Question 1

Using time value of money is most important when planning for short-term goals.

Accepted Answer

A) True 
 B)False

Question 2

A balance sheet shows your financial condition as of the time the statement is prepared.

Accepted Answer

A) True 
 B)False

Question 3

The balance sheet equation is assets plus liabilities equals net worth.

Accepted Answer

A) True 
 B)False

Question 4

____ 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

Question 5

One should quickly make important financial decisions soon after a financial shock,such as death or divorce.

Accepted Answer

A) True 
 B)False

Question 6

If your statement of income and expenditures shows a deficit,you may have

Accepted Answer

A)  increased your debts. 
B)  increased your assets. 
C)  added to savings. 
D)  bought additional insurance. 
E)  paid off some of your debts.

Question 7

Which of the following is among the four categories accounting for almost three-quarters of consumer spending?

Accepted Answer

A)  Personal insurance and pensions 
B)  Clothing 
C)  Utilities 
D)  Entertainment 
E)  Medical

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Four categories,accounting for 75% of consumer spending,include [clothing | housing].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 9

A cash deficit decreases net worth.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Only four categories of spending account for almost 90% of all consumer spending.

Accepted Answer

A) True 
 B)False

Question 12

Balance sheet liabilities should be recorded at their

Accepted Answer

A)  original outstanding balance. 
B)  year-end outstanding balance. 
C)  average outstanding balance. 
D)  current outstanding balance. 
E)  none of these.

Question 13

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?

Accepted Answer

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

Question 14

The most common budgeting period is a

Accepted Answer

A)  week. 
B)  month. 
C)  quarter. 
D)  semi-annually. 
E)  bi-weekly.

Question 15

Personal financial software is widely available,much of which is free.

Accepted Answer

A) True 
 B)False

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-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

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The liquidity ratio is designed to show the percentage of [your annual credit obligations | next months credit obligations] you could cover with your current assets.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 18

The best approach to solving the problem of an annual budget deficit is generally to

Accepted Answer

A)  liquidate enough savings to make up the deficit. 
B)  sell stock to make up the deficit. 
C)  reduce flexible expenditures. 
D)  reduce fixed expenses. 
E)  get a part time job.

Question 19

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 20

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

Accepted Answer

A)  above 50%. 
B)  below 50%. 
C)  at 35%. 
D)  below 35%. 
E)  above 20%.

Exam 2: Using Financial Statements and Budgets

Using time value of money is most important when planning for short-term goals.

A balance sheet shows your financial condition as of the time the statement is prepared.

The balance sheet equation is assets plus liabilities equals net worth.

____ would not be a long-term financial goal.

One should quickly make important financial decisions soon after a financial shock,such as death or divorce.

If your statement of income and expenditures shows a deficit,you may have

Which of the following is among the four categories accounting for almost three-quarters of consumer spending?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Four categories,accounting for 75% of consumer spending,include [clothing | housing].

A cash deficit decreases net worth.

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?

Only four categories of spending account for almost 90% of all consumer spending.

Balance sheet liabilities should be recorded at their

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?

The most common budgeting period is a

Personal financial software is widely available,much of which is free.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -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].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The liquidity ratio is designed to show the percentage of [your annual credit obligations | next months credit obligations] you could cover with your current assets.

The best approach to solving the problem of an annual budget deficit is generally to

A budget is a

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