BA218Ch.3PersonalFinancePart2

As you gather data regarding your assets, it is important to remember that regardless of category, you should record all assets on the balance sheet at ___.

Fair Market Value

___ expenses are expenses that are usually contractual with a predetermined payment, typically equal, periodic payments.

Fixed

A ___ liability is not due in the current year

Long-term

What you own can be broken down into asset categories. In the following table, select a category for each item listed: A. Money Market Fund B. Municipal Bond C. Fur Coat D. Individual Retirement Account E. Money Stuffed in Mattress F. Your House G. Checking Account H. Your Stock I. Your Pension J. Savings Account K. Your House

Monetary, Tangible or Invesment Assets? A. Monetary B. Investment C. Tangible D. Investment E. Monetary F. Tangible G. Monetary H. Investment I. Investment J. Monetary K. Tangible

Cash in less cash out results in a cash value. If this cash value is positive, it indicates that the individual or family has a cash

Surplus

Indicate whether each of the following statements about ratio analysis is true or false. A. P.F. Ratios can be used to show how your income, savings, and debt are related B. P.F. Ratios should not be used with personal financial statements C. P.F. Ratios can be used to track your progress toward a goal D. P.F. Ratios can be used to see how you compare to others in your demographic E. P.F. Ratios can be used to gauge your financial strength F. P.F. Ratios do not change over time G. P.F. Ratios can be used to see how you compare to others in your age group

A. True B. False C. True D. True E. True F. False G.True

The following table contains five concepts or definitions related to financial planning. Identify the term that best corresponds to each given concept or definition. A. Fundamental beliefs about what is important, desirable, and worthwhile B. Snapshot of assets, liabilities, and net worth on a particular date C. Assets that can be speedily and easily converted to cash D. Everything you own that has monetary value E. Cash taken in is more than cash disbursed or spent as reported on a cash-flow statement

A. Values B. Balance Sheet C. Liquid Assets D. Assets E. Surplus

Which financial records should you keep? Check all that apply. A. Home repair/home improvement receipts B. All cancelled checks C. Updated legal documents (wills, living trusts, powers of attorney, etc.) D. Copies of all income tax returns, both state and federal, for that past 3 years including all supporting documentation E. All utility bills F. All pay stubs G. Pet-related health records for all past and current pets H. Original insurance policies (including expired ones) I. Records of stock, bond, and mutual fund transactions and certificate numbers

A. Yes B. Yes C. Yes D. Yes E. Yes F. NO G. NO H. Yes I. Yes

Don Boyd owns a home valued at $250,000. The balance due on his mortgage is $187,500. $Don's vehicle is worth $10,000 and the outstanding balance on his car loan is $2,500. All bills are paid and Don's only bank balance shows that he has $5,000 in his account.

Assets - Liabilities = Net Worth 265,000 - 190,000 = 75,000 (Answer) Assets: Cash at Bank: 5,000 Home: 250,000 Vehicle: 10,000 Total Assets = 265,000 Liabilities: Mortgage Balance: 187,500 Car Loan Balance: 2,500 Total Liabilities = 190,000

A ___ reflects an individual's or family's assets and liabilities on a specified date

Balance Sheet

A ___ lists the transactions that have been taken place over a specific period of time

Cash-flow Statement

As you gather data regarding your liabilities, it is important to remember that regardless of category, you should record all liabilities on the balance sheet at their current payoff amounts, which should ___ future interest payments

Exclude

A cash-flow statement shows you where your money comes from and where it goes. There are three sections. The first is their come ___ section. It reflects all cash inflows including income from wages, gifts, investments, and so on. The asset ___ section is next, where expenses are classified as fixed or variable. And the last part is the net ___ of the cash in and cash out, which shows what you have left or what you have overspent in a given time period.

Income Expenditure Net

Your net worth is reflected on your balance sheet. Complete the net worth formula by selecting the correct term for each piece of the equation that follows. ____ - ____ = Net Worth

Assets (what you own) - Liabilities (what you owe) = Net Worth (your true financial wealth)

___ - ___ = Surplus (Deficit)

Total Income (cash in) - Total Expenses (cash out) = Surplus (deficit)

Expenses are categorized as fixed or variable depending on their nature. Categorize each of the following expenses as fixed or variable. A. Basic Cable TV Fee (no upgrades) B. Plumbing Bill C. Internet Access Fees D. School Supplies E. Paid Medical Bills F. Capital Gains Tax G. Property Taxes

A. Fixed B. Variable C. Fixed D. Variable E. Variable F. Variable G. Fixed

The following items may or may not appear on a personal cash-flow statement. Check "Cash In" or "Cash Out" accordingly if the item would appear on a personal cash-flow statement. If neither applies, leave both check boxes empty. A. Annual Bonus B. Basic Cable TV Fee (no upgrades) C. Plumbing Bill D. State Tax Refund E. Interest on Municipal Bond F. Internet Access Fees G. Company-paid Business Travel H. School Supplies I. Rental Income J. Stock Dividends K. Capital Gains Tax

A. IN B. OUT C. OUT D. IN E. IN F. OUT G. NEITHER H. OUT I. IN J. IN K. OUT

Categorize each of the following liabilities as a short-term liability or a long-term liability. A. This month's Electric Bill B. Educational Loan C. Home Equity Loan D. This Month's Water Bill E. Washer/Dryer Loan Due This Year F. Property Taxes

A. Short-term B. Long-term C. Long-term D. Short-term E. Short-term F. Short-term