Question 1

If your statement of income and expense prepared on a cash basis shows a deficit, you have:

Accepted Answer

A) increased your debts. 
B) liquidated your investments. 
C) increased your savings. 
D) taken a cash loan on your insurance. 
E) sold some securities. 
A) increased your debts. 
B) liquidated your investments. 
C) increased your savings. 
D) taken a cash loan on your insurance. 
E) sold some securities.

Question 2

What can you do if your budget shows an annual budget deficit?

Accepted Answer

A) You can liquidate investments to meet the total budget shortfall. 
B) You can increase low-priority expenses on the budget. 
C) You can invest more in real estate\personal estate. 
D) You can discourage additional borrowing. 
E) You can shift expenses from the surplus months to the deficit months. 
A) You can liquidate investments to meet the total budget shortfall. 
B) You can increase low-priority expenses on the budget. 
C) You can invest more in real estate\personal estate. 
D) You can discourage additional borrowing. 
E) You can shift expenses from the surplus months to the deficit months.

Question 3

Budgeting and record keeping are the same.

Accepted Answer

A) True 
 B)False

Question 4

The three parts of an individual's balance sheet are his or her:

Accepted Answer

A) income, liabilities, and net worth. 
B) assets, expenditures, and net worth. 
C) assets, liabilities, and expenses. 
D) assets, liabilities, and net worth. 
E) income, liabilities, and assets. 
A) income, liabilities, and net worth. 
B) assets, expenditures, and net worth. 
C) assets, liabilities, and expenses. 
D) assets, liabilities, and net worth. 
E) income, liabilities, and assets.

Question 5

You bought a $500 stereo on an installment plan and made two payments of $75 each during the year. On your income and expense statement for the year, you will show an expense of:

Accepted Answer

A) $150. 
B) $575. 
C) $650. 
D) $500. 
E) $75. 
A) $150. 
B) $575. 
C) $650. 
D) $500. 
E) $75.

Question 6

Loans should be recorded as a liability on the balance sheet at their ______ outstanding balance.

Accepted Answer

A) original 
B) year-end 
C) average 
D) current 
E) beginning 
A) original 
B) year-end 
C) average 
D) current 
E) beginning

Question 7

It is best to prepare your financial statements at least once a year, ideally when drawing up your budget.

Accepted Answer

A) True 
 B)False

Question 8

Jean and Jim have liquid assets of $3,600 and other assets of $42,800. Their total liabilities equal $26,000. What is their net worth? (Show all work.)

Accepted Answer

Net Worth = Total As

Question 9

Which of the following statements regarding an individual's income and expense statement is true?

Accepted Answer

A) An income and expense statement describes your financial position at a given point in time. 
B) An income and expense statement looks forward in time to control spending. 
C) An income and expense statement identifies your financial goals. 
D) An income and expense statement measures your financial performance over a period of time. 
E) An income and expense statement can be used to predict inflation and interest rates. 
A) An income and expense statement describes your financial position at a given point in time. 
B) An income and expense statement looks forward in time to control spending. 
C) An income and expense statement identifies your financial goals. 
D) An income and expense statement measures your financial performance over a period of time. 
E) An income and expense statement can be used to predict inflation and interest rates.

Question 10

A detailed forecast used to monitor and control expenses is called a(n):

Accepted Answer

A) balance sheet. 
B) profit and loss account. 
C) budget. 
D) income and expense statement. 
E) cash inflow. 
A) balance sheet. 
B) profit and loss account. 
C) budget. 
D) income and expense statement. 
E) cash inflow.

Question 11

If your total assets equal $87,000 and your total liabilities equal $10,000, your solvency ratio is:

Accepted Answer

A) 11.5%. 
B) 13.0%. 
C) 77.0%. 
D) 87.0%. 
E) 88.5%. 
A) 11.5%. 
B) 13.0%. 
C) 77.0%. 
D) 87.0%. 
E) 88.5%.

Question 12

When your liabilities exceed your assets, you:

Accepted Answer

A) are bankrupt. 
B) have growing equity. 
C) have a positive net worth. 
D) are insolvent. 
E) have less real assets than investments. 
A) are bankrupt. 
B) have growing equity. 
C) have a positive net worth. 
D) are insolvent. 
E) have less real assets than investments.

Question 13

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years. You require a 7% return. The present value annuity factor at 7% for 10 years is 7.0236. What is the most you should pay for this investment?

Accepted Answer

A) $49,179 
B) $175,590 
C) $201,000 
D) $225,682 
E) $250,000 
A) $49,179 
B) $175,590 
C) $201,000 
D) $225,682 
E) $250,000

Question 14

Financial plans provide direction to annual budgets.

Accepted Answer

A) True 
 B)False

Question 15

Mike and Teresa have a monthly gross income of $5,000. They pay $1,000 per month toward taxes and $2,000 per month toward various loans. What is their debt service ratio?

