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Exam 2: Using Financial Statements and Budgets

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Question 61

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Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -The process of finding the present value is termed as [discounting | compounding].

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Question 62

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Assets listed on your balance sheet must have monetary value.

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Question 63

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Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Once you define your [short-term | long-term] financial goals,you can prepare a cash budget for the upcoming year.

Your _____ is an example of a liquid asset.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Another term sometimes used for net worth is [collateral | equity].

When estimating income for the income and expense statement,you should:

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -When your liabilities exceed your assets,you are [solvent | insolvent].

You are solvent if your:

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -If your budget shows a deficit,[increase income | increase expenses] to regain balance.

Kathy purchased new furniture for $10,000.She put $1,000 down and financed $9,000.She will pay $350 per month until the loan is paid off.Which of the following is true of the value of furniture Kathy would record on her personal balance sheet?

A house and land are examples of real property.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A(n) [auto loan | credit card balance] would be an example of a current liability.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A balance sheet provides a statement of your financial [position | performance].

Inflation is expected to be 4 percent in the coming year.If Mr.Gonza earned $37,000 this year,how much must he earn the following year just to keep up with inflation and maintain the balance between his income and his increasing expenditures?

All assets are recorded on the balance sheet at their original cost.

A balance sheet shows your financial condition as of the time the statement is prepared.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Putting specific target dates on your goals [will not | will] increase the likelihood of their being accomplished.

A cash surplus will typically produce a positive savings ratio.

_____ is an example of a personal asset.

Mike and Teresa Garza have a monthly gross income of $5,000,but they pay $1,000 per month in taxes.They also pay $2,000 per month in various loan payments.What is their debt service ratio?