Question

The following table shows the assets and liabilities of the Chang family in 2007 and 2008.

2007
2008
home valued at $315,000
home valued at $325,000
mortgage of $265,000
mortgage of $240,000
car valued at $10,000
car valued at $6,000
car loan of $5,000
car loan of $1,000
savings of $2,000
credit card debt of $1,500

Based on the table, which of the following is true?
a.
From 2007 to 2008, both assets and liabilities decreased.
b.
From 2007 to 2008, both assets and liabilities increased.
c.
From 2007 to 2008, assets decreased and liabilities increased.
d.
From 2007 to 2008, assets increased and liabilities decreased.

Answer 1

Compute totals.

2007 assets = 315,000 + 10,000 + 2,000 = 327,000
2007 liabilities = 265,000 + 5,000 = 270,000

2008 assets = 325,000 + 6,000 = 331,000
2008 liabilities = 240,000 + 1,000 + 1,500 = 242,500

Assets rose (327,000 → 331,000) and liabilities fell (270,000 → 242,500). Answer: d.