Answered

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

\begin{tabular}{|l|l|}
\hline
2005 & 2009 \\
\hline
home valued at [tex]$\$[/tex] 200,000[tex]$ & home valued at $[/tex]\[tex]$ 180,000$[/tex] \\
\hline
mortgage of [tex]$\$[/tex] 30,000[tex]$ & home equity loan of $[/tex]\[tex]$ 18,000$[/tex] \\
\hline
car valued at [tex]$\$[/tex] 25,000[tex]$ & car valued at $[/tex]\[tex]$ 18,000$[/tex] \\
\hline
car loan of [tex]$\$[/tex] 8,000[tex]$ & boat valued at $[/tex]\[tex]$ 20,000$[/tex] \\
\hline
& personal loan of [tex]$\$[/tex] 5,000$ \\
\hline
\end{tabular}

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.

Please select the best answer from the choices provided.



Answer :

To determine which statement is true based on the given asset and liability values for the Smith family in 2005 and 2009, we need to calculate the total assets and total liabilities for both years and then compare them.

### Assets in 2005:
- Home: \[tex]$200,000 - Car: \$[/tex]25,000

Total assets in 2005:
[tex]\[ 200,000 + 25,000 = 225,000 \][/tex]

### Liabilities in 2005:
- Mortgage: \[tex]$30,000 - Car loan: \$[/tex]8,000

Total liabilities in 2005:
[tex]\[ 30,000 + 8,000 = 38,000 \][/tex]

### Assets in 2009:
- Home: \[tex]$180,000 - Car: \$[/tex]18,000
- Boat: \[tex]$20,000 Total assets in 2009: \[ 180,000 + 18,000 + 20,000 = 218,000 \] ### Liabilities in 2009: - Home equity loan: \$[/tex]18,000
- Personal loan: \[tex]$5,000 Total liabilities in 2009: \[ 18,000 + 5,000 = 23,000 \] Next, we compare the total assets and total liabilities between 2005 and 2009: ### Comparing Assets: - 2005 total assets: \$[/tex]225,000
- 2009 total assets: \[tex]$218,000 - Change: \$[/tex]225,000 (2005) - \[tex]$218,000 (2009) = \$[/tex]7,000 (decrease)

### Comparing Liabilities:
- 2005 total liabilities: \[tex]$38,000 - 2009 total liabilities: \$[/tex]23,000
- Change: \[tex]$38,000 (2005) - \$[/tex]23,000 (2009) = \[tex]$15,000 (decrease) From the comparisons, we see that: - Assets have decreased from \$[/tex]225,000 in 2005 to \[tex]$218,000 in 2009. - Liabilities have also decreased from \$[/tex]38,000 in 2005 to \$23,000 in 2009.

Based on these calculations, the correct statement is:
a. From 2005 to 2009, both assets and liabilities decreased.