Budgets and Balance Sheets PERSONAL FINANCE

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budget

a forecast of your future cash inflows and outflows

After all of her expenses, Sarabeth typically has 100-150 left over each month. Which of the following tools would help Sarabeth the most

a personal balance sheet

Current and long term liabilities represent which of the following

a persons total debt

personal cash flow statement

a record of your incoming and outgoing money

Which of the following would you most likely use to assess the accuracy of your budget?

an expense journal

A ____ is a promise to repay a certain amount of money at some future time

bond

A _____ can help you save money for major purchases, unexpected expenses, and unexpected opportunities

budget

While a _____ tracks cash flows over time, a _____ shows an individual's financial position at a point in time

budget; personal balance sheet

Which of the following is NOT a typical asset listed on a personal balance sheet

cash inflows

The most common form of current liability for individuals is a

credit card balance

You should use a credit card as a ___, not a ____

current liability; long term liability

Lendors often use the ______ ratio to determine whether someone has enough wealth of repay debt

debt to asset

Which of the following is likely to have the smallest effect on an individual's cash outflows

ethnicity

Money spent on a vacation or a birthday is an example of an _____ expense that will not show up in a typical month's budget

expected but irregular

A cash flow statement is a forecast of future cash inflows and outflows

false

A good budget should forecast cash inflows and outflows for a week or two

false

A personal cash flow statement is a summary of an individual's assets, liabilities, and net worth

false

A stock if basically a certificate that functions like an IOU

false

According to a survey by Bankrate, americans who are college grads are more likely than americans who only have a high school edu to have more in credit card debt than they do in savings

false

If you are coming up short of money at the end of most months, you need to either increase your cash inflow or increase your ash outflow

false

Most publicly traded companies have millions of bonds outstadning so one bond represents a very small fraction of ownership in that company

false

To assess the accuracy of your budget, you should compare cash flow forecasts for each month

false

Turning a personal cash flow statement into a budget for an entire year requires precision and accuracy

false

any asset can be quickly and easily convert to cash

false

money management refers to the management of investments, not liquid assets

false

Liquid assets typically make up a larger proportion of a person's balance sheet than household assets do

falsse

The difference between what you forecast to happen and what actually happened is referred to as

forecast error

Christine is creating a personal balance sheet and has begun classifying her assets. Which of the following should Christine classify as a liquid asset

her checking account

To figure your personal balance sheet you would need to conduct research to estimate the market value of your

household assets

An _____ is something that you acquire with the ultimate goal of making money

investment

If you are unsure about investment selections and want the expertise of a professional portfolio manager, you should invest in

mutual funds

Most _____ typically require a minimum investment ranging between 500$ and 3,000$

mutual funds

Which of the following are commonly used as investments for Section 529 College Savings Plans

mutual funds

Which of the following types of investments offers and investor the most protection from severe drop in the value of an investment

mutual funds

You can use the information from ______ to calculate your debt to asset ratio

personal balance sheet

The initial amount you owe in a liability such as a home mortgage is referred to as the

principal;

The defining characteristic of a liquid asset is its

quick availiability

Homes, rental property, farms, and timberland are all examples of

real estate investments

The primary cash inflow for most adults is their

salary

A good budget will force you to ____ take advantage of unexpected opportunities

set aside moeny

Market value refers to what something would be worth if you

sold it today

A(n) ______ represents fractional ownership of a company

stock

People purchase _____ in a company in hopes that the company will do well and their investment will increase in value

stocks

forecast error

the difference between your predicted cash flows and your actual cash flows

To determine your net worth, subtract _____ from -_____

the total of your current and long term liabilities; the value of your total assets

Creating a budget involves forecasting your net cash flows

true

Identifying your current cash inflows and outflows is the first step in the budgeting process

true

In a budget, money you receive from a scholarship would be calculated as part of your income

true

It is possible adjust your budget once you have started to use it

true

Net worth is the figure used to track and individual's overall wealth

true

The most effective and easy to follow budgets do not vary from month to month

true

Your budget should account for expected but irregular expenses such as vacations and birthdays

true

Your budget should help you anticipate future cash shortfalls

true

a liquid asset should be used to make money through the accumulation of interest

true

a low debt to asset ratio is an advantage for someone who is seeking a loan

true

one way to increase your net worth is to possess assets that increase by more than the value of your liabilities

true

parents, grandparents, and other relatives can contribure to a childs 529 college savings plan

true

your personal balance sheet will change if you acquire a new asset or a new liability but will not change if you spend all of your income on living expenses

true

Figuring your net worth is an easy way to measure your

wealth


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