Question 1

____ is an example of an personal asset.

Accepted Answer

A)  Jewelry 
B)  Recreational equipment 
C)  Corporate bond 
D)  Charge account balance 
E)  Auto insurance premium

Question 2

What can you do if your budget shows an annual budget deficit?

Accepted Answer

A)  Liquidate enough savings and investments to meet the total budget shortfall for the year. 
B)  Borrow enough to meet the total budget shortfall for the year. 
C)  Cut low-priority expenses from the budget. 
D)  Increase Income. 
E)  All of the above.

Question 3

Jean and Jim have liquid assets of $3,600 and other assets of $42,800.Their total liabilities equal $26,000.What is their net worth?

Accepted Answer

The answer of Jean and Jim have liquid assets of...

Question 4

When the income statement indicates a surplus,this may be used to increase net worth by increasing assets or decreasing liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Most types of personal property depreciate,or decline in value,shortly after being put into use.

Accepted Answer

A) True 
 B)False

Question 6

Interest you earned on your savings account would be an entry on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Financial planning and budgeting [do | do not] mean the same thing.

Accepted Answer

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

Question 8

Inability to reach short-term goals will significantly affect your ability to reach long-term goals.

Accepted Answer

A) True 
 B)False

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Once you define your [short-term | long-term] financial goals,you can prepare a cash budget for the upcoming year.

Accepted Answer

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

Question 10

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn?

Accepted Answer

A)  6% 
B)  7% 
C)  8% 
D)  9% 
E)  10%

Question 11

Budgets are

Accepted Answer

A)  restrictive. 
B)  complicated. 
C)  are forward looking. 
D)  permanent. 
E)  unnecessary.

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Investment assets are required to [earn a return | provide a service].

Accepted Answer

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

Question 13

The best place to keep a budget is in a safe deposit box.

Accepted Answer

A) True 
 B)False

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].

Accepted Answer

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

Question 15

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years.If you require a 7% return,what is the most you should pay for this investment?

Accepted Answer

A)  $ 49,179 
B)  $175,590 
C)  $201,000 
D)  $225,682 
E)  $250,000

Question 16

On an income statement covering January 1 to June 30,____ would not be included as income.

Accepted Answer

A)  wages and salaries received in that six months 
B)  interest received on June 30 
C)  auto sold with payment received May 15 
D)  inheritance granted in April,to be paid in September 
E)  income tax refund received April 14

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The most difficult approach to handle a budget deficit is to [find a second job | borrow money].

Accepted Answer

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

Question 18

Which of the following are not among the four categories accounting for three-quarters of consumer spending?

Accepted Answer

A)  Utilities 
B)  Clothing 
C)  Food 
D)  a and b 
E)  a,b,and c

Question 19

Money I loaned to a friend is a liability on my balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

Another term sometimes used instead of net worth is

Accepted Answer

A)  assets. 
B)  net debts. 
C)  long-term liabilities 
D)  equity. 
E)  liquid assets.

Exam 2: Using Financial Statements and Budgets

____ is an example of an personal asset.

What can you do if your budget shows an annual budget deficit?

Jean and Jim have liquid assets of $3,600 and other assets of $42,800.Their total liabilities equal $26,000.What is their net worth?

When the income statement indicates a surplus,this may be used to increase net worth by increasing assets or decreasing liabilities.

Most types of personal property depreciate,or decline in value,shortly after being put into use.

Interest you earned on your savings account would be an entry on the balance sheet.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Financial planning and budgeting [do | do not] mean the same thing.

Inability to reach short-term goals will significantly affect your ability to reach long-term goals.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Once you define your [short-term | long-term] financial goals,you can prepare a cash budget for the upcoming year.

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn?

Budgets are

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Investment assets are required to [earn a return | provide a service].

The best place to keep a budget is in a safe deposit box.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If your expenses exceed your income,the bottom line of your income/expense statement will show a [surplus | deficit].

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years.If you require a 7% return,what is the most you should pay for this investment?

On an income statement covering January 1 to June 30,____ would not be included as income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The most difficult approach to handle a budget deficit is to [find a second job | borrow money].

Which of the following are not among the four categories accounting for three-quarters of consumer spending?

Money I loaned to a friend is a liability on my balance sheet.

Another term sometimes used instead of net worth is