Exam 2: Using Financial Statements and Budgets

Total net worth is the numerator for the solvency ratio.

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. -[Present | Future] value is the value today of an amount to be received in the future.

The expenditure categories for your budget should be determined by

You may be under-budgeting for food if you continually have monthly deficits in the food category.

Your ____ is an example of a liquid asset.

A budget is an orderly estimate of income and expenditures.

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

Which of the following are not among the four categories accounting for three-quarters of consumer spending?

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 term sometimes used for net worth is [collateral | equity].

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 detailed short-term financial forecast used to monitor and control expenses is called a [budget | financial statement].

____ is an example of personal property.

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

Inflation this coming year is expected to be 3 percent.If Mr.Gonza earned $45,000 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? (Show all work.)

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 deficit on your income and expense statement will have [an | no] effect on your personal balance sheet.

When preparing a cash budget,estimating expenses using actual expenses from previous years and by tracking current expenses makes the task easier.

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

You would not include ____ on an income and expense statement.

When Phil lists his house on his personal balance sheet,he should record the

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 pay off your debt but make no changes in your assets,your net worth will [increase | decrease].

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 your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].