Question

In order to reduce their debt, the Johnsons sold some real estate property valued at $165,000 for $143,000. They paid off a loan balance of $100,000 and put the rest in savings. Which of the following is a true statement?

a.
The Johnsons increased their liabilities.
b.
The Johnsons increased their liquid assets.
c.
The Johnsons increased their net worth.
d.
The Johnsons increased their use assets.

Answer 1

The answer is B

Explanation:

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Answer 2

The question is giving us the following scenario: "In order to reduce their debt, the Johnsons sold some real estate property valued at $165,000 for $143,000. They paid off a loan balance of $100,000 and put the rest in savings." We can see that they actually lost money - they got for the house less than the house is worth - they decreased their net value. But they have more cash that they can use (the savings) - this is called liquid assets - so the correct answer is b The Johnsons increased their liquid assets.