Personal Financial Stewardship Ch.2

Which of the following is a liquid asset? A) Money market accounts B) Checking account balance C) Savings/money market accounts D) Cash surrender value of life insurance E) All of these are liquid assets

All of these are liquid assets

Which of the following is most correct? A) A current budget belongs in your safe deposit box B)Adoption papers belong in a safe deposit box C) W-2s for tax records belong in a safe deposit box D) A marriage certificate should be kept in a home file E) Rare coins and stamps belong in a safe deposit box

Rare coins and stamps belong in a safe deposit box

A home file should be used to keep

financial records for current needs.

an example of a fixed expense is

home rental payment

Which of the following is a cash inflow? A) Payment for rent B) Payment for loan C) Payment for medical expenses D) Income for employment E) Purchase of groceries

income from employment

All of the following are ways that households can increase their net worth except A) increase their savings B) increase their debt ratio C) Decrease their debt ratio D) reduce spending E) Increase value of investments

increase their debt ratio

Given the following information, calculate the net worth: Assets = $8,000 cash inflows = $6,000 Cash outflows = $4,500 Liabilities = $5,000

$3,000

The amount you would have left if all assets were sold and all debts were paid in full is called your

Net worth

when creating a budget, which of the following statements is true? A) it is easier to create a budget if your earnings vary by season B) it is better to overestimate your income for next year C) include in income the bonuses and gifts you expect to receive D) common financial problems can be maximized through budgeting E) Numbers in the budget are estimates

Numbers in the budget are estimates

which of the following is most correct? A) adoption papers belong in a home file B)Tax records belong in a home file C)A current budget belongs in your safe deposit box D)A warranty belongs in a safe deposit box E)A death certificate should be kept in a home file

Tax records belong in a home file

When creating a personal balance sheet, which of the following is a real estate asset? A)Possessions in your home B) Cash Value of life insurance C) Vacation property D) Retirement accounts E) investments for financing children's education

Vacation property

Which of the following appears as a cash outflow on a cashflow statement? A) Real estate assets B) Liquid assets C) Variable expenses D) Personal possessions E) Net worth

Variable expenses

The inability to pay debts when they are due because liabilities far exceed the value of assets is called

insolvency

Common stock and bond brokerage statements are an example of a(n) _________ record

investment

after having established a spending plan, it is important to

keep track of your actual income and expenses

Which of the following appears as a cash outflow on a cash flow statement? A) cash value of life insurance B) balance of mortgage C) Home value D) loan payment E) Net worth

loan payment

When creating a personal balance sheet, which of the following is a current liability? A) Checking account B) Thirty-year mortgage C) Medical bill D) educational bill E) 5-year home equity loan

medical bill

Discretionary income equals

money left over after paying for housing, food, and other necessities

How long should you keep your most current will?

permanently

The statement that includes liquid assets, real estate, personal possessions, and investment assets is known as a

personal balance sheet

A budget system that involves envelopes, folders, or containers to hold money or slips of paper is called a(n)

physical budget

When creating a personal balance sheet, which of the following is an investment asset? A) Retirement account such as a 401k B)Personal possessions in your home C) cash surrender value of life insurance D)Checking account E)Vacation property

retirement account such as a 401k

The number of personal financial records a household has to organize may see overwhelming. How long should you keep copies of your tax returns?

seven years

All of the following are sources of income except: A)social security taxes B) salary C) interest earned on savings D) dividends E) Commissions

social security taxes

Which of the following is a deduction to determine take-home pay? A)interest earned on savings B) commissions C) dividends D) social security taxes E) housing, food and other living expenses

social security taxes

Disposable income equals

the amount a person or household has to spend

all of the following are fixed expenses except A) a monthly allocation for life insurance B) a mortgage or rent payment C) an installment loan payment D)a monthly train ticket for commuting to work E) utilities

utilities

A budget system that can be kept on notebook paper or accounting paper is called a(n)

written budget

take-home pay is also called

net pay

When creating a budget, it is important to

"Pay yourself first" by setting aside savings before other expenses are budgeted.

A family with $100,000 in assets and$60,000 of liabilities would have a net worth of

$40,000

Financial experts recommend monthly saving of ___________ of gross income

5-10%

When creating a personal balance sheet, which of the following is considered to be a personal possession asset? A) Vacation property B) Cash in a checking account C) Retirement accounts D) A home E) A five-year-old television set

A five-year-old television set

Which of the following is a component of money management? A) Creating and implementing a plan for spending and saving B) Creating a cash flow statement C) Storing and maintaining personal financial records and documents D) Creating a balance sheet E) All of the above

All of the above

The main purposes of personal financial statements are to A) provide data for preparing tax forms or applying for credit b) maintain information about your financial activities C) measure your progress toward financial goals D) Report your current E) All of these choices are correct

All of these choices are correct

How long should you keep documents relating to investments?

As long as you own these items

The equation to calculate net worth is

Assets - Liabilities = Net Worth

Items that you own that have a monetary value are referred to as

Assets ?

A personal balance sheet reports

Items owned, amounts owed, and your net worth

Which of the following financial documents would most likely be stored in a safe deposit box or fireproof home safe?

Marriage certificates

Which of the following are two personal financial statements that you create yourself? A) Personal balance sheet and cash flow statement B) Budget and credit card statements C) Tax returns D) Bank statement and balance sheet E) Checkbook and budget

Personal balance sheet and cash flow statement

a budget deficit would result when a person's or family's

actual spending exceeds planned spending

When a household's budget must be cut, which of the following categories would be most difficult to cut? A) cable B) auto insurance C)lawn services D)Vacations E) charitable donations

auto insurance

Another name for a statement of financial position is a

balance sheet

The current financial position of an individual or family is best presented in the form of a:

balance sheet

The document that would report your current financial position is the

balance sheet

The document that would report be most useful to plan spending and saving to achieve financial goals is the

budget

The document that would tell you what you received and spent over the past month is

cash flow statement

Money management refers to

day to day financial activities

Which of the following will increase the net worth of a household? A) increase the amount borrowed for major purchases B) increase spending by $5 per day C) decrease saving by $50 per month D) Invest in possessions while values do not increase E)Decrease spending by $5 per day

decrease spending by $5 per day

the money left over after paying for housing, food, and other necessities is called

discretionary income

an example of a variable expense is a(n)

electric bill

The number of personal financial records a household has to organize may see overwhelming. How long should you keep documents relating to the purchase and sale of real estate?

indefinitely