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. -The purpose of the debt service ratio is to show the amount of your income needed to pay your [current liabilities | monthly loan payments].

The income and expense statement looks forward in time,while a budget is backward looking.

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

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?

If your ____,your net worth on the personal balance sheet would have increased from one period to the next.

The Wilson family's short-term goals might include

Mandy and Jeff have a net worth of $25,000 and total assets of $140,000.If their revolving credit and unpaid bills total $2,200,what are their total liabilities?

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. -Another word for take-home pay is [gross | disposable] income.

Only the current month's payment on your mortgage loans would be listed on the personal balance sheet as a liability.

To determine how effectively the budget is working,you can compare it to

Net worth is measured by

So long as you can earn interest on your investments,in a strict financial sense,you should always prefer to receive equal amounts of money sooner rather than later.

Net income (after taxes)should be used when developing an income and expense statement.

The equity in your home is the difference between the loan balance and the purchase price.

An income and expense statement deficit would increase net worth.

You have a balanced budget when total income for the year equals or exceeds total expenditures for the year.

____ would not be a long-term financial goal.

All assets,regardless of category,should be recorded on your personal balance sheet at their current fair market value.

All of the following are stages in preparing a cash budget except

The income and expense statement includes