ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A personal balance sheet calculates your net worth by comparing your financial assets (what you own) with your financial liabilities (what you owe). The difference between the two is your personal net worth.

Detailed explanation-2: -Liabilities are merely what you owe. Liabilities include current bills, payments still owed on some assets like cars and houses, credit card balances, and other loans.

Detailed explanation-3: -An asset is anything you own that adds financial value, as opposed to a liability, which is money you owe. Examples of personal assets include: Your home. Other property, such as a rental house or commercial property. Checking/savings account.

Detailed explanation-4: -To calculate your net worth, you subtract your total liabilities from your total assets. Total assets will include your investments, savings, cash deposits, and any equity that you have in a home, car, or other similar assets. Total liabilities would include any debt, such as student loans and credit card debt.

Detailed explanation-5: -Net worth is the value of all assets, minus the total of all liabilities. Put another way, net worth is what is owned minus what is owed.