Question 1

There is a need for budget adjustments when:

Accepted Answer

A)  income is stable. 
B)  account deficits and surpluses balance out. 
C)  account deficits are more than surpluses. 
D)  a new calendar year begins. 
E)  short-term financial goals are achieved. 
A)  income is stable. 
B)  account deficits and surpluses balance out. 
C)  account deficits are more than surpluses. 
D)  a new calendar year begins. 
E)  short-term financial goals are achieved.

Question 2

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 3

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

Accepted Answer

The answer of Construct a balance sheet using the following...

Question 4

The real rate of return is also referred to as the real:

Accepted Answer

A)  liability rate. 
B)  short-term rate. 
C)  estimated rate. 
D)  inflation rate. 
E)  interest rate. 
A)  liability rate. 
B)  short-term rate. 
C)  estimated rate. 
D)  inflation rate. 
E)  interest rate.

Question 5

Which of the following statements regarding liabilities is true?

Accepted Answer

A)  Liabilities are generally classified according to maturity. 
B)  Most loans fall into the category of short-term liabilities. 
C)  Future interest payments are accounted for separately as long-term liabilities on the balance sheet. 
D)  All liabilities should be recorded on the balance sheet at their current fair market value. 
E)  Whether or not a liability must be repaid in the future depends on its source. 
A)  Liabilities are generally classified according to maturity. 
B)  Most loans fall into the category of short-term liabilities. 
C)  Future interest payments are accounted for separately as long-term liabilities on the balance sheet. 
D)  All liabilities should be recorded on the balance sheet at their current fair market value. 
E)  Whether or not a liability must be repaid in the future depends on its source.

Question 6

INSTRUCTIONS: 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. 
Over time, inflation [ increases | reduces ] the purchasing power of cash flows produced by an investment.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 7

A cash budget uses short-term financial goals to help you reach long-term financial goals.

Accepted Answer

A) True 
 B)False

Question 8

If your _____, your net worth on the balance sheet will increase from one period to the next.

Accepted Answer

A)  liabilities increase and assets remain constant 
B)  liabilities increase and assets decrease 
C)  assets increase and liabilities remain constant 
D)  income and liabilities decrease 
E)  liabilities and expenses increase 
A)  liabilities increase and assets remain constant 
B)  liabilities increase and assets decrease 
C)  assets increase and liabilities remain constant 
D)  income and liabilities decrease 
E)  liabilities and expenses increase

Question 9

Josh wants to determine the rate of return he needs to earn in order to net a real rate of return of 7% when expected inflation is 4%. What nominal rate of return would Josh need to earn? (Show all work.)

Accepted Answer

Using the Fisher equation, the required

Question 10

An individual is said to have a balanced budget when his or her total income for the year equals or exceeds his or her total expenses.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements regarding budgets is true?

Accepted Answer

A)  Budgets are meant for poor people only. 
B)  Budgets need software to be effective. 
C)  Budgets are forward looking. 
D)  Budgets do not need to be revised. 
E)  Budgets provide long-term financial forecasts. 
A)  Budgets are meant for poor people only. 
B)  Budgets need software to be effective. 
C)  Budgets are forward looking. 
D)  Budgets do not need to be revised. 
E)  Budgets provide long-term financial forecasts.

Question 12

Your car has a market value of $4,000, while the balance of the loan against it is now $2,500. Your ownership interest in the car is:

Accepted Answer

A)  $2,500. 
B)  $4,000. 
C)  $6,500. 
D)  $1,500. 
E)  $5,500. 
A)  $2,500. 
B)  $4,000. 
C)  $6,500. 
D)  $1,500. 
E)  $5,500.

Question 13

_____  is the most preferred way for one to deal with budget deficits.

Accepted Answer

A)  Liquidating savings and investments 
B)  Borrowing money from relatives 
C)  Cutting low-priority expenses 
D)  Increasing income 
E)  Paying all short-term liabilities 
A)  Liquidating savings and investments 
B)  Borrowing money from relatives 
C)  Cutting low-priority expenses 
D)  Increasing income 
E)  Paying all short-term liabilities

Question 14

Jacques's total monthly loan payments amount to $1,020, while his gross income is $3,000 per month. What is his debt service ratio?

Accepted Answer

A)  34% 
B)  43% 
C)  50% 
D)  75% 
E)  82% 
A)  34% 
B)  43% 
C)  50% 
D)  75% 
E)  82%

Question 15

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

Question 16

INSTRUCTIONS: 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. 
Take-home pay represents the amount of [ gross | disposable ] income you receive from your employer.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 17

An individual's auto loan payments are listed as an expense on the income and expense statement.

Accepted Answer

A) True 
 B)False

Question 18

The Hamptons want to have $1,750,000 for their retirement in 30 years. How much should they save annually if they expect to earn 8% on their investments?

Accepted Answer

In the financial calculator, i

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

_____  are considered to be variable expenses.

Accepted Answer

A)  Interest payments 
B)  Medical expenses 
C)  Rent payments 
D)  Insurance premiums 
E)  Cable TV fees 
A)  Interest payments 
B)  Medical expenses 
C)  Rent payments 
D)  Insurance premiums 
E)  Cable TV fees

There is a need for budget adjustments when:

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:

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

The real rate of return is also referred to as the real:

Which of the following statements regarding liabilities is true?

A cash budget uses short-term financial goals to help you reach long-term financial goals.

If your _____, your net worth on the balance sheet will increase from one period to the next.

Josh wants to determine the rate of return he needs to earn in order to net a real rate of return of 7% when expected inflation is 4%. What nominal rate of return would Josh need to earn? (Show all work.)

An individual is said to have a balanced budget when his or her total income for the year equals or exceeds his or her total expenses.

Which of the following statements regarding budgets is true?

Your car has a market value of $4,000, while the balance of the loan against it is now $2,500. Your ownership interest in the car is:

_____ is the most preferred way for one to deal with budget deficits.

Jacques's total monthly loan payments amount to $1,020, while his gross income is $3,000 per month. What is his debt service ratio?

You record _____ on an income and expense statement.

An individual's auto loan payments are listed as an expense on the income and expense statement.

The Hamptons want to have $1,750,000 for their retirement in 30 years. How much should they save annually if they expect to earn 8% on their investments?

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.)

_____ are considered to be variable expenses.

Understanding the Financial Planning 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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 2: Developing Your Financial Statements and Plans

There is a need for budget adjustments when:

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:

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

The real rate of return is also referred to as the real:

Which of the following statements regarding liabilities is true?

A cash budget uses short-term financial goals to help you reach long-term financial goals.

If your _____, your net worth on the balance sheet will increase from one period to the next.

Josh wants to determine the rate of return he needs to earn in order to net a real rate of return of 7% when expected inflation is 4%. What nominal rate of return would Josh need to earn? (Show all work.)

An individual is said to have a balanced budget when his or her total income for the year equals or exceeds his or her total expenses.

Which of the following statements regarding budgets is true?

Your car has a market value of $4,000, while the balance of the loan against it is now $2,500. Your ownership interest in the car is:

_____ is the most preferred way for one to deal with budget deficits.

Jacques's total monthly loan payments amount to $1,020, while his gross income is $3,000 per month. What is his debt service ratio?

You record _____ on an income and expense statement.

An individual's auto loan payments are listed as an expense on the income and expense statement.

The Hamptons want to have $1,750,000 for their retirement in 30 years. How much should they save annually if they expect to earn 8% on their investments?

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.)

_____ are considered to be variable expenses.

Understanding the Financial Planning 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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters