Question 1

The liquidity ratio is an indicator of a family's ability to pay current debts if there is an interruption in income.

Accepted Answer

A) True 
 B)False

Question 2

The income statement:

Accepted Answer

A)  shows financial position at a specific point in time. 
B)  shows financial performance for a specific time. 
C)  shows financial position for a specific time. 
D)  shows financial performance at a specific point of time. 
E)  none of these. 
A)  shows financial position at a specific point in time. 
B)  shows financial performance for a specific time. 
C)  shows financial position for a specific time. 
D)  shows financial performance at a specific point of time. 
E)  none of these.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Net worth is:

Accepted Answer

A)  the sum of liquid assets and current liabilities. 
B)  the sum of gross income and payroll taxes. 
C)  the sum of net income and deductions for payroll taxes. 
D)  the difference between total assets and total liabilities. 
E)  the difference between income and expenses. 
A)  the sum of liquid assets and current liabilities. 
B)  the sum of gross income and payroll taxes. 
C)  the sum of net income and deductions for payroll taxes. 
D)  the difference between total assets and total liabilities. 
E)  the difference between income and expenses.

Question 5

The main purpose of a budget is to:

Accepted Answer

A)  develop financial goals. 
B)  calculate discounted cash flow. 
C)  give feedback to the plan. 
D)  monitor and control financial outcomes. 
E)  revise depreciation schedule. 
A)  develop financial goals. 
B)  calculate discounted cash flow. 
C)  give feedback to the plan. 
D)  monitor and control financial outcomes. 
E)  revise depreciation schedule.

Question 6

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 7

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].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 8

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment?

Accepted Answer

100%- [30 + 5 + 25 +

Question 9

_____ would not be a long-term financial goal.

Accepted Answer

A)  Purchasing a new car 
B)  Providing adequate life insurance 
C)  Reducing income taxes 
D)  Paying your phone bill 
E)  Planning for retirement 
A)  Purchasing a new car 
B)  Providing adequate life insurance 
C)  Reducing income taxes 
D)  Paying your phone bill 
E)  Planning for retirement

Question 10

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 liquidity ratio is designed to show the percentage of [your annual credit obligations | future months credit obligations] you could cover with your current assets.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 11

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.
-When your assets exceed your liabilities,you are [insolvent | solvent].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 12

Net worth is greatest for those in their prime working years,about age 55.

Accepted Answer

A) True 
 B)False

Question 13

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 liability would be listed on a balance sheet as the [amount originally borrowed | amount of the next loan payment to be made | none of these].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 14

A budget is a financial report that forecasts your current income as a percentage of your past earnings.

Accepted Answer

A) True 
 B)False

Question 15

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?

Accepted Answer

The answer of Jamie wants to have $1,000,000 for her...

Question 16

The Flemings will need $80,000 annually for 20 years during retirement.How much will they need at retirement if they can earn a 4% rate of return?

Accepted Answer

The answer of The Flemings will need $80,000 annually for...

Question 17

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.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 18

The three parts of your balance sheet are your:

Accepted Answer

A)  income,liabilities,and net worth. 
B)  assets,expenditures,and net worth. 
C)  assets,liabilities,and expenses. 
D)  assets,liabilities,and net worth. 
E)  income,liabilities,and assets. 
A)  income,liabilities,and net worth. 
B)  assets,expenditures,and net worth. 
C)  assets,liabilities,and expenses. 
D)  assets,liabilities,and net worth. 
E)  income,liabilities,and assets.

Question 19

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn? Approximate the rate of interest to the nearest whole number.

Accepted Answer

A)  6% 
B)  7% 
C)  8% 
D)  9% 
E)  10% 
A)  6% 
B)  7% 
C)  8% 
D)  9% 
E)  10%

Question 20

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

Accepted Answer

A)  liabilities increased and assets remained constant 
B)  liabilities increased and assets decreased 
C)  assets increased and liabilities remain constant or decreased 
D)  income decreased 
E)  none of these 
A)  liabilities increased and assets remained constant 
B)  liabilities increased and assets decreased 
C)  assets increased and liabilities remain constant or decreased 
D)  income decreased 
E)  none of these

The liquidity ratio is an indicator of a family's ability to pay current debts if there is an interruption in income.

The income statement:

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

Net worth is:

The main purpose of a budget is to:

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

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment?

_____ would not be a long-term financial goal.

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. -When your assets exceed your liabilities,you are [insolvent | solvent].

Net worth is greatest for those in their prime working years,about age 55.

A budget is a financial report that forecasts your current income as a percentage of your past earnings.

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 Flemings will need $80,000 annually for 20 years during retirement.How much will they need at retirement if they can earn a 4% rate of return?

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.

The three parts of your balance sheet are your:

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn? Approximate the rate of interest to the nearest whole number.

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

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

Planning for Retirement

Preserving Your Estate

Filters

Exam 2: Using Financial Statements and Budgets

The liquidity ratio is an indicator of a family's ability to pay current debts if there is an interruption in income.

The income statement:

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

Net worth is:

The main purpose of a budget is to:

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

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment?

_____ would not be a long-term financial goal.

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. -When your assets exceed your liabilities,you are [insolvent | solvent].

Net worth is greatest for those in their prime working years,about age 55.

A budget is a financial report that forecasts your current income as a percentage of your past earnings.

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 Flemings will need $80,000 annually for 20 years during retirement.How much will they need at retirement if they can earn a 4% rate of return?

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.

The three parts of your balance sheet are your:

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn? Approximate the rate of interest to the nearest whole number.

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

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

Planning for Retirement

Preserving Your Estate

Filters