications to the list of assets and liabilities below would result in a negative net worth? House valued at $90,000. Mortgage owed $78,000. Car valued at $11,000. Car loan of $5,000. Student loan of $13,700. Stocks valued at $2,500. Savings of $3,000.
answer
Borrowing $10,000 more in student loans.
question
The following table shows the assets and liabilities of the Smith family in 2005 and 2009. Based on the table, which of the following is true?
answer
From 2005 to 2009, both assets and liabilities decreased.
question
Which of the following modifications to the list of assets and liabilities below would result in an increase in net worth? Cash of $300. Car valued at $28,000. Car loan of $22,000. Motorcycle valued at $6,000. Savings of $2,000. Credit card balances of $4,000. Student loan of $10,000.
answer
All of the above (Putting $100 in savings Paying $100 on credit cards and Getting paid $100)
question
The amount of money invested in a retirement fund is an example of which of the following?
answer
Investment asset
question
Ben owns a townhome valued at $195,000, but still owes $120,000 on the loan. Ben has $5,000 in savings and a balance of $1,400 on his credit cards. There is a balance of $20,000 owed on Ben's car which is valued at $38,000. What is Ben's net worth?
answer
96,600
question
When it goes on sale for $1,600, Mikah buys a new plasma television that is valued at $1,800. He takes $300 from his savings account to use as a down payment and finances the rest. Choose the true statement.
answer
Mikah's assets increased by $1,500.
question
The rare coin collection your grandmother gave you is part of your liabilities.
answer
F
question
You have a car that is valued at $12,000. The balance that you owe on the car loan is $7,000. You lose your job and can not afford to make payments on your loan so you sell the car for $9,000 and pay off the loan. Explain how your net worth is affected by your actions.
answer
You have reduced your net worth. Before selling the car, your net worth is $12,000 - $7,000 = $5,000. After selling the car and paying off the loan, it is $2,000.