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

Roberto's balance sheet (September 2013)

Cash $1,800 credit card $4,000

Investments $6,200 personal loan $1,000

House $150,000 mortgage $1000,000

Car $8,000 car loan $5,000

Total. Total.

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

A.it will make the assets $5,000 less than the liabilities.

B.it will make the assets $5,000 more than the liabilities.

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

Do.the difference between the assets and the liabilities cannot be compared

Verified Answer :

MissPhiladelphia

To see the effect on Robertos balance sheet, we will first have to get the total assets and liabilities
Total assets = cash+ investment+ house + car
Total liabilities= credit card + personal loan + mortgage  + car loan
Substituting the values, we will get
Total asset =$166000
Total liabilities =$1010000
Difference= $844000
To pay off car loan, he uses his investment
Total asset = $166000-5000
                   =$161000
Total liabilities= $1010000-5000
                        =$1005000
Difference=$844000
Therefore the answer is letter C, the difference between asset and liability will remain the same.

Answer: The correct option is C, i.e., the difference between the assets and the liabilities will remains the same.

Explanation:

Assets are the thing which gives the future profits and liabilities are the obligations.

It in the given data the assets are cash, investment, house and car.

\(\text{Assets}=\$1,800+\$6,200+\$1,50,000+\$8,000=\$166,000\)

It in the given data the liabilities are credit card, personal loan, mortgage and car loan.

\(\text{Liability}=\$4,000+\$1,000+\$1000,000+\$5,000=\$1010,000\)

The difference between liability and assets is \(\$1010,000-\$166,000=\$884,000\).

If Roberto use his his investment to pay off his car loan, then the assets decreased by $5000 and liabilities decreased by $5000.

\(\text{Assets}=\$166,000-\$5,000=\$161,000\)

\(\text{Liability}=\$1010,000-\$5000=\$1005,000\)

The difference between liability and assets is \(\$1005,000-\$161,000=\$884,000\).

Therefore, the correct option is C, i.e., the difference between the assets and the liabilities will remains the same.

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