Accepted Answer

A) 20% 
B) 30% 
C) 40% 
D) 50% 
E) 60% 
A) 20% 
B) 30% 
C) 40% 
D) 50% 
E) 60%

Question 16

A cash budget helps you:

Accepted Answer

A) monitor and control your finances. 
B) analyze your financial position. 
C) calculate your solvency ratio. 
D) measure your net worth. 
E) identify your long-term debt. 
A) monitor and control your finances. 
B) analyze your financial position. 
C) calculate your solvency ratio. 
D) measure your net worth. 
E) identify your long-term debt.

Question 17

I should record _____ on my income and expense statement for the period of January 1 to June 30.

Accepted Answer

A) an $800 refrigerator I bought on credit on May 30 
B) an outstanding education loan account 
C) jewelry I purchased with an arrangement to pay later 
D) my checking account balance 
E) the groceries I bought and paid for in June 
A) an $800 refrigerator I bought on credit on May 30 
B) an outstanding education loan account 
C) jewelry I purchased with an arrangement to pay later 
D) my checking account balance 
E) the groceries I bought and paid for in June

Question 18

You record _____ on an income and expense statement.

Accepted Answer

A) the value of your stock portfolio 
B) your installment loan balance 
C) your checking account balance 
D) your cash on hand 
E) your charitable payments 
A) the value of your stock portfolio 
B) your installment loan balance 
C) your checking account balance 
D) your cash on hand 
E) your charitable payments

Question 19

Inflation is expected to be 4% in the coming year. If Mr. Gonza earned $37,000 this year, how much must he earn in the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures? (Show all work.)

Accepted Answer

To keep up with an inflation of 4% in th

Question 20

Future value calculations to estimate the funds needed to meet a goal take compounding into account.

Accepted Answer

A) True 
 B)False

If your statement of income and expense prepared on a cash basis shows a deficit, you have:

What can you do if your budget shows an annual budget deficit?

Budgeting and record keeping are the same.

The three parts of an individual's balance sheet are his or her:

You bought a $500 stereo on an installment plan and made two payments of $75 each during the year. On your income and expense statement for the year, you will show an expense of:

Loans should be recorded as a liability on the balance sheet at their ______ outstanding balance.

It is best to prepare your financial statements at least once a year, ideally when drawing up your budget.

Jean and Jim have liquid assets of $3,600 and other assets of $42,800. Their total liabilities equal $26,000. What is their net worth? (Show all work.)

Which of the following statements regarding an individual's income and expense statement is true?

A detailed forecast used to monitor and control expenses is called a(n):

If your total assets equal $87,000 and your total liabilities equal $10,000, your solvency ratio is:

When your liabilities exceed your assets, you:

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years. You require a 7% return. The present value annuity factor at 7% for 10 years is 7.0236. What is the most you should pay for this investment?

Financial plans provide direction to annual budgets.

Mike and Teresa have a monthly gross income of $5,000. They pay $1,000 per month toward taxes and $2,000 per month toward various loans. What is their debt service ratio?

A cash budget helps you:

I should record _____ on my income and expense statement for the period of January 1 to June 30.

You record _____ on an income and expense statement.

Inflation is expected to be 4% in the coming year. If Mr. Gonza earned $37,000 this year, how much must he earn in the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures? (Show all work.)

Future value calculations to estimate the funds needed to meet a goal take compounding into account.

Understanding the Financial Process

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 2: Using Financial Statements and Budgets

If your statement of income and expense prepared on a cash basis shows a deficit, you have:

What can you do if your budget shows an annual budget deficit?

Budgeting and record keeping are the same.

The three parts of an individual's balance sheet are his or her:

You bought a $500 stereo on an installment plan and made two payments of $75 each during the year. On your income and expense statement for the year, you will show an expense of:

Loans should be recorded as a liability on the balance sheet at their ______ outstanding balance.

It is best to prepare your financial statements at least once a year, ideally when drawing up your budget.

Jean and Jim have liquid assets of $3,600 and other assets of $42,800. Their total liabilities equal $26,000. What is their net worth? (Show all work.)

Which of the following statements regarding an individual's income and expense statement is true?

A detailed forecast used to monitor and control expenses is called a(n):

If your total assets equal $87,000 and your total liabilities equal $10,000, your solvency ratio is:

When your liabilities exceed your assets, you:

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years. You require a 7% return. The present value annuity factor at 7% for 10 years is 7.0236. What is the most you should pay for this investment?

Financial plans provide direction to annual budgets.

Mike and Teresa have a monthly gross income of $5,000. They pay $1,000 per month toward taxes and $2,000 per month toward various loans. What is their debt service ratio?

A cash budget helps you:

I should record _____ on my income and expense statement for the period of January 1 to June 30.

You record _____ on an income and expense statement.

Inflation is expected to be 4% in the coming year. If Mr. Gonza earned $37,000 this year, how much must he earn in the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures? (Show all work.)

Future value calculations to estimate the funds needed to meet a goal take compounding into account.

Understanding the Financial Process

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters