, 23.09.2019abelgutierrez370

# Mr. chavez has assets of \$250,000 and liabilities of \$18,000. he decides to finance the entire amount of the purchase of a car valued at \$26,000. which of the following is true? a. mr. chavez increased his assets. b. mr. chavez increased his net worth. c. mr. chavez increased both his assets and net worth. d. mr. chavez did not increase his assets or his net worth.

Your answer is certainly A seeing how this has nothing to do with net worth(b,c)
and D is not applicable
D. he did not increase his assets or net worth. a car is not considered an asset and financing means a bank loan = liability.

Determination of effect of the transaction:

It is given that Mr. Chavez decides to finance the entire amount of the purchase of a car valued at \$26,000. It means he has taken a loan to purchase the asset. This transaction will increase the Assets (Car) and the Liability (Loan). Further this transaction shall have no impact on the net worth because the loan is taken to buy the asset.

Hence the correct option is:

a. Mr. Chavez increased his assets.

mr. chavez did not increase his assets or his net worth.

step-by-step explanation:

Mr. Chavez increased his assets.

Step-by-step explanation:

Given is :

Mr. Chavez has assets of \$250,000 and liabilities of \$18,000.

He decides to finance the entire amount of the purchase of a car valued at \$26,000.

So, he has taken a loan to purchase the asset. This will increase the assets in the form of his car and the the liability also in the form of loan.

This will have no impact on Mr. Chavez's net worth as the loan is taken to buy the asset.

So, only correct option is option A. Mr. Chavez increased his assets.

A, mr Chavez increased his assests

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