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 first step in financial planning is to [define financial goals | set up a budget.]

A solvency ratio shows how much "cushion" you have as a protection against insolvency.

Kim's net worth is $85,000 and her total assets are $100,000.What is Kim's 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. -Investment assets are required to [earn a return | provide a service].

Theresa invested $5,000 in an account she expects to earn 7% annually.Approximately how many years will it take for the account to double in value? (Round number of years to nearest whole number.)

Mary and Tom purchased their home for $150,000,and it is now worth $175,000.Its asset value is $150,000.

You would not include _____ on an income and expenditures statement.

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

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

Assume that your total income is $72,000.Total expenses including the taxes of $10,000 is $60,000.Your savings ratio is:

If you obtain a loan to purchase a car in June,this loan amount would be included as income for June.

In order to minimize the difficulty associated with meeting monthly loan payments,the debt service ratio should be:

Dual-income families often face:

Mindy and Lou had liquid assets of $10,000 and current debts of $30,000.What is their liquidity 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. -An asset must have [market | monetary] value to be included on a balance sheet.

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 [house | certificate of deposit] is an example of a tangible asset.

Only four categories of spending account for almost 90% of all 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. -The short-term goals you put into your financial plan [will | will not] affect the achievement of long-term goals.

A cash deficit decreases net worth.

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