Question

The following table shows the assets and liabilities of the Smith family in 2005 and 2009.

2005
-home valued at $200,000
-mortgage of 30,000
-car valued at 25,000
-car loan of 8,000

2009
-home valued at 180,000
-home equity loan of 18,000
-car valued at 18,000
-boat valued at 20,000
-personal loan of 5,000

Based on the table, which of the following is true?

a. From 2005 to 2009, both assets and liabilities decreased.

b. From 2005 to 2009, both assets and liabilities increased.

c. From 2005 to 2009, assets decreased and liabilities increased.

d. From 2005 to 2009, assets increased and liabilities decreased

Answer 1

Based on the table, which of the following is true?

a.

From 2005 to 2009, both assets and liabilities decreased.

b.

From 2005 to 2009, both assets and liabilities increased.

c.

From 2005 to 2009, assets decreased and liabilities increased.

d.

From 2005 to 2009, assets increased and liabilities decreased.

The answer is A

Answer 2

2005:
Asset = 200,000 + 25,000 = 225,000
Liability = 30,000 + 8,000 = 38,000

2009
Asset = 180,000 + 18,000 + 20,000 = 218,000
Liability = 18,000 + 5,000 = 23,000

Assets decreased by 7,000. From 225,000 to 218,000
Liabilities decreased by 13,000. From 38,000 to 23,000

a. From 2005 to 2009, both assets and liabilities decreased.