Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The short-term goals you put into your financial plan [will | will not] affect the achievement of long-term goals.

Accepted Answer

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

Question 2

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 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-When your assets exceed your liabilities,you are [saving | solvent].

Accepted Answer

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

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Personal financial software is mostly available for [free | a fee].

Accepted Answer

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

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

Accepted Answer

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

When a cash surplus exists on your income and expenditure statements,you can

Accepted Answer

A)  acquire assets. 
B)  pay off existing debts. 
C)  increase your savings. 
D)  increase your investments. 
E)  do any of the above.

Question 9

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 10

A(n)____ would not be listed as an asset on your balance sheet.

Accepted Answer

A)  mortgaged home 
B)  savings account 
C)  owned automobile 
D)  checking account 
E)  leased automobile

Question 11

I should not record ____ on an income/expense statement covering January 1 to June 30.

Accepted Answer

A)  an $800 refrigerator bought on credit May 30 
B)  a paid March telephone bill 
C)  health insurance premiums deducted from monthly pay checks 
D)  checking account service charges 
E)  groceries bought and paid for in June

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A [savings account | retirement account] would be an example of a liquid asset.

Accepted Answer

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

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If you liquidate assets or borrow to make your budget balance,this will [increase | decrease] your net worth.

Accepted Answer

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

Question 14

All of the following are stages in preparing a cash budget except:

Accepted Answer

A)  estimating income 
B)  estimating expenses 
C)  calculating depreciation expense 
D)  finalizing the cash budget

Question 15

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 16

Balance sheets and income statements are most useful if prepared at least annually.

Accepted Answer

A) True 
 B)False

Question 17

The balance sheet equation is:

Accepted Answer

A)  Total Assets / Total Liabilities = Net Worth. 
B)  Total Assets * Total Liabilities = Net Worth. 
C)  Total Assets - Total Liabilities = Net Worth. 
D)  Total Assets + Total Liabilities = Net Worth. 
E)  Total Liabilities - Total Assets = Net Worth.

Question 18

Elena purchased a stamp collection for $5,000 thirty years ago.If it appreciated 8% annually,what is it worth today?

Accepted Answer

A)  $ 17,000 
B)  $ 36,400 
C)  $ 50,313 
D)  $123,023 
E)  $150,000

Question 19

Sonny and Cher have a net worth of $35,000 and total assets of $200,000.If their revolving credit and unpaid bills total $2,200,what are their long-term liabilities?

Accepted Answer

A)  $115,000 
B)  $140,000 
C)  $142,200 
D)  $162,800 
E)  $165,000

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Using Financial Statements and Budgets

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The short-term goals you put into your financial plan [will | will not] affect the achievement of long-term goals.

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

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -When your assets exceed your liabilities,you are [saving | solvent].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Personal financial software is mostly available for [free | a fee].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

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

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

When a cash surplus exists on your income and expenditure statements,you can

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

A(n) ____ would not be listed as an asset on your balance sheet.

I should not record ____ on an income/expense statement covering January 1 to June 30.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A [savings account | retirement account] would be an example of a liquid asset.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If you liquidate assets or borrow to make your budget balance,this will [increase | decrease] your net worth.

All of the following are stages in preparing a cash budget except:

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?

Balance sheets and income statements are most useful if prepared at least annually.

The balance sheet equation is:

Elena purchased a stamp collection for $5,000 thirty years ago.If it appreciated 8% annually,what is it worth today?

Sonny and Cher have a net worth of $35,000 and total assets of $200,000.If their revolving credit and unpaid bills total $2,200,what are their long-term liabilities?

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