Question 1

Your net worth and your equity in owned assets are the same basic concept.

Accepted Answer

A) True 
 B)False

Question 2

Using the future value calculations to estimate the funds needed to meet a goal takes compounding into account.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  actual purchase price. 
B)  replacement value. 
C)  insured value. 
D)  sale price. 
E)  fair market value.

Question 4

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 most difficult approach to handle a budget deficit is to [find a second job | borrow money].

Accepted Answer

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

Question 5

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 
D)  income increased 
E)  none of these

Question 6

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/expense statement will have [an | no] effect on your balance sheet.

Accepted Answer

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

Question 7

The income and expenditures statement examines your financial

Accepted Answer

A)  level. 
B)  performance. 
C)  position. 
D)  assets. 
E)  objectives.

Question 8

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

Accepted Answer

A)  the value of your stock portfolio 
B)  taxes withheld 
C)  utilities paid 
D)  mortgage payments 
E)  charitable payments

Question 9

The income statement includes

Accepted Answer

A)  income, liabilities, net worth. 
B)  income, expenditures, surplus or deficit. 
C)  expenditures, net worth, surplus or deficit. 
D)  net worth, surplus, income or expenditures. 
E)  savings, surplus, income or expenditures.

Question 10

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 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.
-If your budget shows a deficit,[increase income | increase expenses] to regain balance.

Accepted Answer

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

Question 12

Rosa and Jose have liquid assets of $5,000 and other assets of $50,000.Their total liabilities equal $26,000.What is their net worth? (Show all work.)

Accepted Answer

The answer of Rosa and Jose have liquid assets of...

Question 13

A budget is a

Accepted Answer

A)  purchase plan. 
B)  line of credit. 
C)  financial statement. 
D)  detailed financial forecast. 
E)  set of personal financial objectives.

Question 14

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? (Show all work.)

Accepted Answer

The answer of Inflation this coming year is expected to...

Question 15

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

Accepted Answer

A)  8 
B)  9 
C)  10 
D)  11 
E)  12

Question 16

Kim's net worth is $85,000 and her total assets are $100,000.What is Kim's solvency ratio?

Accepted Answer

A)  15% 
B)  25% 
C)  65% 
D)  85% 
E)  100%

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

Accepted Answer

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

Question 18

The Wilson family's short-term goals might include

Accepted Answer

A)  setting up an emergency fund of three months' income 
B)  buying a house 
C)  sending the kids to college 
D)  planning to retire at age 60 
E)  all of these

Question 19

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.
-Once you define your [short-term | long-term] financial goals,you can prepare a cash budget for the upcoming year.

Accepted Answer

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

Question 20

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.
-Four categories,accounting for 75% of consumer spending,include [utilities | clothing].

Accepted Answer

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

Exam 2: Using Financial Statements and Budgets

Your net worth and your equity in owned assets are the same basic concept.

Using the future value calculations to estimate the funds needed to meet a goal takes compounding into account.

When Phil lists his house on his 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. -The most difficult approach to handle a budget deficit is to [find a second job | borrow money].

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

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/expense statement will have [an | no] effect on your balance sheet.

The income and expenditures statement examines your financial

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

The income statement includes

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

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 budget shows a deficit,[increase income | increase expenses] to regain balance.

Rosa and Jose have liquid assets of $5,000 and other assets of $50,000.Their total liabilities equal $26,000.What is their net worth? (Show all work.)

A budget is a

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? (Show all work.)

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

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

The Wilson family's short-term goals might include

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. -Four categories,accounting for 75% of consumer spending,include [utilities | clothing].