Question 1

Total assets on your balance sheet are $6,000 and liabilities are $2,000. Your solvency ratio will be:

Accepted Answer

A)  30.2%. 
B)  33.3%. 
C)  67.7%. 
D)  85.0%. 
E)  75.0%. 
A)  30.2%. 
B)  33.3%. 
C)  67.7%. 
D)  85.0%. 
E)  75.0%.

Question 2

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. 
If you liquidate assets or borrow to make your budget balance, this will [ increase | decrease ] your net worth.

Accepted Answer

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

Question 3

_____ will be listed as a liability on your balance sheet.

Accepted Answer

A)  A money market deposit account 
B)  A checking account 
C)  Equipment 
D)  The cash value of a life insurance policy 
E)  An education loan 
A)  A money market deposit account 
B)  A checking account 
C)  Equipment 
D)  The cash value of a life insurance policy 
E)  An education loan

Question 4

You are solvent if your:

Accepted Answer

A)  total liabilities exceed your total assets. 
B)  total assets exceed your total liabilities. 
C)  total assets exceed your equity. 
D)  total liabilities exceed your equity. 
E)  current liabilities exceed your current assets. 
A)  total liabilities exceed your total assets. 
B)  total assets exceed your total liabilities. 
C)  total assets exceed your equity. 
D)  total liabilities exceed your equity. 
E)  current liabilities exceed your current assets.

Question 5

Knowing how to prepare and interpret personal financial statements is a cornerstone of personal financial planning.

Accepted Answer

A) True 
 B)False

Question 6

Estimating expenses using actual expenses from previous years and tracking current expenses make the task of preparing a cash budget easier.

Accepted Answer

A) True 
 B)False

Question 7

When Phil lists his house on his balance sheet, he should record its:

Accepted Answer

A)  actual purchase price. 
B)  depreciated value. 
C)  insured value. 
D)  deferred price. 
E)  fair market value. 
A)  actual purchase price. 
B)  depreciated value. 
C)  insured value. 
D)  deferred price. 
E)  fair market value.

Question 8

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 9

The income and expense statement measures your financial:

Accepted Answer

A)  obligations that have been paid. 
B)  performance over time. 
C)  current position. 
D)  liquid assets. 
E)  long-term objectives. 
A)  obligations that have been paid. 
B)  performance over time. 
C)  current position. 
D)  liquid assets. 
E)  long-term objectives.

Question 10

It is recommended that you maintain a ledger to summarize all of your financial transactions.

Accepted Answer

A) True 
 B)False

Question 11

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. 
Total assets on your personal balance sheet are $8,000 and liabilities are $2,000. Your solvency ratio is [ 75% | 25% ].

Accepted Answer

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

Question 12

A balance sheet describes your:

Accepted Answer

A)  financial position at a given point in time. 
B)  financial performance over time. 
C)  financial performance at a given point in time. 
D)  financial goals over time. 
E)  financial plans over time. 
A)  financial position at a given point in time. 
B)  financial performance over time. 
C)  financial performance at a given point in time. 
D)  financial goals over time. 
E)  financial plans over time.

Question 13

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 14

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. 
A [ savings account | retirement account ] would be an example of a liquid asset.

Accepted Answer

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

Question 15

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 16

The concept that a dollar today is worth more than a dollar received in the future is known as:

Accepted Answer

A)  the rule of 72. 
B)  the time value of money. 
C)  compounding . 
D)  discounting. 
E)  the Fisher equation. 
A)  the rule of 72. 
B)  the time value of money. 
C)  compounding . 
D)  discounting. 
E)  the Fisher equation.

Question 17

A(n) _____  is an example of a current liability.

Accepted Answer

A)  auto loan 
B)  credit card balance 
C)  mortgage 
D)  education loan 
E)  furniture loan 
A)  auto loan 
B)  credit card balance 
C)  mortgage 
D)  education loan 
E)  furniture loan

Question 18

If your liquid assets equal $15,000 and your current debts equal $50,000, your liquidity ratio is:

Accepted Answer

A)  30%. 
B)  70%. 
C)  143%. 
D)  233%. 
E)  333%. 
A)  30%. 
B)  70%. 
C)  143%. 
D)  233%. 
E)  333%.

Question 19

Amit lists his gross salary in the income portion of his income and expense statement, and he includes the amount of his income taxes and Social Security taxes withheld from his paycheck in the expenses portion.

Accepted Answer

A) True 
 B)False

Question 20

If Jenny obtains a loan to purchase a car in June, the loan amount will be included as income for the month of June.

Accepted Answer

A) True 
 B)False

Total assets on your balance sheet are $6,000 and liabilities are $2,000. Your solvency ratio will be:

_____ will be listed as a liability on your balance sheet.

You are solvent if your:

Knowing how to prepare and interpret personal financial statements is a cornerstone of personal financial planning.

Estimating expenses using actual expenses from previous years and tracking current expenses make the task of preparing a cash budget easier.

When Phil lists his house on his balance sheet, he should record its:

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?

The income and expense statement measures your financial:

It is recommended that you maintain a ledger to summarize all of your financial transactions.

A balance sheet describes your:

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

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. A [ savings account | retirement account ] would be an example of a liquid asset.

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.)

The concept that a dollar today is worth more than a dollar received in the future is known as:

A(n) _____ is an example of a current liability.

If your liquid assets equal $15,000 and your current debts equal $50,000, your liquidity ratio is:

Amit lists his gross salary in the income portion of his income and expense statement, and he includes the amount of his income taxes and Social Security taxes withheld from his paycheck in the expenses portion.

If Jenny obtains a loan to purchase a car in June, the loan amount will be included as income for the month of June.

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

Total assets on your balance sheet are $6,000 and liabilities are $2,000. Your solvency ratio will be:

_____ will be listed as a liability on your balance sheet.

You are solvent if your:

Knowing how to prepare and interpret personal financial statements is a cornerstone of personal financial planning.

Estimating expenses using actual expenses from previous years and tracking current expenses make the task of preparing a cash budget easier.

When Phil lists his house on his balance sheet, he should record its:

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?

The income and expense statement measures your financial:

It is recommended that you maintain a ledger to summarize all of your financial transactions.

A balance sheet describes your:

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

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. A [ savings account | retirement account ] would be an example of a liquid asset.

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.)

The concept that a dollar today is worth more than a dollar received in the future is known as:

A(n) _____ is an example of a current liability.

If your liquid assets equal $15,000 and your current debts equal $50,000, your liquidity ratio is:

Amit lists his gross salary in the income portion of his income and expense statement, and he includes the amount of his income taxes and Social Security taxes withheld from his paycheck in the expenses portion.

If Jenny obtains a loan to purchase a car in June, the loan amount will be included as income for the month of June.

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