personal finance chapter two

a family with $45,000 in assets and $22,000 of liabilities would have a net worth of assets subtract liabilities

$23,000

payments that do not vary from month to month are _________ expenses

fixed expenses

improvements in a person's financial position are the result of

increased savings and investments

liquid asset refer to

items of value that are easily converted to cash , checking and savings account are most liquid

a person's net worth is computed by assets subtract liabilities = net worth

subtracting assets from current liabilities

a common deduction from a person's paycheck is for

taxes

a major expenditure for most families is

transportation

pay yourself first is an approach that can assure building savings for the future

true

persona; records include birth certificates , marriage license , and social security card

true

take home pay is a person's earnings after destruction for taxes and other items

true

insolvency is a result of having more liabilities than assets

true liabilities is debts and assets are what I own

a person's net worth is the difference between the value of the items owned and the amounts owed to others

true owed to other is liabilities

current liabilities differ from long term liabilities based on

when the debt is due

a family has a net worth of $156,000 and liabilities of $167,000 what is the amount of their assets assets add liaboilties 156,000 add 167,000 = 323,000

$323,000

a person has $1,250 in liabilities monthly saving of $200 and monthly gross income of $2,500 what is the persons savings ratio saving ratio = monthly saved divide gross income

0.08

a savings amount of $5,000 on deposit for eight years at four percent interest compound annually would earn about

1,840 5,000 times four percent = 200 times eight = 1,600 but more so its 1,840

the herendez family budgets $420 a month for food . last month they spent $413 which creates budgets 420 subtract spent 415 = seven surplus

a budget surplus of $7

items with a monetary worth are referred to as

assets

which of the following situations is a person who could be insolvent

assets $40,000 ; liabilities $45,000

to determine a person's solvency which financial document should be consulted

balance sheet

which of the following are considerd to be personal financial statement

balance sheet and cash flow statement

a cash flow statement reports a person's or a family's

current income and payments

money management refers to

day to day financial activities

changes in the cost of living are

different in various geographic areas

financial records that may need to be referred on a regular basis should be kept in a safe deposit box

false

most American have an adequate savings for emergencies

false

a personal balance sheet reports your income and expenses

false its assets liabilities and net worth . income and expenses is cash flow statement

money management activities refers to long term investment decisions

false its day today

a home file should be used for

financial records for current needs