Chapter 3 - Quiz

Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $131,000, the value of her personal possessions is $61,000, and the value of her investment assets is $76,000. she has also determined the value of her current liabilities is $7,100 and the value of her long term liabilities is $88,000. what is Patricia's net worth?

$177,400 explanation: (4,500 + 131,000 + 61,000 + 76,000) - (7,100 + 88,000)

which of the following can be minimized through budgeting? overusing credit lacking a regular savings program failing it ensure future financial security all of these none of these

all of these

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

cash receipts and payments

Andrew Smith has developed a budget that he follows each month. this is a budget he keeps in his head. he does not write anything down, nor does he use a computer to keep track of this budget. what type of budget has Andrew created?

mental budget

discretionary income is

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

a decrease in net worth could be a result of

outflows exceeding inflows for a month

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

personal balance sheet

insolvency occurs when liabilities far exceed available assets

true

current liabilities differ from long-term liabilities based on

when the debt is due

a person has $1,550 in liabilities, monthly savings of $200, and monthly gross income of $2,000. what is the person's saving ratio?

.10 explanation: 200 / 2,000