chapter 2 - money management
a savings amount of $5,000 on deposit for 8 years at 4 percent interest (compounded annually) would earn about
$1,840
a family with $45,000 in assets and $22,000 of liabilities would have a net worth of
$23,000
a home file should be used for
financial records for current needs
payments that do not vary from month to month are ____________ expenses
fixed
what makes a person insolvent
having more liabilities than assets
improvements in a person's financial position are the result of
increased savings and investments
liquid assets refer to
items of value that are easily converted to cash
a person's net worth is computed by
subtracting total liabilities from total assets
a common deduction from a person's paycheck is for
taxes
a major expenditure for most families is
transportation
"pay yourself first" is an approach that can assure building savings for the future
true
t/f: a person's net worth is the difference between the value of the items owned and the amounts owed to others
true
t/f: current liabilities are amounts that must be paid within a short period of time, usually less than a year
true
t/f: insolvency is a result of having more liabilities than assets
true
t/f: personal records include birth certificates, marriage license, and social security card
true
t/f: take-home pay is a person's earnings after deductions for taxes and other items
true
current liabilities differ from long-term liabilities based on
when the debt is due
a family has a net worth of $156,000, and liabilities of $167,000, what is the amount of their assets
$323,000
a person has $1,250 in liabilities, monthly saving of $200, and monthly gross income of $2,500. what is the person's savings ratio
0.08
the hernandez family budgets $420 a month for food. last month they spent $413, which creates
a budget surplus of $7
items with a monetary worth are referred to as
assets
to determine a person's solvency, which financial document should be consulted
balance sheet
what are considered to be personal financial statements
balance sheet and cash flow statement
a cash flow statement reports a person's or family's
current income and payments
money management refers to
day-to-day financial activities
changes in the cost of living are
different in various geographic areas.
t/f: a personal balance sheet reports your income and expenses
false
t/f: financial records that may need to be referred to on a regular basis should be kept in a safe-deposit box
false
t/f: money management activities refers to long-term investment decisions
false
t/f: most americans have an adequate savings for emergencies
false
