Net Worth

Asset

An asset is an item that is owned and has value.

The car owned by a person is part of his or her ____.

d) use assets

The rare coin collection your grandmother gave you is part of your liabilities.

False

Net worth

Net worth is the difference between assets and liabilities.

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.

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.

Liability

a responsibility, an obligation, or a debt

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?

a) From 2005 to 2009, both assets and liabilities decreased.

The amount of money invested in a retirement fund is an example of which of the following?

a) investment asset

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?

a)$96,600

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?

b) Mary increased both assets and liabilities.

The Svensons find a refrigerator valued at $2,300 on sale for $1,900. They decided to withdraw $500 from savings to use as a down payment on the purchase of the refrigerator and took out a loan to pay the balance. Choose the true statement.

b) The Svensons' assets increased by $1,800.

Which of the following is a liability?

b) credit card balance

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.

b)Mikah's assets increased by $1,500.

In order to reduce their debt, the Johnsons sold some real estate property valued at $165,000 for $143,000. They paid off a loan balance of $100,000 and put the rest in savings. Which of the following is a true statement?

b)The Johnsons increased their liquid assets

The Worthingtons love to travel, so when they retired they sold their house and purchased a motor home valued at $165,000. They tow their car, valued at $32,000 behind their motor home when they travel. The Worthingtons have medical bills totaling $1,300 and a balance of $3,000 on credit cards. Since they invested for retirement, the Worthingtons have $200,000 in investments and an additional $20,000 in their savings account. What is the Worthingtons' net worth? a. $411,700 b. $412,700 c. $413,700 d. $414,700

b.

The amount of money in a savings account is an example of which of the following? a. investment asset b. liquid asset c. long term asset d. use asset

b.

Which of the following increases liabilities but not assets?

b. Taking out a loan to go on vacation

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?

c) Mr. Chavez increased both his assets and net worth.

Which of the following could be true if one decreases their long term liability and increases their liquid assets?

c) Paid down mortgage and received a cash prize.

Over the period of a year, Sam's net worth increased. Which of the following could be true?

c) Sam's assets increased by more than his liabilities.

What does a negative net worth indicate?

c) Your liabilities exceed your assets.

The Roth family has liquid assets of $10,000, use assets of $150,000 and investment assets of $34,000. They also have liabilities totaling $108,000. If their total liabilities increase by $7,000 over the next year, by how much would the Roth family need to increase their assets in order to have a net worth of $100,000?

c)$21,000

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.

c)Borrowing $10,000 more in student loans.

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.

d) All of the above

The following table shows the assets and liabilities of the Chang family in 2007 and 2008. Based on the table, which of the following is true?

d) From 2007 to 2008, assets increased and liabilities decreased.

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.

d) adding $1,000 in credit card debt

Over the period of a year, Julie's net worth decreased. Which of the following could be true? a.Julie's assets and liabilities decreased by the same amount. b.Julie's assets and liabilities increased by the same amount. c.Julie's assets increased by more than her liabilities. d.Julie's assets decreased by more than her liabilities.

d) decreased by more than her liabilities

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.

d)all of the above

Which of the following is an example of increasing both current liability and use assets? a. paying off car loan and investing money in retirement fund b. paying down mortgage and putting money in savings c. selling a motorcycle to pay off a debt d. trading in an old car for a newer car and financing the balance

d.