Why is it a good idea to know your net worth? Explain how you can use an income statement, personal balance sheet, and net worth statement with regard to your personal finances.

Answer:

It’s a good idea to know your net worth so you can track your financial progress. You can use your income statement to organize monthly income and expenses. Then use a personal balance sheet to organize assets and liabilities on a monthly basis. Use an annual net worth statement to organize your personal finances each year.