Question

Use the following items to determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows.
Rent for the month $ 1,390 Monthly take-home salary $ 3,920
Cash in checking account $ 1,340 Savings account balance $ 2,770
Spending for food $ 1,110 Balance of educational loan $ 3,050
Current value of automobile $ 8,020 Telephone bill paid for month $ 85
Credit card balance $ 334 Loan payment $ 143
Auto insurance $ 321 Household possessions $ 3,510
Stereo equipment $ 3,320 Payment for electricity $ 189
Lunches/parking at work $ 204 Donations $ 116
Home computer $ 2,490 Value of stock investment $ 1,160
Clothing purchase $ 139 Restaurant spending $ 223

Answer 1

Total assets is $20,120; total liabilities is $3,384; net worth is $16,7366; total cash inflows is $3,804; and total cash outflows is $3,920.

How do we calculate the net worth?

Total assets = Cash in checking account + Savings account balance + Current value of automobile + Household possessions + Stereo equipment + Home computer + Value of stock investment = $1,340 + $2,770 + $8,020 + $3,510 + $3,320 + $1,160 = $20,120

Total liabilities = Balance of educational loan + Credit card balance = $3,050 + $334 = $3,384

Net worth = Total assets - Total liabilities = $20,120 - $3,384 = $16,736

Cash outflows = Rent for the month + Spending for food + Telephone bill paid for month + Loan pyment + Auto insurance + Payment for electricity  + Lunches/parking at work + Donations + Clothing purchase + Restaurant spending = $1,390 + $1,110 + $85 + $143 + $321 + $189 + $204 + $139 + $223 = $3,804

Cash inflows = Monthly take-home salary = $3,920

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