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Julio has a house worth $220,000. He has a $175,000 mortgage. Julio says that in this situation, his asset is really only $45,000. Which statement explains whether Julio is correct? Julio is correct because the $45,000 equity in the house is the real asset. Julio is correct because he can pay $45,000 and have no more liabilities. Julio is not correct because the same item cannot represent both an asset and a liability. Julio is not correct because the house cannot be worth more than the mortgage.

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johnchri06

Answer:

Julio is correct because the $45,000 equity in the house is the real asset.

Step-by-step explanation:

220000-175000=45000

When Julio's assets are worth $220,000 and he owes $175,000, his assets are really only $45,000 because the $45,000 equity in the house is the real asset.

What are assets?

An asset is any resource owned or controlled by a business or an economic entity. It is anything that can be used to produce positive economic value.

What are liabilities?

A liability is something a person or company owes, usually a sum of money.

What is equity?

Equity is ownership of assets that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of the assets.

Learn more about assets, liability and equity here

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