Chapter 3 Study Questions
A family with 45,000 in assets and 22,000 of liabilities would have a net worth of
23,000
Which of the following are considered to be personal financial statements?
Balance sheet and cash flow statement
Which one of the following presents a summary of cash receipts and payments for a period of time?
Cash flow statement
Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
Current Liabilities
For may years, the United States has ranked highest among industrial nations in savings rate
False
Money management activities refer to long term investment decisions?
False
Ed Bostrom wants to reduce his fixed expenses. Which action would be appropriate?
Find a place to live with a lower rent
A personal balance sheet presents:
Items owned and amounts owed
Which of the following would be considered a long-term liability?
Mortgage
Which of the following would be an example of a personal and employment record?
Social Security Number
A budget is a specific plan of how a person or family will spend their money
True
Cash and other tangible property with a monetary value that you own are referred to as
assets
Which one of the following illustrates an insolvent situation?
assets 40,000, liabilities 45,000
Liquid assets refer to
cash and other items that are easily converted into cash
A retirement account is an example of _ asset
investment
cost refers to Opportunity
trade-offs associated with financial decisions
A person's net worth is the difference between the value of the items owned and the amounts owed to others:
True
Discretiony income is money left over after paying for housing, food and other necessities.
True
Insolvency is a result of having more liabilities than assets
True
Take- home pay is a person's earnings after deductions for taxes and other items.
True
Liabilities are amounts representing
debts