Your financial statements reflect your current financial condition and how much you earn and spend in a given time period. The two most useful statements are the balance sheet and the cash-flow statement. One presents a summary of assets and liabilities at a certain date and the other shows the income and spending of an individual or family for a period of time. Areflects an individual's or family's assets and liabilities on a specified date.
Your net worth is reflected on your balance sheet. Complete the net worth formula by selecting the correct term for each piece of the equation that follows.
Net Worth
(Your true financial wealth)
(What you own)
(What you owe)
Consider the following example:
Henry Sekkide owns a home valued at $200,000. The balance due on his mortgage is $150,000. Henry's vehicle is worth $18,000 and the outstanding balance on his car loan is $4,500. All bills are paid and Henry's only bank balance shows that he has $5,000 in his account. What is Henry's net worth?
a. $68,500
b. $63,500
c. $50,000
d. $223,000