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