Certified Financial Planner (CFP) Practice Exam · Question
In 2022, John's Net Worth was $500,000. In 2023, his assets increased by $75,000, and his liabilities increased by $20,000. What is his Net Worth at the end of 2023, and what does the trend indicate?
Net Worth = Assets - Liabilities. In 2023, the change in Net Worth is $75,000 (increase in assets) - $20,000 (increase in liabilities) = $55,000 (increase). So,
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Question: In 2022, John's Net Worth was $500,000. In 2023, his assets increased by $75,000, and his liabilities increased by $20,000. What is his Net Worth at the end of 2023, and what does the trend indicate?
Answer options: ✅ Net Worth: $555,000; Trend: Positive (Net Worth increased)
- Net Worth: $555,000; Trend: Negative (Net Worth decreased)
- Net Worth: $445,000; Trend: Positive (Net Worth increased)
- Net Worth: $445,000; Trend: Negative (Net Worth decreased)
Correct answer: Net Worth: $555,000; Trend: Positive (Net Worth increased)
Explanation: Net Worth = Assets - Liabilities. In 2023, the change in Net Worth is $75,000 (increase in assets) - $20,000 (increase in liabilities) = $55,000 (increase). So, John's Net Worth at the end of 2023 is $500,000 + $55,000 = $555,000. An increase in Net Worth indicates a positive financial trend.
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