This chapter described the concept of a firm’s balance sheet. Individuals and households have balance sheets as well, and the broad categories in them are the same as those on a firm’s balance sheet. That is, an asset is something that an individual owns, a liability is something that an individual owes, and net worth is the difference between the value of assets and the value of liabilities. Construct a balance sheet for yourself. You can make estimates about the type and value of assets, liabilities, and net worth. The focus of this exercise is on what counts as assets and liabilities for an individual.