Chapter 3 test
Which type of financial records includes stock and bond reports? a) investment b) insurance c) estate planning d) tax e) consumer purchase
A
A personal balance sheet presents... a) amounts budgeted for spending b) income and expenses for a period of time c) earnings on savings and investmenets d) items owned and amounts owed e) family finanical goals
D
A personal balance sheet reports your income and expenses (T/F)
False
Definite financial obligations are referred to as variable expenses (T/F)
False
Financial records that are referred to on a regular basis should be kept in a safe-deposit box (T/F)
False
A budget is a specific plan of how a person or family will spend their money (T/F)
True
A person's net worth is the difference between the value of the items owned and the amounts owed to others (T/F)
True
Take-home pay is a person's earnings after deductions for taxes and other items (T/F)
True
When one money management decision is made, an alternative must be given up (T/F)
True
insolvency is a result of having more liabilities than assets (T/F)
True
A person's net worth would increase as a result of... a) reduced amounts owed to others b) reduced earnings c) increased spending for current living expenses d) decreased value of personal possessions e) decreased value of investment
a
During the past month, Jennifer Ernest had an income of $3,000. During the month, her net worth declined by $200. If no other financial activities occurred, this means Jennifer's payments for the month were... A) 3,200 B) 3,000 C)2,800 D) 200 E) 0
a
If a family planned to spend $370 for food during march but only spent $348, this difference would be referred to as a ... a- variance b- deficit c- fixed living expenses d- budget reduction e- contribution to net worth
a
A budget deficit would result when a person's or family's... a- actually expenses are less than planned expenses b- actually expenses are greater than planned expenses c-actually expenses equal planned expenses d- assets exceed liabilities e- net worth decreases
b
A decrease in net worth could be the result of.. a) income exceeding expenses for a month b) expenses exceeding income for a month c) assets exceeding expenses d) increased earnings on the job e) income and expenses being equal for a month
b
Which of the following would be considered a long-term liability... a) charge account payment b) mortgage c) 6 month personal loan d) amount due for taxes e)amount due on a credit card
b
Which of the following should be budgeted first? a) variable expenses b) vacation expenses c) fixed expenses D) unplanned living expenses e) recreation expenses
c
Nick's boss has a savings account with $550 in it. He knows that he can withdraw this money whenever he wishes. This is an ex of... a) money management b) an opportunity cost c) a limited asset d) a liquid asset e) net worth analysis
d
To determine a person's solvency, which financial document should be consulted? A)cash flow statement B0 budget C)debt consolidation statement D) balance sheet E) credit report
d
Items that you own with a monetary worth are referred to as ... a)liabilities b)variable expenses c) net worth d) income e)assets
e
A home file should be used for a) storing all financial documents and records b) financial records for current needs c) documents that require maximum security d) obsolete financial documents e) records that are difficult to replace
B
Which of the following are considered to be personal financial statements a) budget and credit card statements b) balance sheet and cash flow statement c)checkbook and budget d) tax returns e) bank statement and savings passbook
B
Opportunity costs refer to as... a) current spending habits b)changing economic conditions that affect a person's cost of living c) storage facilities to make financial documents easily available d) trade-offs associated with financial decisions e) avoiding the use of consumer credit
D
For many years, the United States has ranked highest among industrial nations in savings rate (T/F)
False
Furniture, jewelry, and an automobile are examples of liquid assets (T/F)
False
If expenses for a month are greater than income, an increase in net worth will result. (T/F)
False
In order to calculate savings ratio, the amount saved each month is divided by net income (T/F)
False
Money management activities refer to long-term investment decisions (T/F)
False
Opportunity costs are only associated with money management decisions involving long-term financial security (T/F)
False
A personal cash flow statement can serve as the bass for the budget categories used by an individual or family (T/F)
True
A personal cash flow statement presents income and outflows of cash for a given time period, such as a month. (T/F)
True
Discretionary income is money left over after paying for housing, food, and other necessities (T/F)
True
Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long-term liabilities is $98,000. What is the total value of her assets? a- 267,500 b - 105,000 c - 162,000 d - 205,500 e - none of these
a
Sean Carter needs to store monthly statements from his bank, his credit card company and from his savings and loan. Where is the most appropriate place for Sean to store this information? a) home file cabinet b) safe deposit box c) personal computer d) best friend's house e) none of these
a
A family with $45,000 in assets and $22,000 of liabilities would have a net worth of... a)45,000 b)23,000 c)22,000 d)67,000 e)41,000
b
A personal balance sheet... a) predicts income and expenses b) reports what an individual or a family owes and owns c) reports income and expenses or a individual or a family d) predicts net worth of an economic entity e) analyzes debt payment activities
b
Jerry Allison needs to store the title to his car and his house. Where is the most appropriate place for Jerry to store this information? a) home file cabinet b) safe deposit box c) personal computer d) best friend's house e) none of these
b
Kyle has decided to put $25 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his savings is important. This is an example of... a-a budget variance b- an opportunity cost c- balance sheet d- an accounting error e- a budget anomaly
b
Liquid assets refer to... a) amounts that must be paid soon b) cash and other items that are easily converted to cash c) total income available to a family for spending d)the value of investments e)the amount on which taxes must be paid
b
The value of items owned minus the amounts owed to others equal... a) net assets b) net worth c) total liabilities d) total income e)budgeted expenses
b
An individual retirement account is an example of a ____ asset a) personal b) common c) investment d) household e)budgeted
c
Karen Price has created a financial statement for herself that lists all of the assets she owns as well as th debts she owes. This would be an example of.. A) money management b) opportunity cost anaylis c) a balance sheet d) liquidation excersise e) a budget variance
c
When it come to savings, most americans... a-have an adequate emergency fund b- devote large portions of their income to savings c- find saving difficult d- keep substantial amounts in a regular savings account e- reduce the amount they save during their working life
c
Which one of the following presents a summary of income and outflows for a period of time? a) balance sheet b) bank statement c) investment summary d) cash flow statement e) asset report
d
Kathy stumbaugh has determined that the value of her assets is $46,000 and the value of her debts is $32,000. The difference between these two is $14,000. The $14,000 could be referred to as her... a) nest egg b) total assets c) adjusted assets d)debt equity e)net worth
e