Exam 2: Your Financial Statements and Plans

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 will have value only if it is actually used and [records are kept of actual income/expenses | spending never deviates from the budgeted amount].

If you use net salary as income on your budget,the expenditures section must include income and social security taxes.

____ would not be a long-term financial goal.

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. -If your budget shows a deficit,[increase income | increase expenses] to regain balance.

If you listed your gross salary in the income portion of the budget,the expenditures section must include income taxes and social security.

Using balance sheet information,the ____ ratio indicates your ability to meet current debt payments.

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

A budget is a detailed statement of what income and expenses occurred over a past period.

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 gross income was $32,000;your net income was $25,000;you saved $1,000.Your savings ratio was [3% | 4%].

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 most difficult approach to handle a budget deficit is to [find a second job | borrow money].

Using the future value calculations to estimate the funds needed to meet a goal takes compounding into account.

The income statement includes

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. -Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio would be [67% | 33%].

With cafeteria plans,employees can select the employee benefits that best meet their needs.

You may be under-budgeting for food if you continually have monthly deficits in the food category.

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 liquidity ratio is designed to show the percentage of [your annual credit obligations | next months credit obligations] you could cover with your current assets.

An income statement deficit would increase net worth.

You have a balanced budget when total income for the year equals or exceeds total expenditures for the year.

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 primary function of financial statements is to provide a picture of your [actual | projected] financial position.

If your statement of income and expenditures shows a deficit,you may have