Suppose You Borrow $1,000 to Purchase a Car

question 20

Multiple Choice

Suppose you borrow $1,000 to purchase a car.Which of the following correctly represents the changes in your personal balance sheet after the bank lends the money but before you spend it?

• A)assets: loan,+$1,000; liabilities and net worth: checking deposit,+$1,000
• B)assets: loan,-$1,000,checking deposit,+$1,000; liabilities and net worth: no change
• C)assets: loan,+$1,000,checking deposit,-$1,000; liabilities and net worth: no change
• D)assets: checking deposit,+$1,000; liabilities and net worth: loan,+$1,000
• E)assets: checking deposit,+$1,000; liabilities and net worth: loan,-$1,000

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