Personal Finance Ch 3 Money Management Strategy: Financial Statements and Budgeting

a good financial goal should ____

all of the above

characteristics of a good budget include all of the following except

all of these are characteristics of a good budget

which of the following is NOT a purpose of personal financial statement

all of these are purposes of personal financial statements

Cash and other tangible assets with monetary value are called your personal ___

assets

Victoria's financial records show the following entries: car worth $2500 stereo equip $360 car loan $2300 credit card debit of $2,700 checking account $120 What is Victoria's net worth? Write your answer to the nearest dollar with commas and a dollar sign as needed. If the value is negative, enter the dollar sign before the minus sign

$-2020

Alva's financial records show the following entries: a car worth $3400 furniture worth $2000 car loan of $1400 home mortgage $42,000 home with market value of $44,000 credit card debt $350 checking account $140 What is Alva's net worth? Write your answer to the nearest dollar with commas and a dollar sign as needed. If the value is negative, enter the dollar sign before the minus sign

$5790

Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Suri has a net worth of $6,600 current liabilities of $1,900, liquid assets worth $900, net take home pay of $1,100 and monthly expenses of $900. What is Suri's debt ratio to the nearest tenth? If your answer is less than 1, write the answer as 0

0.4

Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Alvin has a net worth of $7850, current liabilities of $1700, liquid assets worth $1250, net take home pay of $1500, and monthly expenses of $800. What is Alvin's liquidity ratio to the nearest tenth

1.6

Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Trinity has a net worth of $10,350 current liabilities of $700, liquid assets worth $1150, net take home pay of $1500 and monthly expenses of $800. What is Trinity's current ratio to the nearest tenth? Express your answer to the nearest tenth

1.6

Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Tom has a net worth of $6,170, current liabilities of $1,700, liquid assets worth $650, net take home pay of $1,200 and monthly credit payments of $300. What is Toms debt payment ratio to the percent? Express your answer without the % sign (write 7 not .07 or 0.07)

25

copies of tax returns and supporting documents should be kept for ___ years

6

Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Chuck has a net worth of $10,500, current liabilities of $1000, monthly saving of$150, gross pay of $2000 and monthly expenses of $700. What is Chuck's saving ratio to the nearest percent? Express your answer without the percent sign (write 5 not .05 or 0.05)

8

Another term for a spending plan is a ___

budget

a ___ is the difference between the amount budgeted and the actual amount received or spent

budget variance

the inflow and outflow of cash during a specific time period is called ___

cash flow

if total cash inflows during a time period are greater than the total cash outflows during the same period, the result is a ___

cash surplus

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Income - Cash outflows

cash surplus or deficit

which of the following would not be helped by preparing a budget

choosing the best software to maintain your financial records

which of the following is NOT a money management activity

comparison shopping

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Debts owed within the next 12 months

current liabilities

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the ability to pay current liabilities

current ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liquid assets / current liabilities

current ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the relationship between debt and net worth

debt ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liabilities / net worth

debt ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates how much of a person's earnings go for debt payments

dept payments ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Monthly credit payments / net pay

dept payments ratio

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Income - necessary expenses

discretionary income

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit A highly liquid fund for unplanned expenses

emergency fund

a person with a high net worth will never have financial problems

false

a system of financial records can be used to save money through comparison shopping

false

current liabilities are debts that must be paid within 6 months

false

good financial goals never change once they are defined

false

if your budgeted income is less than your actual income, you have a surplus

false

the best technique for saving is to save the amount left at the end of each month

false

when estimating your income, you should include bonuses and gifts

false

your net worth is the money you can use to pay debts

false

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Mortgage payments due each

fixed expense

which of the following is an example of an opportunity cost

giving up time to clip coupons so you can spend less on groceries

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Hourly wage * hours worked

gross income

your budget is an important tool in achieving your financial goals because it

helps you plan your spending and saving

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept A written copy of your personal will

home file

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Insurance policies

home file

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Property tax records

home file

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Warranties

home file

the inability to pay current debts when they are due is called ___

insolvency

A home mortgage and care loan are both examples of personal debts called ___

liabilities

Cash and property that can easily be converted to cash are called ___

liquid assets

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Assets easily converted to cash

liquid assets

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the number of months living expenses that could be paid if an emergency occurs

liquidity ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liquid assets / monthly expenses

liquidity ratio

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Debits owed more than 12 months from now

long term liabilities

calculating your net worth is best used to

measure your current financial position

the routine financial activities to manage your current economic resources is called ___

money management

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Stock certificates for stock you sold 2 years ago

need not be kept

Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Salary - (Income tax + Social Security withholding)

net income

the amount of a person's salary that is left over after taxes are withheld is

net pay

If you total your assets and subtract the total of your liabilities the result is your ___

net worth

a balance sheet, also known as a ___ or statement of financial position, identifies your current financial worth

net worth statements

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Account summaries and performance results of investments

personal computer

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Income tax prepared on with personal tax software

personal computer

the personal balance sheet and cash flow statement are called ____

personal financial statements

The home and other land a person or family owns are called ___

real estate

a ___ is a private storage area at a financial institution for storing valuables and documents

safe deposit box

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Birth certificates

safe deposit box or fire proof home safe

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Citizenship papers

safe deposit box or fire proof home safe

match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept List of credit card numbers and telephone numbers of issuers

safe deposit box or fire proof home safe

the basis for an improved financial position and long term financial security is

savings

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the percentage of a persons earnings that is being saved

savings ratio

match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Monthly savings / gross income

savings ratio

which of the following might be used to calculate a person's net worth

the market value of a coin collection

a monthly car payment is an example of a cash outflow

true

an emergency fund should cover three to six months of living expenses

true

when estimating irregular income, you should estimate on the low side

true

Match each term with its description or formula a. debt ratio b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit A monthly electric bill

variable expense

___ are plans for future activities that require plans for spending, saving, and investing

Financial goals