chapter 2 - money management

a savings amount of $5,000 on deposit for 8 years at 4 percent interest (compounded annually) would earn about

$1,840

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

$23,000

a home file should be used for

financial records for current needs

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

fixed

what makes a person insolvent

having more liabilities than assets

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

increased savings and investments

liquid assets refer to

items of value that are easily converted to cash

a person's net worth is computed by

subtracting total liabilities from total assets

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

t/f: a person's net worth is the difference between the value of the items owned and the amounts owed to others

true

t/f: current liabilities are amounts that must be paid within a short period of time, usually less than a year

true

t/f: insolvency is a result of having more liabilities than assets

true

t/f: personal records include birth certificates, marriage license, and social security card

true

t/f: take-home pay is a person's earnings after deductions for taxes and other items

true

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

$323,000

a person has $1,250 in liabilities, monthly saving of $200, and monthly gross income of $2,500. what is the person's savings ratio

0.08

the hernandez family budgets $420 a month for food. last month they spent $413, which creates

a budget surplus of $7

items with a monetary worth are referred to as

assets

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

balance sheet

what are considered to be personal financial statements

balance sheet and cash flow statement

a cash flow statement reports a person's or 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.

t/f: a personal balance sheet reports your income and expenses

false

t/f: financial records that may need to be referred to on a regular basis should be kept in a safe-deposit box

false

t/f: money management activities refers to long-term investment decisions

false

t/f: most americans have an adequate savings for emergencies

false