Budgets and Balance Sheets PERSONAL FINANCE
budget
a forecast of your future cash inflows and outflows
After all of her expenses, Sarabeth typically has 100-150 left over each month. Which of the following tools would help Sarabeth the most
a personal balance sheet
Current and long term liabilities represent which of the following
a persons total debt
personal cash flow statement
a record of your incoming and outgoing money
Which of the following would you most likely use to assess the accuracy of your budget?
an expense journal
A ____ is a promise to repay a certain amount of money at some future time
bond
A _____ can help you save money for major purchases, unexpected expenses, and unexpected opportunities
budget
While a _____ tracks cash flows over time, a _____ shows an individual's financial position at a point in time
budget; personal balance sheet
Which of the following is NOT a typical asset listed on a personal balance sheet
cash inflows
The most common form of current liability for individuals is a
credit card balance
You should use a credit card as a ___, not a ____
current liability; long term liability
Lendors often use the ______ ratio to determine whether someone has enough wealth of repay debt
debt to asset
Which of the following is likely to have the smallest effect on an individual's cash outflows
ethnicity
Money spent on a vacation or a birthday is an example of an _____ expense that will not show up in a typical month's budget
expected but irregular
A cash flow statement is a forecast of future cash inflows and outflows
false
A good budget should forecast cash inflows and outflows for a week or two
false
A personal cash flow statement is a summary of an individual's assets, liabilities, and net worth
false
A stock if basically a certificate that functions like an IOU
false
According to a survey by Bankrate, americans who are college grads are more likely than americans who only have a high school edu to have more in credit card debt than they do in savings
false
If you are coming up short of money at the end of most months, you need to either increase your cash inflow or increase your ash outflow
false
Most publicly traded companies have millions of bonds outstadning so one bond represents a very small fraction of ownership in that company
false
To assess the accuracy of your budget, you should compare cash flow forecasts for each month
false
Turning a personal cash flow statement into a budget for an entire year requires precision and accuracy
false
any asset can be quickly and easily convert to cash
false
money management refers to the management of investments, not liquid assets
false
Liquid assets typically make up a larger proportion of a person's balance sheet than household assets do
falsse
The difference between what you forecast to happen and what actually happened is referred to as
forecast error
Christine is creating a personal balance sheet and has begun classifying her assets. Which of the following should Christine classify as a liquid asset
her checking account
To figure your personal balance sheet you would need to conduct research to estimate the market value of your
household assets
An _____ is something that you acquire with the ultimate goal of making money
investment
If you are unsure about investment selections and want the expertise of a professional portfolio manager, you should invest in
mutual funds
Most _____ typically require a minimum investment ranging between 500$ and 3,000$
mutual funds
Which of the following are commonly used as investments for Section 529 College Savings Plans
mutual funds
Which of the following types of investments offers and investor the most protection from severe drop in the value of an investment
mutual funds
You can use the information from ______ to calculate your debt to asset ratio
personal balance sheet
The initial amount you owe in a liability such as a home mortgage is referred to as the
principal;
The defining characteristic of a liquid asset is its
quick availiability
Homes, rental property, farms, and timberland are all examples of
real estate investments
The primary cash inflow for most adults is their
salary
A good budget will force you to ____ take advantage of unexpected opportunities
set aside moeny
Market value refers to what something would be worth if you
sold it today
A(n) ______ represents fractional ownership of a company
stock
People purchase _____ in a company in hopes that the company will do well and their investment will increase in value
stocks
forecast error
the difference between your predicted cash flows and your actual cash flows
To determine your net worth, subtract _____ from -_____
the total of your current and long term liabilities; the value of your total assets
Creating a budget involves forecasting your net cash flows
true
Identifying your current cash inflows and outflows is the first step in the budgeting process
true
In a budget, money you receive from a scholarship would be calculated as part of your income
true
It is possible adjust your budget once you have started to use it
true
Net worth is the figure used to track and individual's overall wealth
true
The most effective and easy to follow budgets do not vary from month to month
true
Your budget should account for expected but irregular expenses such as vacations and birthdays
true
Your budget should help you anticipate future cash shortfalls
true
a liquid asset should be used to make money through the accumulation of interest
true
a low debt to asset ratio is an advantage for someone who is seeking a loan
true
one way to increase your net worth is to possess assets that increase by more than the value of your liabilities
true
parents, grandparents, and other relatives can contribure to a childs 529 college savings plan
true
your personal balance sheet will change if you acquire a new asset or a new liability but will not change if you spend all of your income on living expenses
true
Figuring your net worth is an easy way to measure your
wealth