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. -You bought a $500 stereo on the installment plan and made two payments of $75 during the year.On your income/expense statement for the year,you will show an expense of [$150 | $500].

If your total assets equal $87,000 and your total liabilities equal $10,000;your solvency ratio is

You are solvent if your

Budgeting and record keeping are really the same activity.

The liquidity ratio is an indicator of a family's ability to pay current debts if there is an interruption in income.

Dual-income families often face

The balance sheet equation is:

Assets listed on your balance sheet must have monetary value.

To determine how effectively the budget is working,you can use

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 you liquidate assets or borrow to make your budget balance,this will [increase | decrease] your net worth.

Phil has $2,000 and he needs it to grow to $4,000 in 8 years.Assuming he adds no more money to this fund,what rate of return would he need to earn?

Your investment advisor wants you to purchase an annuity that will pay you $25,000 per year for 10 years.If you require a 7% return,what is the most you should pay for this investment?

The Wilson family's short-term goals might include

What can you do if your budget shows an annual budget deficit?

A solvency ratio shows how much "cushion" you have as a protection against insolvency.

Balance sheet liabilities should be recorded at their

Russ buys his wife a valuable painting for $20,000.He purchases it using $15,000 from his savings and a $5,000 loan.How does this transaction affect Russ' balance sheet?

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 total amount of salary you earn before taxes are deducted is called your [gross | net] pay.

Construct a balance sheet from the following information.Be sure the format is correct.(Show all work. )