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.
