Personal Finance CH. 2 Assessment

When creating a budget, it is important to

"Pay yourself first" by setting aside savings before other expenses are bedgeted

A family with $100,000 us assets and $60,000 of liabilities would have a net worth of

$40,000

The main purpose of a personal financial statements is to

-report your current financial position -measure your progress toward financial goals -maintain information about your financial activities -provide data for preparing tax forms or applying for credit

Which of the following is a liquid asset

-savings/money market accounts -cash surrender value of life insurance -checking account balance -money market accounts

Which of the following is a component of money management

-strong and maintaining personal financial records and documents -creating a balance sheet -creating and implementing a plan for spending and saving -creating a cash flow statement

Items that you own that have a monetary value are referred to as

assets

Which of the following situations describes a person who could be insolvent

assets $40,000; liabilities $55,000

Money management refers to

day-to-day financial activities

Which of the following ratios shows the relationship between debt and net worth

debt ratio

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

discretionary income

An example of a variable expense is a(n)

electric bill

An example of fixed expenses are

home rental payments

Which of the following is a cash inflow

income from employment

The inability to pay debts when they are due because liabilities far exceed the value of assets is called

insolvency

Common stock and bond brokerage statements are an example of a(n) _______________ record

investment

A personal balance sheet reports

items owned, amounts owed, and net worth

Which of the following appears as a cash outflow on a cash flow statement

loan payment

The amount you would have left if all assets were sold and all debts were paid in full is called your

net worth

How long should you keep your most current will

permanently

All of the following are sources of income except

social security taxes