Question 1

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 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The first step in financial planning is to [define financial goals | set up a budget.]

Accepted Answer

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

Question 3

The three parts of your balance sheet are

Accepted Answer

A)  income,liabilities,balance. 
B)  assets,expenditures,balance. 
C)  assets,liabilities,balance. 
D)  assets,liabilities,net worth. 
E)  income,liabilities,net worth.

Question 4

Kathy purchased new furniture for $10,000.She put $1,000 down and financed $9,000.She will pay $350 per month until the loan is paid off.Which of the following are true?

Accepted Answer

A)  The furniture should be recorded as an asset of $10,000 on Kathy's balance sheet. 
B)  The $9,000 is entered as a liability on Kathy's balance sheet. 
C)  The furniture should be recorded as a $1,000 expenditure on Kathy's balance sheet. 
D)  The $350 payments are expenditures on Kathy's income and expenditure statement. 
E)  All are correct except c

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Another term sometimes used for net worth is [collateral | equity].

Accepted Answer

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

Question 6

Mike and Teresa Garza have a monthly gross income of $5,000,but they pay $1,000 per month in taxes.They also pay $2,000 per month in various loan payments.What is their debt service ratio?

Accepted Answer

A)  20% 
B)  30% 
C)  40% 
D)  50% 
E)  60%

Question 7

Net worth is greatest for those in their prime working years,about age 55.

Accepted Answer

A) True 
 B)False

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-An asset must have [market | monetary] value to be included on a balance sheet.

Accepted Answer

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

Question 9

Jewelry,furniture and computers are examples of personal property.

Accepted Answer

A) True 
 B)False

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If your budget shows a deficit,[increase income | increase expenses] to regain balance.

Accepted Answer

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

Question 11

Construct a balance sheet from the following information.Be sure the format is correct.

Accepted Answer

The answer of Construct a balance sheet from the following...

Question 12

A charge made on your credit card becomes a liability as soon as the charge is incurred.

Accepted Answer

A) True 
 B)False

Question 13

You are more likely to achieve your goals when

Accepted Answer

A)  your income is high. 
B)  goal dates are inflexible. 
C)  short- and long-term goals are established separately. 
D)  goals are reassessed and revised periodically. 
E)  one person controls all goals in the household.

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Payments made on your loan obligations should [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 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Your car has a market value of $4,000 while the balance of the loan against it is now $2,500.You will list this car as net worth of [$4,000 | $1,500].

Accepted Answer

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

Question 16

A cash surplus will typically produce a positive savings ratio.

Accepted Answer

A) True 
 B)False

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Putting specific target dates on your goals [will not | will] increase the likelihood of their being accomplished.

Accepted Answer

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

Question 18

Budgeting and record keeping are really the same activity.

Accepted Answer

A) True 
 B)False

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Another word for take-home pay is [gross | disposable] income.

Accepted Answer

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

Question 20

The Hamptons want to have $1,750,000 for their retirement in 30 years.How much should they save annually if they think they can earn 8% on their investments?

Accepted Answer

The answer of The Hamptons want to have $1,750,000 for...

Exam 2: Using Financial Statements and Budgets

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

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The first step in financial planning is to [define financial goals | set up a budget.]

The three parts of your balance sheet are

Kathy purchased new furniture for $10,000.She put $1,000 down and financed $9,000.She will pay $350 per month until the loan is paid off.Which of the following are true?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Another term sometimes used for net worth is [collateral | equity].

Mike and Teresa Garza have a monthly gross income of $5,000,but they pay $1,000 per month in taxes.They also pay $2,000 per month in various loan payments.What is their debt service ratio?

Net worth is greatest for those in their prime working years,about age 55.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -An asset must have [market | monetary] value to be included on a balance sheet.

Jewelry,furniture and computers are examples of personal property.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If your budget shows a deficit,[increase income | increase expenses] to regain balance.

Construct a balance sheet from the following information.Be sure the format is correct.

A charge made on your credit card becomes a liability as soon as the charge is incurred.

You are more likely to achieve your goals when

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Payments made on your loan obligations should [increase | decrease] your net worth.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Your car has a market value of $4,000 while the balance of the loan against it is now $2,500.You will list this car as net worth of [$4,000 | $1,500].

A cash surplus will typically produce a positive savings ratio.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Putting specific target dates on your goals [will not | will] increase the likelihood of their being accomplished.

Budgeting and record keeping are really the same activity.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Another word for take-home pay is [gross | disposable] income.

The Hamptons want to have $1,750,000 for their retirement in 30 years.How much should they save annually if they think they can earn 8% on their investments?