Definitions
Use of a good that reduces its value.
Consumption
property that stores value or reduces expenses
Assets
A coin from the year 1600s
appreciate
You are paid $5/hr. for 3 hours of baby-sitting.
Earning income
Jake has $500 in assets and $700 in liabilities. Calculate his net worth using the appropriate equations.
$-200
Measures your ability for consumption; the greater your wealth, the greater your ability to consume goods.
Wealth
Are obligations to make future payments
A smartphone from last year
depreciates
You buy two slices of pizza for $2 each.
Inquiring Expense
Maya is organizing her personal finances:
Savings account = $3,2000
Car Value = $8,500
Student Loans = $4,100
What is Maya's Net worth?
$-9,400
Defined as an increase in wealth
Income
Is when an asset increases in value
Appreciation
A $20 bill from 2014
maintain value: or due to inflation, it was depreciate
You buy a one-month subway pass for $100 that you use to get to school every day.
Acquiring Asset
Jordan calculated his liabilities = $14,200. If his net worth is $18,500, what is the total value of his assets?
$32,700
a decrease in wealth
Expense
Is when an asset decreases in value.
Depreciates
A Picasso painting
Appreciate
Your friend lends you $10
Increasing liabilities
Elena's total assets are valued at $45,000. Her net worth is $28,400. What is the total dollar value of Elena's liabilities?
$16,600
Net worth
In exchange for your labor, you receive cash.
A Jaws DVD
Depreciate
You earn $5 of interest on your savings.
Sam currently has a new worth of -$1,500. Sam's assets total $3,500. Sam has two liabilities: A personal loan for $2,000 and a credit card balance. What is the balance on Sam's credit card?
$3,000