If you have assets of $1,000 and liabilities of $300, what's your net worth?
A. $700
B. $1,000
C. $1,300
D. $300
Answer (2)
Your net worth is calculated by subtracting your liabilities from your assets. In this case, with assets of $1,000 and liabilities of $300, your net worth is $700. The chosen answer option is A. $700.
;
Net worth equals assets minus liabilities.
Assets are $1,000 and liabilities are $300.
Subtract liabilities from assets: $1,000 - $300 = $700.
Your net worth is $700 .
Explanation
Understanding Net Worth Let's break down how to calculate your net worth!
Identifying Assets and Liabilities Net worth is simply what you own (your assets) minus what you owe (your liabilities). In this case:
Assets: $1,000
Liabilities: $300
Calculating Net Worth To find the net worth, we subtract the liabilities from the assets: N e t W or t h = A sse t s − L iabi l i t i es N e t W or t h = $1 , 000 − $300 N e t W or t h = $700
Final Answer Therefore, your net worth is $700.
Examples
Understanding net worth is crucial in personal finance. For example, if you're applying for a loan, lenders often look at your net worth to assess your financial health. A higher net worth indicates a stronger financial position, making you a more attractive borrower. Similarly, tracking your net worth over time helps you monitor your financial progress and make informed decisions about saving, investing, and managing debt. Knowing your net worth is like having a financial snapshot, providing valuable insights into your overall financial well-being.
