Exam 2: Using Financial Statements and Budgets

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If you pay off your debt but make no changes in your assets,your net worth will [increase | decrease].

Assets listed on your balance sheet must have monetary value.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A [credit card bill | credit card balance] would be an example of a current liability.

Jacque's total monthly loan payments are $1,020 while her gross income is $3,000 per month.What is her debt service ratio?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The primary function of financial statements is to provide a picture of your [actual | projected] financial position.

Inflation this coming year is expected to be 4 percent.If Mr.Gonza earned $37,000 this year,how much must he earn the following year just to keep up with inflation and maintain the balance between his income and his increasing expenditures?

Sam and his wife Ann purchased a home in Lubbock,Texas in 1980 for $100,000.Their original home mortgage was for $90,000.The house has a current market value of $175,000 and a replacement value of $200,000.They still owe $55,000 on their home mortgage.Sam and Sally are now constructing their balance sheet.How should their home be reflected on their current personal balance sheet?

The savings ratio is useful in the evaluation of the balance sheet.

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

If you listed your gross salary in the income portion of the budget,the expenditures section must include income taxes and social security.

Assets purchased on credit should be included on the asset side of the balance sheet.

Jamie wants to have $1,000,000 for her retirement in 25 years.How much should she save annually if she thinks she can earn 10% on her investments?

The income statement includes information on your latest paycheck.

Net worth achieves is highest level beginning at age 65 and increases throughout retirement years.

Which of the following has been determined to be the best way for dual-income families to handle their money management?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A [house | certificate of deposit] is an example of a tangible asset.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A budget will have value only if it is actually used and [records are kept of actual income/expenses | spending never deviates from the budgeted amount].

Dual-income families often face

A budget is an orderly estimate of income and expenditures.

Mindy and Lou had liquid assets of $10,000 and current debts of $30,000.What is their liquidity ratio?