Question 1

The best measure of a person's or family's wealth is

Accepted Answer

A)  the amount of salary earned annually. 
B)  net worth. 
C)  the total dollar value of investment assets. 
D)  the market value of real estate including the personal home. 
A)  the amount of salary earned annually. 
B)  net worth. 
C)  the total dollar value of investment assets. 
D)  the market value of real estate including the personal home.

Question 2

Judy has cash inflows of $3,000 for the month of June.Her expenses or cash outflows were $4,000.What is her net cash flow? List two options for Judy to meet her financial obligations in June.What is the effect (increase or decrease)of these options on her assets and liabilities?

Accepted Answer

Net cash flow is a negative $1

Question 3

A cash flow statement that is based on forecasted cash flows for a future time period is called a(n)

Accepted Answer

A)  cash outflow. 
B)  net cash flow. 
C)  income statement. 
D)  budget. 
A)  cash outflow. 
B)  net cash flow. 
C)  income statement. 
D)  budget.

Question 4

Liabilities can be calculated by

Accepted Answer

A)  adding assets to net worth. 
B)  subtracting net worth from assets. 
C)  adding assets to income. 
D)  subtracting expenses from assets. 
A)  adding assets to net worth. 
B)  subtracting net worth from assets. 
C)  adding assets to income. 
D)  subtracting expenses from assets.

Question 5

The difference between assets and liabilities is called

Accepted Answer

A)  surplus. 
B)  deficit. 
C)  net income. 
D)  net worth. 
A)  surplus. 
B)  deficit. 
C)  net income. 
D)  net worth.

Question 6

Cash outflows are also called

Accepted Answer

A)  assets. 
B)  expenses. 
C)  income. 
D)  liabilities. 
A)  assets. 
B)  expenses. 
C)  income. 
D)  liabilities.

Question 7

If both a husband and wife are employed,their consumption will tend to

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  None of the above; the employment of spouses is unrelated to consumption behavior. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  None of the above; the employment of spouses is unrelated to consumption behavior.

Question 8

Your current liquidity ratio is 2.0.If you take money out of your savings account to pay off a credit card your liquidity ratio will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  More information is needed to determine what effect this action will have. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  More information is needed to determine what effect this action will have.

Question 9

A(n)________ is a forecast of your future cash inflows and outflows.

Accepted Answer

The answer of A(n)________ is a forecast of your future...

Question 10

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these are called

Accepted Answer

A)  liquid assets. 
B)  household assets. 
C)  investment assets. 
D)  retirement assets. 
A)  liquid assets. 
B)  household assets. 
C)  investment assets. 
D)  retirement assets.

Question 11

The main sources of cash outflows for most people are

Accepted Answer

A)  every expenditure is a cash outflow. 
B)  mortgage or rent payments. 
C)  car payments. 
D)  college loan payments. 
A)  every expenditure is a cash outflow. 
B)  mortgage or rent payments. 
C)  car payments. 
D)  college loan payments.

Question 12

Forecasting for more than a month at a time is not helpful because you can't plan for unexpected expenses in the future.

Accepted Answer

A) True 
 B)False

Question 13

The term "liquid assets" refers to

Accepted Answer

A)  the earnings on savings. 
B)  financial assets that can be easily sold without a loss in value. 
C)  the amount of insurance coverage a person has. 
D)  a person's inability to pay his or her debt. 
A)  the earnings on savings. 
B)  financial assets that can be easily sold without a loss in value. 
C)  the amount of insurance coverage a person has. 
D)  a person's inability to pay his or her debt.

Question 14

During the final stage in the life cycle,retirement,people experience higher incomes from their demanding careers.

Accepted Answer

A) True 
 B)False

Question 15

Investment assets include all of the following except

Accepted Answer

A)  stocks. 
B)  automobiles. 
C)  bonds. 
D)  rental property. 
A)  stocks. 
B)  automobiles. 
C)  bonds. 
D)  rental property.

Question 16

Corporations issue stocks for all of the following reasons except

Accepted Answer

A)  to purchase new machinery. 
B)  to expand into new markets. 
C)  to fund a plant expansion. 
D)  to loan money to shareholders. 
A)  to purchase new machinery. 
B)  to expand into new markets. 
C)  to fund a plant expansion. 
D)  to loan money to shareholders.

Question 17

Another term for your wealth calculated by deducting the amount that you owe from the value of the things you own is

Accepted Answer

A)  gross income. 
B)  net income. 
C)  net property. 
D)  net worth. 
A)  gross income. 
B)  net income. 
C)  net property. 
D)  net worth.

Question 18

Individuals who switch from a low-demand industry to a high-demand industry usually earn higher incomes.

Accepted Answer

A) True 
 B)False

Question 19

A high debt ratio indicates an excessive amount of debt and should be reduced over time to avoid any debt repayment problems.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following will not increase your liquidity?

Accepted Answer

A)  Selling a boat and depositing the proceeds in your checking account 
B)  Selling a car in exchange for cash 
C)  Selling stock in exchange for cash 
D)  Using cash to purchase a home entertainment system 
A)  Selling a boat and depositing the proceeds in your checking account 
B)  Selling a car in exchange for cash 
C)  Selling stock in exchange for cash 
D)  Using cash to purchase a home entertainment system

Exam 2: Planning With Personal Financial Statements

The best measure of a person's or family's wealth is

Judy has cash inflows of $3,000 for the month of June.Her expenses or cash outflows were $4,000.What is her net cash flow? List two options for Judy to meet her financial obligations in June.What is the effect (increase or decrease)of these options on her assets and liabilities?

A cash flow statement that is based on forecasted cash flows for a future time period is called a(n)

Liabilities can be calculated by

The difference between assets and liabilities is called

Cash outflows are also called

If both a husband and wife are employed,their consumption will tend to

Your current liquidity ratio is 2.0.If you take money out of your savings account to pay off a credit card your liquidity ratio will

A(n)________ is a forecast of your future cash inflows and outflows.

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these are called

The main sources of cash outflows for most people are

Forecasting for more than a month at a time is not helpful because you can't plan for unexpected expenses in the future.

The term "liquid assets" refers to

During the final stage in the life cycle,retirement,people experience higher incomes from their demanding careers.

Investment assets include all of the following except

Corporations issue stocks for all of the following reasons except

Another term for your wealth calculated by deducting the amount that you owe from the value of the things you own is

Individuals who switch from a low-demand industry to a high-demand industry usually earn higher incomes.

A high debt ratio indicates an excessive amount of debt and should be reduced over time to avoid any debt repayment problems.

Which of the following will not increase your liquidity?

Overview of a Financial Plan

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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