Chapter 3 test
Your home is valued at $250,000, but you still owe $100,000. Where would you record this on the Balance Sheet?
$250,000- Tangible Asset $100,000- Long Term Liability
A mortgage payment will be recorded in which section of the monthly cash flow statement? a. fixed expenses b. income c. variable expenses
a. fixed expenses
Insolvency happens when the total of your assets is greater than your liabilities.
false
Take-home pay is equal to your salary.
false
the debts that you owe
liabilities
cash and items that can be quickly converted to cash
liquid assets
the price at which a property could be sold
market value
the method of planning how to get the most from your money
money management
the difference between the amount you own and the debts you owe
net worth
documents that provide information about your current financial position and present a summary of your income and spending
personal financial statements
a small, secure storage compartment that can be rented in a bank
safe-deposit box
The first step in planning a budget is ____. a. estimating income b. listing fixed expenses c. setting financial goals d. budgeting for savings
setting financial goals
extra money that can be spent or saved
surplus
A deficit is when more money is spent than is earned or received.
true
An asset can also be a liability
true
Checking account is an example of a liquid asset
true
Having a budget and using a cash flow statement can help you anticipate shortages and surpluses.
true
It's not a good idea to include bonuses you might get at work when you estimate your income.
true
One disadvantage of a home fire-safe box is that it can be stolen.
true
The total of your fixed and variable expenses is your cash outflow.
true
Three places you can keep your financial records are a home file, safe-deposit box, and compu
true
A cash flow statement gives you important feedback on your ____. a. income and spending patterns b. assets and liabilities c. net pay and gross pay d. short term and long term debts
a. income and spending patterns
Your net worth goes up when you a. increase your liabilities and increase your assets b. increase assets and decrease your liabilities c. increase liabilities and decrease assets d. decrease your assets and decrease liabilities
b. increase your assets and decrease your liabilities
A savings option many employers offer is ____. a. sending employees' children through college b. putting paycheck deductions in employees' retirement funds c. paying interest on employees' savings d. writing a check for employees' savings account
b. putting paycheck deductions in employees' retirement funds
Eating out for dinner with friends will be recorded in which section of the monthly cash flow statement? a. fixed expenses b. variable expenses c. income
b. variable expenses
A disadvantage of using a safe-deposit box, from the bank, for keeping financial documents is that it ____. a. takes up too much space in your home b. cannot store cancelled checks c. can cost $100 a year to rent d. fails to protect documents from fire
c. can cost $100 a year to rent
Which of the following is not an asset category on the balance sheet? a. tangible assets b. monetary assets c. long-term assets d. investment assets
c. long term assets
An example of a variable expense is ____ a. cable TV charges b. insurance premiums c. bus fare to school or work d. electric bills
d. electric bills
A good budget has all the following characteristics EXCEPT ____. a. flexibility b. careful planning c. practicality d. inaccessibility
d. inaccessibility
a situation that occurs if a person spends more than he or she receives
deficit