Personal Finance Ch 3 Money Management Strategy: Financial Statements and Budgeting
a good financial goal should ____
all of the above
characteristics of a good budget include all of the following except
all of these are characteristics of a good budget
which of the following is NOT a purpose of personal financial statement
all of these are purposes of personal financial statements
Cash and other tangible assets with monetary value are called your personal ___
assets
Victoria's financial records show the following entries: car worth $2500 stereo equip $360 car loan $2300 credit card debit of $2,700 checking account $120 What is Victoria's net worth? Write your answer to the nearest dollar with commas and a dollar sign as needed. If the value is negative, enter the dollar sign before the minus sign
$-2020
Alva's financial records show the following entries: a car worth $3400 furniture worth $2000 car loan of $1400 home mortgage $42,000 home with market value of $44,000 credit card debt $350 checking account $140 What is Alva's net worth? Write your answer to the nearest dollar with commas and a dollar sign as needed. If the value is negative, enter the dollar sign before the minus sign
$5790
Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Suri has a net worth of $6,600 current liabilities of $1,900, liquid assets worth $900, net take home pay of $1,100 and monthly expenses of $900. What is Suri's debt ratio to the nearest tenth? If your answer is less than 1, write the answer as 0
0.4
Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Alvin has a net worth of $7850, current liabilities of $1700, liquid assets worth $1250, net take home pay of $1500, and monthly expenses of $800. What is Alvin's liquidity ratio to the nearest tenth
1.6
Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Trinity has a net worth of $10,350 current liabilities of $700, liquid assets worth $1150, net take home pay of $1500 and monthly expenses of $800. What is Trinity's current ratio to the nearest tenth? Express your answer to the nearest tenth
1.6
Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Tom has a net worth of $6,170, current liabilities of $1,700, liquid assets worth $650, net take home pay of $1,200 and monthly credit payments of $300. What is Toms debt payment ratio to the percent? Express your answer without the % sign (write 7 not .07 or 0.07)
25
copies of tax returns and supporting documents should be kept for ___ years
6
Use these formulas to answer the question. a.) debt ratio = liabilities / net worth b.) current ratio = liquid assets / current liabilities c.) liquidity ratio = liquid assets / monthly expenses d.) debt-payment ratio = monthly credit payments / take home pay e.) savings ratio =amount saved each month / gross income Chuck has a net worth of $10,500, current liabilities of $1000, monthly saving of$150, gross pay of $2000 and monthly expenses of $700. What is Chuck's saving ratio to the nearest percent? Express your answer without the percent sign (write 5 not .05 or 0.05)
8
Another term for a spending plan is a ___
budget
a ___ is the difference between the amount budgeted and the actual amount received or spent
budget variance
the inflow and outflow of cash during a specific time period is called ___
cash flow
if total cash inflows during a time period are greater than the total cash outflows during the same period, the result is a ___
cash surplus
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Income - Cash outflows
cash surplus or deficit
which of the following would not be helped by preparing a budget
choosing the best software to maintain your financial records
which of the following is NOT a money management activity
comparison shopping
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Debts owed within the next 12 months
current liabilities
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the ability to pay current liabilities
current ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liquid assets / current liabilities
current ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the relationship between debt and net worth
debt ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liabilities / net worth
debt ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates how much of a person's earnings go for debt payments
dept payments ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Monthly credit payments / net pay
dept payments ratio
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Income - necessary expenses
discretionary income
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit A highly liquid fund for unplanned expenses
emergency fund
a person with a high net worth will never have financial problems
false
a system of financial records can be used to save money through comparison shopping
false
current liabilities are debts that must be paid within 6 months
false
good financial goals never change once they are defined
false
if your budgeted income is less than your actual income, you have a surplus
false
the best technique for saving is to save the amount left at the end of each month
false
when estimating your income, you should include bonuses and gifts
false
your net worth is the money you can use to pay debts
false
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Mortgage payments due each
fixed expense
which of the following is an example of an opportunity cost
giving up time to clip coupons so you can spend less on groceries
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Hourly wage * hours worked
gross income
your budget is an important tool in achieving your financial goals because it
helps you plan your spending and saving
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept A written copy of your personal will
home file
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Insurance policies
home file
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Property tax records
home file
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Warranties
home file
the inability to pay current debts when they are due is called ___
insolvency
A home mortgage and care loan are both examples of personal debts called ___
liabilities
Cash and property that can easily be converted to cash are called ___
liquid assets
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Assets easily converted to cash
liquid assets
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the number of months living expenses that could be paid if an emergency occurs
liquidity ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Liquid assets / monthly expenses
liquidity ratio
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Debits owed more than 12 months from now
long term liabilities
calculating your net worth is best used to
measure your current financial position
the routine financial activities to manage your current economic resources is called ___
money management
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Stock certificates for stock you sold 2 years ago
need not be kept
Match each term with its description or formula a. fixed expense b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit Salary - (Income tax + Social Security withholding)
net income
the amount of a person's salary that is left over after taxes are withheld is
net pay
If you total your assets and subtract the total of your liabilities the result is your ___
net worth
a balance sheet, also known as a ___ or statement of financial position, identifies your current financial worth
net worth statements
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Account summaries and performance results of investments
personal computer
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Income tax prepared on with personal tax software
personal computer
the personal balance sheet and cash flow statement are called ____
personal financial statements
The home and other land a person or family owns are called ___
real estate
a ___ is a private storage area at a financial institution for storing valuables and documents
safe deposit box
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Birth certificates
safe deposit box or fire proof home safe
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept Citizenship papers
safe deposit box or fire proof home safe
match each to the best place to store the record. a.Personal Computer b. safe deposit box or fire proof home safe c. home file d. need not be kept List of credit card numbers and telephone numbers of issuers
safe deposit box or fire proof home safe
the basis for an improved financial position and long term financial security is
savings
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Indicates the percentage of a persons earnings that is being saved
savings ratio
match each term will its description or formula a. debt ratio b. current ratio c. liquidity ratio d. dept payments ratio e. savings ratio Monthly savings / gross income
savings ratio
which of the following might be used to calculate a person's net worth
the market value of a coin collection
a monthly car payment is an example of a cash outflow
true
an emergency fund should cover three to six months of living expenses
true
when estimating irregular income, you should estimate on the low side
true
Match each term with its description or formula a. debt ratio b.) variable expense c.discretionary income d.) current liabilities e. long term liabilities f.) liquid assets g. net income h.) gross income i. emergency fund j.) cash surplus or deficit A monthly electric bill
variable expense
___ are plans for future activities that require plans for spending, saving, and investing
Financial goals