jarriouswesley7
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Roberto listed his assets and liabilities on a personal balance sheet.

\begin{tabular}{|c|c|c|c|}
\hline \multicolumn{3}{|c|}{Roberto's Balance Sheet (September 2013)} \\
\hline Assets & \multicolumn{2}{c|}{Liabilities} \\
\hline cash & [tex]$\$[/tex] 1,800[tex]$ & credit card & $[/tex]\[tex]$ 4,000$[/tex] \\
\hline investments & [tex]$\$[/tex] 6,200[tex]$ & personal loan & $[/tex]\[tex]$ 1,000$[/tex] \\
\hline house & [tex]$\$[/tex] 150,000[tex]$ & mortgage & $[/tex]\[tex]$ 100,000$[/tex] \\
\hline car & [tex]$\$[/tex] 8,000[tex]$ & car loan & $[/tex]\[tex]$ 5,000$[/tex] \\
\hline Total & & Total & \\
\hline \hline \multicolumn{2}{|c|}{} & \\
\hline
\end{tabular}

After creating the balance sheet, Roberto decided to use his investments to pay off his car loan. How will that decision affect the difference between his assets and liabilities?

A. It will make the assets [tex]$\$[/tex] 5,000[tex]$ less than the liabilities.
B. It will make the assets $[/tex]\[tex]$ 5,000$[/tex] more than the liabilities.
C. The difference between the assets and the liabilities will remain the same.
D. The difference between the assets and the liabilities cannot be compared.



Answer :

GinnyAnswer
To determine the effect of Roberto using his investments to pay off his car loan on the difference between his assets and liabilities, let's break down the solution step-by-step.

### Step 1: List and sum Roberto's initial assets and liabilities

Assets:
- Cash: \[tex]$1,800 - Investments: \$[/tex]6,200
- House: \[tex]$150,000 - Car: \$[/tex]8,000

Total assets = \[tex]$1,800 + \$[/tex]6,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$166,000 Liabilities: - Credit card: \$[/tex]4,000
- Personal loan: \[tex]$1,000 - Mortgage: \$[/tex]100,000
- Car loan: \[tex]$5,000 Total liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$5,000 = \$[/tex]110,000

### Step 2: Calculate the initial difference between assets and liabilities
Initial difference = Total Assets - Total Liabilities
Initial difference = \[tex]$166,000 - \$[/tex]110,000 = \[tex]$56,000 ### Step 3: Roberto decides to use his investments to pay off his car loan - Investments will decrease by the amount of the car loan: \$[/tex]6,200 - \[tex]$5,000 = \$[/tex]1,200 (Remaining investments)
- Car loan will become \[tex]$0: \$[/tex]5,000 - \[tex]$5,000 = \$[/tex]0

### Step 4: Calculate the new totals of assets and liabilities after paying off the car loan
New Assets:
- Cash: \[tex]$1,800 - Investments: \$[/tex]1,200 (after paying off the car loan)
- House: \[tex]$150,000 - Car: \$[/tex]8,000

New total assets = \[tex]$1,800 + \$[/tex]1,200 + \[tex]$150,000 + \$[/tex]8,000 = \[tex]$161,000 New Liabilities: - Credit card: \$[/tex]4,000
- Personal loan: \[tex]$1,000 - Mortgage: \$[/tex]100,000
- Car loan: \[tex]$0 (after paying off the car loan) New total liabilities = \$[/tex]4,000 + \[tex]$1,000 + \$[/tex]100,000 + \[tex]$0 = \$[/tex]105,000

### Step 5: Calculate the new difference between assets and liabilities
New difference = New Total Assets - New Total Liabilities
New difference = \[tex]$161,000 - \$[/tex]105,000 = \[tex]$56,000 ### Step 6: Determine the effect on the difference Compare the initial difference and the new difference: - Initial difference: \$[/tex]56,000
- New difference: \$56,000

Both differences are the same.

Therefore, the difference between the assets and the liabilities will remain the same. So, the correct answer is:

The difference between the assets and the liabilities will remain the same.

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