Question 1

Net worth is measured by

Accepted Answer

A)  bank card balances. 
B)  house mortgage balances. 
C)  amount owed on an automobile loan. 
D)  assets minus liabilities. 
E)  insurance premium.

Question 2

The financial planning process is regulated by state governments when done by professionals.

Accepted Answer

A) True 
 B)False

Question 3

Your ____ is an example of a liquid asset.

Accepted Answer

A)  home 
B)  car 
C)  checking account 
D)  charge account 
E)  life insurance cash value

Question 4

Financial planning is necessary only if you earn a lot of money.

Accepted Answer

A) True 
 B)False

Question 5

A budget is a detailed financial forecast.

Accepted Answer

A) True 
 B)False

Question 6

You are solvent if your

Accepted Answer

A)  total liabilities exceed total assets. 
B)  total assets exceed total liabilities. 
C)  total assets exceed net worth. 
D)  total liabilities exceed net worth. 
E)  none of these.

Question 7

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

Accepted Answer

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

Question 8

The savings ratio indicates the percentage of after-tax income that is saved.

Accepted Answer

A) True 
 B)False

Question 9

The best way to balance your budget is to increase borrowing.

Accepted Answer

A) True 
 B)False

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-You bought a $500 stereo on the installment plan and made two payments of $75 during the year.On your income/expense statement for the year,you will show an expense of [$150 | $500].

Accepted Answer

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

Question 11

The income and expenditures statement provides a measure of financial performance over a period of time.

Accepted Answer

A) True 
 B)False

Question 12

Most personal financial software is available at a reasonable cost.

Accepted Answer

A) True 
 B)False

Question 13

Net worth is highest at about what age?

Accepted Answer

A)  45 
B)  55 
C)  65 
D)  75 
E)  85

Question 14

Jamil invested $9,500 in an account he expects will earn 5% annually.Approximately how many years will it take for the account to double in value?

Accepted Answer

A)  8.8 
B)  9.7 
C)  10.8 
D)  11.4 
E)  14.4

Question 15

On the balance sheet,a mortgage loan is recorded as the

Accepted Answer

A)  interest only. 
B)  sum of interest paid and the outstanding balance. 
C)  sum of interest due and the outstanding balance. 
D)  principal portion only. 
E)  none of the above.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

If you use net salary as income on your budget,the expenditures section must include income and social security taxes.

Accepted Answer

A) True 
 B)False

Question 18

A cash budget helps you:

Accepted Answer

A)  Monitor and control your finances. 
B)  Decide how to allocate your income to reach your financial goals. 
C)  Achieve your long-term financial goals. 
D)  All of the above. 
E)  A & B only.

Question 19

Investment assets include items such as boats or automobiles.

Accepted Answer

A) True 
 B)False

Question 20

A budget is a detailed statement of what income and expenses occurred over a past period.

Accepted Answer

A) True 
 B)False

Exam 2: Using Financial Statements and Budgets

Net worth is measured by

The financial planning process is regulated by state governments when done by professionals.

Your ____ is an example of a liquid asset.

Financial planning is necessary only if you earn a lot of money.

A budget is a detailed financial forecast.

You are solvent if your

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

The savings ratio indicates the percentage of after-tax income that is saved.

The best way to balance your budget is to increase borrowing.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -You bought a $500 stereo on the installment plan and made two payments of $75 during the year.On your income/expense statement for the year,you will show an expense of [$150 | $500].

The income and expenditures statement provides a measure of financial performance over a period of time.

Most personal financial software is available at a reasonable cost.

Net worth is highest at about what age?

Jamil invested $9,500 in an account he expects will earn 5% annually.Approximately how many years will it take for the account to double in value?

On the balance sheet,a mortgage loan is recorded as the

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

If you use net salary as income on your budget,the expenditures section must include income and social security taxes.

A cash budget helps you:

Investment assets include items such as boats or automobiles.

A budget is a detailed statement of what income and expenses occurred over a past period.