Question

Mr. X wants to purchase a piece of land costing Rs 10, 00,000. To do so, he has to borrow. S.B.I agree to finance if he can invest Rs 2, 00,000. For measuring the capacity of Mr. X the banker asks two specific questions :

(i) What the things of value are you owned?

(ii) How much do you owe, and to whom?

Mr. X replies

Things I owned: Term deposit Rs 1, 00,000, Demand Deposit Rs 3, 00,000, Other Personal Possessions Rs 1, 00,000.

Things I owed: Loan from Friend: 1, 00,000.

Now as a banker you have to:

(iii) Calculate the Net worth of Mr. X

(iv) Prepare a Financial Statement.​

Answer 1

Answer:

1) Net Worth of Mr. X = Total Assets - Total Liabilities = 5,00,000 - 1,00,000

= Rs. 4,00,000

Total Assets = 1,00,000 + 3,00,000 + 1,00,000 = Rs. 5,00,000

Total Liabilities = Rs.1,00,000

 

Assets

Cash Mr. X owns = 1,00,000

Other Personal Possession = 1,00,000

Demand Deposit = 3,00,000

= 5,00,000

Liabilities

Loan from friend = 1,00,000

Explanation: