Chapter 3 Personal Finance

Your personal balance sheet is used to compute which of the following? A: Net worth B: Current year income C: Periodic cash flow D: Student loan debt E: Monthly mortgage payments

A: Net worth

What does the S in SMART stand for? A. Saving B. Spending C. Specific D. Smart

C, Specific.

What is Phase 2 of Creating and Implementing a Budget? a. Prep next months information b. Create your goals c. Plan your financial direction d. Make a grocery list

(C) Plan your financial direction

A budget is? A. speding plan B. A financial statment of income earned C. the amount own in a year D. trade-offs E. your net worth

A spending plan

Which of the following is an example of an opportunity cost? A. Lower future investment earnings as a result of purchases B. Interest earned on a savings account C. The cost of a needed car repair D. Salary or wages earned on a part-time job

A. Lower future investment earnings as a result of purchases

Financial ratios are guidelines for: A. measuring changes in your financial situation B. measuring strictly cash inflows C. using both numerical and subjective measures D. measuring only solvency

A. measuring changes in your financial situation

What is one way you can increase your net worth? A. reduce spending B. don't put aside money for savings C. increase the amounts you owe D. decrease the value of investments and other possessions E. go shopping more often

A. reduce spending

Discretionary income is what you have left after you have paid for housing, food, and ______. A. entertainment B. other necessities C. dining out D. student loan payments

B. other necessities

1. What is the inflow and outflow of cash during a given period of time? A. income B. expenses C. cash flow D. surplus

C. cash flow

What is the 2nd phase of creating and implementing a budget? A. evaluate your budget B. assess your current situation C. implement your budget program D. plan your financial direction

D. plan your financial direction

How can someone increase their net worth? a. reducing spending b. increasing savings c. buying more items d. increasing the value of investments e. A, B, D f. A only

E. A, B, D.

Cash flow is the ______ of cash during a given period of time. a. outflow b. inflow and outflow c. inflow and investment

b. inflow and outflow

Discretionary income refers to: A. earning after tax and other items B. disposable income C. money leftover after paying for housing, food, and other necessities D. inability to pay debts when they are due

c. money leftover after paying for housing, food, and other necessities.

What are liquid assets A. Cash and items that can easily be converted into cash B. Home, condominium or vacation property C. Cars and motorcycles D. Funds set aside for long term financial needs

A. Cash and items that can easily be converted to cash

Which of the following is NOT a type of investment record? Multiple choice question. A) Brokerage statements and dividend records B) Records of stock and bond holdings C) Insurance policies D) Mutual fund statements and annual reports

Answer is C) Insurance policies

When making a purchase, which of the following is an opportunity cost? A.Deilevery changes B. Lost investments earnings C. The sales tax paid D. The cost of warranty

B Lost investment earnings.

How is net worth computed? A. Liabilities - Assets = Net worth B. Assets -Liabilities = Net worth C. Liabilities + Assets = Net worth D. Liabilities + cash flow = Net worth

B. Assets - Liabilities

The amount by which actual spending exceeds planned spending is _______? A. Surplus B. Deficit C. Variable Expenses D. Fixed Expenses

B. Deficit

What is not considered a current liability? A. Tax Payments B. Medical bills C. Insurance D. Student loans

C. Insurance

How is a cash surplus (or deficit) on a statement of cash flows calculated? A. Cash inflows (receipts) for the last period less cash outflows (expenditures) during a current period of time B. Assets less liabilities during a given period of time C. Assets plus cash inflows less liabilities and cash outflows during a given period of time D. Cash inflows (receipts) less cash outflows (expenditures) during a given period of time

D. Cash inflows (receipts) less cash outflows (expenditures) during a given period of time

An organized system of financial records provides a basis for all of the following except for ____? A. making effective investment decisions B. handling daily business activities, such as bill paying C. completing required tax reports D. access your financial position and progress

D. access your financial position and progress

Financial ratios are guidelines for what? A. measuring only solvency B. using both numerical and subjective measures C. measuring strictly cash inflows D. measuring changes in your financial situation

D. measuring changes in your financial situation

Expenses that do NOT vary from month to month are know as____expenses. A) Required B) Fixed C) Variable D) Expected

B. Fixed

What are the characteristics of successful budgeting? A. Mental Budget, Physical Budget, Written Budget, Computerized Budget, Online Budget, Budgeting Apps. B. Well Planned, Realistic, Flexible, Clearly Communicated. C. Unplanned, Unrealistic, Stretchable, Kept to self. D. Just throw caution to the wind and do not keep track.

B. Well planned, realistic, flexible, clearly communicated

Money Management experts advise that a successful budget should be: A. flexibleB. clearly communicatedC. realisticD. well-plannedE. all of the above.

E. all of the above