Fin 300

third

Identifying alternative courses of action is the ______ step in the financial planning process.

- Evaluating risk - Considering the consequences of your choices - Considering inflation risk

Which of the following are part of evaluating alternative courses of action in the financial planning process?

- Creating and implementing a plan for savings - Storing and maintaining personal financial records - Preparing personal financial statements

Which of the following are the major money management activities?

Balance sheet

Which of the following is a financial statement that reports what an individual or a family owns and owes?

personal

Money management refers to the daily financial activities necessary to manage current ______ economic resources while working toward long-term financial security.

- personal resources. - financial resources.

Opportunity costs can be viewed in terms of_____ and _____ resources.

inflation

A rise in the general level of prices is called:

prices

Inflation is a rise in the general level of ______.

242 ($200 X 0.10 X 1 =$20 in interest. $200 + $20 = $220 at the end of the first year. At the end of the second year he'll have: $220 X 0.10 X 1 =$22 in interest. $220 + $22 = $242).

Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the second year if the investment earns interest compounded annually?

double

The rule of 72 is used to estimate the time that it would take for your money to:

True

True or False: Net worth is found by subtracting liabilities from assets.

- The amount you would have if you sold the assets and paid off the liabilities - Assets minus liabilities

Which of the following provide accurate explanations of net worth?

The net worth is $175,000 as of 12/31/2020.

Which of the following statements are true about a balance sheet that you are reviewing on 1/15/2021 that shows an "as of" date of 12/31/2020 and assets of $600,000 and liabilities of $425,000? - The net worth is $175,000 as of 12/31/2020. - The assets as of 1/15/2021 have a market value of $600,000. - The liabilities, which don't change much, are $425,000 as of 12/31/2020 and 1/15/2021. - The net worth is $175,000 as of 1/15/2021.

Career choice decisions do not have risks and opportunity costs.

Which of the following statements is NOT true? - The steps of the financial planning process can provide an approach to career planning. - Career choices require periodic evaluation of trade-offs related to various factors. - The average person changes jobs seven times in a lifetime. - Career choice decisions do not have risks and opportunity costs.

An adequate emergency fund is usually 3-6 months of living expenses

Which of the following statements is true? - An adequate emergency fund is usually 3-6 months of living expenses - An adequate emergency fund is usually 3-6 months of gross pay - An emergency fund should be invested in stocks - An adequate emergency fund is 9-12 months of take home pay

Groceries

Which one of the following is an example of a variable expense?

financial plan

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is called a(n) ______ ______.

Emotional decision making

According to AICPA Insights, which of the following is a common mistake related to implementing a financial plan?

two

According to the text, there are ______ main factors that contribute to Americans having money problems.

- Poor planning and weak management of money habits. - Advertising efforts and availability of goods encourage overspending.

According to the text, what are the main reasons Americans have financial problems?

once a year

According to the text, you should do a complete review of your finances at least:

Continue the same course of action

After considering the alternative courses of action to reach financial goals, one of the possible courses of action is to ______.

a global economy and foreign competition.

American consumers spend dollars on goods and services. The goods and services are manufactured or offered by American companies and companies from other countries. This is an example of:

discounting

Another name used for calculating present value is ______. Compounding is the other term for future value.

present value computations.

Another name used for discounting is:

- set financial goals - Estimate income - Budget an emergency fund and savings - Budget fixed expenses - Budget variable expenses - Record spending amounts - Review spending and savings pattern

Arrange the steps involved in the process of budgeting in the correct order of occurrence.

Flow

Cash ____ is the actual inflow and outflow of cash during a given time period.

Expanding the current situation

Choosing to save a larger amount each month is an example of which possible course of action that is a part of step three in the financial planning process?

- Preparing your personal financial statements. - Identifying current income, savings, living expenses, and debts.

Determining your current financial situation involves which of the following? - Preparing your personal financial statements. - Assessing your risk. - Creating and implementing your financial action plan. - Identifying current income, savings, living expenses, and debts.

first

Determining your current financial situation is the ______ step in the financial planning process.

second

Developing your financial goals is the ______ step in the financial planning process.

- having enough money to fund retirement and pay for current expenses. - being able to work and go to school at the same time. - accepting a low yield because you have chosen low-risk investments.

Examples of opportunity costs do NOT include: - having enough money to fund retirement and pay for current expenses. - forfeiting interest and taking money from savings and purchasing new appliances to save energy costs. - being able to work and go to school at the same time. - accepting a low yield because you have chosen low-risk investments.

- trading in a large car with poor gas mileage for a smaller car that is fuel-efficient. - not having as much money in savings because you purchased new appliances to save energy costs. - delaying investment while waiting for the time value of money to increase the pay received. - not getting a high yield because you have set aside funds in a low risk investment.

Examples of opportunity costs include: - trading in a large car with poor gas mileage for a smaller car that is fuel-efficient. - not having as much money in savings because you purchased new appliances to save energy costs. - having enough money to save for retirement and to pay for current expenses. - delaying investment while waiting for the time value of money to increase the pay received. - not getting a high yield because you have set aside funds in a low risk investment.

