Exam 2: Using Financial Statements and Budgets

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Four categories,accounting for 75% of consumer spending,include [entertainment | food].

The best approach to solving the problem of an annual budget deficit is generally to

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years.If you require a 7% return,what is the most you should pay for this investment?

One could use statements from their various financial institutions to help complete a balance sheet.

You are more likely to achieve your goals if a definite goal date is set.

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment? (Show all work.)

Construct a balance sheet from the following information.Be sure the format is correct.(Show all work.)

An income statement deficit would increase net worth.

When preparing a cash budget,estimating expenses using actual expenses from previous years and by tracking current expenses makes the task easier.

The level of the debt service ratio would indicate your ability to meet loan payments out of current income.

Monthly statements and pay stubs can be shredded when year-end statements are received.

The financial planning process is regulated by state governments when done by professionals.

____ would not be listed as a liability on your balance sheet.

A cash budget should help you to

Jewelry,furniture and computers are examples of personal property.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -It is most important to balance your budget over a [monthly | yearly] period.

Assets listed on your balance sheet must have monetary value.

Financial assets are intangible assets acquired to achieve long-term personal financial goals.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

A charge made on your credit card becomes a liability as soon as the charge is incurred.