Exam 2: Your Financial Statements and Plans

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

INSTRUCTIONS: 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. -Your car has a market value of $4,000 while the balance of the loan against it is now $2,500.You will list this car as net worth [$4,000 | $1,500].

On an income statement covering January 1 to June 30,____ would not be included as income.

A cash budget has value only if you use it,review it regularly,and keep carful records of income and expenses.

Using time value of money is important when planning for long-term goals.

The income statement is specific to

Your ____ is an example of a liquid asset.

INSTRUCTIONS: 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. -[Borrowing money from relatives | cutting low-priority expenses] is the preferable way to deal with budget deficits.

INSTRUCTIONS: 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 assets exceed your liabilities,you are [saving | solvent].

Inability to reach short-term goals will significantly affect your ability to reach long-term goals.

The best way to balance your budget is to increase borrowing.

INSTRUCTIONS: 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 purpose of the debt service ratio is to show the amount of your income needed to pay your [current liabilities | monthly loan payments].

One should quickly make important financial decisions soon after a financial shock,such as death or divorce.

Kim's net worth is $85,000 and her total assets are $100,000.What is Kim's solvency ratio?

INSTRUCTIONS: 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. -Investment assets are required to [earn a return | provide a service].

INSTRUCTIONS: 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 word for take-home pay is [gross | disposable] income.

INSTRUCTIONS: 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 budget should be prepared on a [cash basis | accrual basis].

You are more likely to achieve your goals if a definite goal date is set.

Most types of personal property depreciate,or decline in value,shortly after being put into use.

Jean and Jim have liquid assets of $3,600 and other assets of $42,800.Their total liabilities equal $26,000.What is their net worth? (Show all work. )