$250 favorable

If expected expenditures for food were $1,000 while the actual food costs were $750, what would be the variance?

- American businesses compete against foreign companies for the spending dollars of American consumers. - American consumers provide foreign companies with a market.

In the context of global influences, which of the following statements are true of American consumers and American businesses? - American businesses compete against foreign companies for the spending dollars of American consumers. - American businesses have no competitors in the global economy. - American consumers provide foreign companies with a market. - The global economy is solely driven by American consumption.

- demand for money. - supply of money.

Interest rates are affected by the following: - demand for money. - supply of money. - the cost of real estate only. - time value of money.

$70,000 because the balance sheet should report what is owed on the balance sheet date.

Joe borrowed $100,000 (a four-year loan at 10 percent interest) on January 2, 2020. During the course of the year, he paid back $30,000 on that debt. What would his December 31, 2020 balance sheet show for this debt? Interest is an expense and not part of the loan balance.

10 (72 / 7.2)

John has an interest rate of 7.2% on his savings account. Using the Rule of 72, his money will double in _____ years.

- time value of money - inflation costs - financial opportunity costs

Key factors for most people in making financial decisions include:

savings

Long-term financial security starts with a regular ______ plan for emergencies and unexpected bills.

True

Money management involves financial activities necessary to manage current personal economic resources, while working for the achievement of long-term financial security.

Credit card statements

Purchase receipts, insurance policies, tax forms, and which of the following are the basis of financial recordkeeping?

personal opportunity costs.

Rachel has been shopping for a new refrigerator over the course of three days and has been putting all her household chores on hold. She finds a refrigerator that fits her needs and purchases it. This is an example of:

final

Reviewing and revising your plan is the ______ step in the financial planning process.

104 ($100x4%=$104)

Samantha wants to buy a new watch that costs $100. She decides to wait a year. All other factors being equal, if inflation is 4%, the watch will cost $ next year.

Federal Reserve

The _____ _____ System is the central bank of the United States and has significant economic responsibility.

future value

The amount to which current savings will increase based on a certain interest rate and a certain time period is called:

act as the central bank and maintain an adequate money supply

The main purpose of the Federal Reserve is to ______.

consumer price index

The measure of the average change in the prices urban consumers pay for a fixed "basket" of goods and services is called the:

three to six months of living expenses

The rule of thumb when saving for an emergency fund is to set aside:

career

The steps in the financial planning process can guide your ______ planning.

Cash flow statement

The two documents considered to be part of personal financial statements include the personal balance sheet and which of the following?

value

Time ______ of money calculations can be used to calculate progress toward achieving different financial goals.

416 (400x4%= $16) ($16+$400= $416)

Tom needs a new washing machine. A new one costs $400. He decides to save and buy one next year. All other factors being equal, if inflation is 4%, the washing machine will cost $_____ next year.

True

True or False: Budgets allow you to live within your income while increasing your chances of achieving your financial goals.

True

True or False: The steps to prepare a budget include setting financial goals, estimating expected income, budgeting for emergency funds and expenses, recording actual expenses, calculating variances, and evaluating.

False

True or False: Personal balance sheet and the cash flow statement come from financial institutions, businesses, or the government.

True

True or False? People should prepare a personal balance sheet on a periodic basis to evaluate financial progress.

True

True or false: A key factor in making financial decisions is time value of money.

True

True or false: Financial goals should be specific, realistic, measurable, have a time frame, and imply the type of action to be taken.

False

True or false: Managing risk is not a financial planning activity.

alternatives

Understanding how the ages of dependents will affect your savings goal is a part of step four in the financial planning process, which involves evaluating your ______.

Present value

What is the current value of a future amount based on a certain interest rate and a certain time period?

decrease

When consumer saving and investing increase, interest rates tend to:

rise

When consumer, business, government, and foreign borrowing increase the demand for money, interest rates tend to:

Setting goals

When discussing personal financial growth, what is an important aspect?

True

When evaluating your budget, you should review and perhaps revise your financial goals and budget allocations and review your financial progress.

long-term goals

When people first begin planning for retirement, saving for a child's college education, and planning the purchase of a vacation home, these are usually:

Daily economic transactions facilitate financial planning activities, which affect personal finance decisions.

When planning your financial goals, what role does the economy play?

- Save between 5 percent and 10 percent of each paycheck. - Save coins in a jar at the end of each day for deposit at a future time into a savings account. - Write a check each payday to deposit into a savings account. - Have savings deducted and automatically deposited into a savings account from each paycheck.

Which of the following can help you to achieve your financial goals? - Invest 40 percent of your annual salary in a new sports car. - Save between 5 percent and 10 percent of each paycheck. - Buy long-term bonds with deductions from every other paycheck. - Save coins in a jar at the end of each day for deposit at a future time into a savings account. - Write a check each payday to deposit into a savings account. - Have savings deducted and automatically deposited into a savings account from each paycheck.

Determine your current financial situation.

Which of the following is the first step in the financial planning process?