Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 2

Mary and Tom purchased their home for $150,000,and it is now worth $175,000.Its asset value is $150,000.

Accepted Answer

A) True 
 B)False

Question 3

The Flemings will need $80,000 annually for 20 years during retirement.How much will they need at retirement if they can earn a 4% rate of return?

Accepted Answer

The answer of The Flemings will need $80,000 annually for...

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Personal financial software is mostly available for [free | a fee].

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 5

Your net worth and your equity in owned assets are the same basic concept.

Accepted Answer

A) True 
 B)False

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-If you liquidate assets or borrow to make your budget balance,this will [increase | decrease] your net worth.

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 7

If you obtain a loan to purchase a car in June,this loan amount would be included as income for June.

Accepted Answer

A) True 
 B)False

Question 8

Balance sheets and income statements are most useful if prepared at least annually.

Accepted Answer

A) True 
 B)False

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A [savings account | retirement account] would be an example of a liquid asset.

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 10

Elena purchased a stamp collection for $5,000 thirty years ago.If it appreciated 8% annually,what is it worth today?

Accepted Answer

A)   $ 17,000
B)   $ 36,400
C)   $ 50,313
D)   $123,023
E)   $150,000

Question 11

I should not record ____ on an income/expense statement covering January 1 to June 30.

Accepted Answer

A)   an $800 refrigerator bought on credit May 30
B)   a paid March telephone bill
C)   health insurance premiums deducted from monthly pay checks
D)   checking account service charges
E)   groceries bought and paid for in June

Question 12

The balance sheet equation is:

Accepted Answer

A)   Total Assets / Total Liabilities = Net Worth.
B)   Total Assets * Total Liabilities = Net Worth.
C)   Total Assets - Total Liabilities = Net Worth.
D)   Total Assets + Total Liabilities = Net Worth.
E)   Total Liabilities - Total Assets = Net Worth.

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-When your assets exceed your liabilities,you are [saving | solvent].

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 14

A(n) ____ would not be listed as an asset on your balance sheet.

Accepted Answer

A)   mortgaged home
B)   savings account
C)   owned automobile
D)   checking account
E)   leased automobile

Question 15

When Phil lists his house on his balance sheet,he should record the

Accepted Answer

A)   actual purchase price.
B)   replacement value.
C)   insured value.
D)   sale price.
E)   fair market value.

Question 16

If your ____,your net worth on the balance sheet would have increased from one period to the next.

Accepted Answer

A)   liabilities increased and assets remained constant
B)   liabilities increased and assets decreased
C)   assets increased and liabilities remain constant
D)   income increased
E)   none of these

Question 17

All of the following are stages in preparing a cash budget except:

Accepted Answer

A)   estimating income
B)   estimating expenses
C)   calculating depreciation expense
D)   finalizing the cash budget

Question 18

Sonny and Cher have a net worth of $35,000 and total assets of $200,000.If their revolving credit and unpaid bills total $2,200,what are their long-term liabilities?

Accepted Answer

A)   $115,000
B)   $140,000
C)   $142,200
D)   $162,800
E)   $165,000

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The short-term goals you put into your financial plan [will | will not] affect the achievement of long-term goals.

Accepted Answer

A)  for the first item
B)  for the second item
C)  if neither item will correctly complete the statement.

Question 20

When a cash surplus exists on your income and expenditure statements,you can

Accepted Answer

A)   acquire assets.
B)   pay off existing debts.
C)   increase your savings.
D)   increase your investments.
E)   do any of the above.

Exam 2: Using Financial Statements and Budgets

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

Correct AnswerverifiedShow Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A [savings account | retirement account] would be an example of a liquid asset.

Correct AnswerverifiedShow Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -When your assets exceed your liabilities,you are [saving | solvent].

Correct AnswerverifiedShow Answer

If you obtain a loan to purchase a car in June,this loan amount would be included as income for June.

Correct AnswerverifiedShow Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Personal financial software is mostly available for [free | a fee].

Correct AnswerverifiedShow Answer

When a cash surplus exists on your income and expenditure statements,you can

Correct AnswerverifiedShow Answer

Your net worth and your equity in owned assets are the same basic concept.

Correct AnswerverifiedShow Answer

When Phil lists his house on his balance sheet,he should record the

Correct AnswerverifiedShow Answer

Balance sheets and income statements are most useful if prepared at least annually.

Correct AnswerverifiedShow Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The short-term goals you put into your financial plan [will | will not] affect the achievement of long-term goals.

Correct AnswerverifiedShow Answer

I should not record ____ on an income/expense statement covering January 1 to June 30.

Correct AnswerverifiedShow Answer

The balance sheet equation is:

Correct AnswerverifiedShow Answer

All of the following are stages in preparing a cash budget except:

Correct AnswerverifiedShow Answer

Mary and Tom purchased their home for $150,000,and it is now worth $175,000.Its asset value is $150,000.

Correct AnswerverifiedShow Answer

The Flemings will need $80,000 annually for 20 years during retirement.How much will they need at retirement if they can earn a 4% rate of return?

Correct AnswerverifiedShow Answer

A(n) ____ would not be listed as an asset on your balance sheet.

Correct AnswerverifiedShow Answer

If your ____,your net worth on the balance sheet would have increased from one period to the next.

Correct AnswerverifiedShow Answer

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -If you liquidate assets or borrow to make your budget balance,this will [increase | decrease] your net worth.

Correct AnswerverifiedShow Answer

Sonny and Cher have a net worth of $35,000 and total assets of $200,000.If their revolving credit and unpaid bills total $2,200,what are their long-term liabilities?

Correct AnswerverifiedShow Answer

Elena purchased a stamp collection for $5,000 thirty years ago.If it appreciated 8% annually,what is it worth today?

Correct AnswerverifiedShow Answer

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