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Complete the sentence defining net worth. Your net worth is the sum of all of your ___ minus all of your ___.

User YunhaoLIU
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Final answer:

Net worth is calculated by subtracting total liabilities from total assets. For banks, assets include reserves and loans, while liabilities consist of customer deposits. A T-account visually represents a firm's assets and liabilities, with net worth ensuring balance.

Step-by-step explanation:

Your net worth is the sum of all of your assets minus all of your liabilities. In the context of a bank, assets might include financial instruments such as reserves, loans made, and U.S. Government Securities. Liabilities refer to what the bank owes to others, like deposits made by customers. If a bank has more assets than liabilities, it has a positive net worth. Conversely, if liabilities exceed assets, the bank has a negative net worth. The concept of net worth is critical in understanding the financial health of an institution. A 'T-account' is a visual representation used to display the assets and liabilities of a firm, with net worth included on the liabilities side to balance the account to zero.

User Asanka
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