Question 1

Use an example with numbers to illustrate financial ratios are important when considering someone's balance sheet.

Accepted Answer

There are unlimited what to illustrate this but a simple way is to illustrate two balance sheets with the same net worth,but drastically different ratios and the risks that implies.
The balance sheet includes assets,liabilities,and net worth.
   
These financial ratios tell a big story of one person in a very stable financial situation and one with a house of cards.

Question 2

This month Jill received $1000 income from her job and $200 in stock dividends.Her expenses were rent and utilities of $300 and $300 on groceries and $200 on clothing.Which of the following is true?

Accepted Answer

A) Jill has a net cash flow of $400. 
B) Jill has net expenses of $400. 
C) Jill has a net cash flow of $200. 
D) Jill has net income of $400. 
A) Jill has a net cash flow of $400. 
B) Jill has net expenses of $400. 
C) Jill has a net cash flow of $200. 
D) Jill has net income of $400. A

Question 3

A cash flow statement is

Accepted Answer

A) an accurate recording of recent actual expenses and incomes. 
B) a forecast of cash inflows and outflows. 
C) only concerned with regular sources of income and expenses. 
D) a summary of monthly cash surpluses or deficits. 
A) an accurate recording of recent actual expenses and incomes. 
B) a forecast of cash inflows and outflows. 
C) only concerned with regular sources of income and expenses. 
D) a summary of monthly cash surpluses or deficits. A

Question 4

Which of the following actions will decrease your net worth?

Accepted Answer

A) Fitness club dues paid monthly 
B) Contributions to a mutual fund paid monthly 
C) Student loan payments paid monthly 
D) Home mortgage payments paid monthly 
A) Fitness club dues paid monthly 
B) Contributions to a mutual fund paid monthly 
C) Student loan payments paid monthly 
D) Home mortgage payments paid monthly

Question 5

Kim has a net worth of -$20 000 and a debt-to-asset ratio of three.Which of the following do you know is true?

Accepted Answer

A) Kim has a major liquidity problem. 
B) Kim is on the verge of bankruptcy. 
C) Kim has assets of $10 000. 
D) Kim has liabilities of $20 000. 
A) Kim has a major liquidity problem. 
B) Kim is on the verge of bankruptcy. 
C) Kim has assets of $10 000. 
D) Kim has liabilities of $20 000.

Question 6

Which of the following is not a cash inflow?

Accepted Answer

A) Interest received 
B) Dividend income 
C) Car payment 
D) Salary 
A) Interest received 
B) Dividend income 
C) Car payment 
D) Salary

Question 7

If Jo Ann had $4000 in liquid assets and $1000 in current liabilities,she would have a current ratio of

Accepted Answer

A) 0)25. 
B) 4)0. 
C) 1000. 
D) 4000. 
A) 0)25. 
B) 4)0. 
C) 1000. 
D) 4000.

Question 8

Which of the following is required in creating a cash flow statement?

Accepted Answer

A) The values of all assets 
B) Value of all liabilities 
C) Amounts used for expenses 
D) The ideal emergency fund amount 
A) The values of all assets 
B) Value of all liabilities 
C) Amounts used for expenses 
D) The ideal emergency fund amount

Question 9

What are net cash flows?

Accepted Answer

A) All assets minus liabilities 
B) All incomes minus living expenses 
C) Current assets minus current liabilities 
D) After-tax income minus expenses 
A) All assets minus liabilities 
B) All incomes minus living expenses 
C) Current assets minus current liabilities 
D) After-tax income minus expenses

Question 10

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Accepted Answer

A) True 
 B)False

Question 11

Mutual funds are portfolio investments that require investors to make individual stock or bond investment decisions themselves.

Accepted Answer

A) True 
 B)False

Question 12

Assets valued at $400 000 with liabilities of $300 000 means a debt-to-asset ratio of 0.75.

Accepted Answer

A) True 
 B)False

Question 13

Students with a negative net worth are essentially bankrupt.

Accepted Answer

A) True 
 B)False

Question 14

If your net cash flow is $1000,the total value of your assets is $14 000,and your total debts are $4000,then your net worth is $11 000.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is the worst approach to solving the problem of an annual budget deficit?

Accepted Answer

A) Liquidate enough savings or investments to make up the deficit. 
B) Get an additional credit card and cover the deficit with that. 
C) Renegotiate debt to longer term,lower interest options. 
D) Increase income by getting an additional part-time job. 
A) Liquidate enough savings or investments to make up the deficit. 
B) Get an additional credit card and cover the deficit with that. 
C) Renegotiate debt to longer term,lower interest options. 
D) Increase income by getting an additional part-time job.

Question 16

Paying off a credit card with savings will have what effect on net worth?

Accepted Answer

A) Increase 
B) Decrease 
C) No effect 
D) Insufficient data 
A) Increase 
B) Decrease 
C) No effect 
D) Insufficient data

Question 17

Jerry has assets of $200 000,net worth of $150 000,gross income of $60 000 and disposable income of $50000 .What are Jerry's liabilities?

Accepted Answer

A) $110 000 
B) $50 000 
C) $100 000 
D) $0 
A) $110 000 
B) $50 000 
C) $100 000 
D) $0

Question 18

A budget is

Accepted Answer

A) the same thing as a cash flow statement. 
B) a method to measure net worth and monitor wealth. 
C) an historical record of income and expenses. 
D) a forecast of all items on the cash flow statement. 
A) the same thing as a cash flow statement. 
B) a method to measure net worth and monitor wealth. 
C) an historical record of income and expenses. 
D) a forecast of all items on the cash flow statement.

Question 19

Net worth always increases when you increase the value of your assets.

Accepted Answer

A) True 
 B)False

Question 20

Last year John purchased a car for $45 000,a desktop computer for $4000,and a camera for $2500.At present,John has $1000 in credit card debt and a $1800 bank loan.With reasonable estimate of market values,John's car is worth $40 000,computer is worth $2000,and camera is worth $3000.What is John's net worth today?

Accepted Answer

A) $37 200 
B) $48 700 
C) $42 200 
D) $39 200 
A) $37 200 
B) $48 700 
C) $42 200 
D) $39 200

Use an example with numbers to illustrate financial ratios are important when considering someone's balance sheet.

This month Jill received $1000 income from her job and $200 in stock dividends.Her expenses were rent and utilities of $300 and $300 on groceries and $200 on clothing.Which of the following is true?

A cash flow statement is

Which of the following actions will decrease your net worth?

Kim has a net worth of -$20 000 and a debt-to-asset ratio of three.Which of the following do you know is true?

Which of the following is not a cash inflow?

If Jo Ann had $4000 in liquid assets and $1000 in current liabilities,she would have a current ratio of

Which of the following is required in creating a cash flow statement?

What are net cash flows?

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Mutual funds are portfolio investments that require investors to make individual stock or bond investment decisions themselves.

Assets valued at $400 000 with liabilities of $300 000 means a debt-to-asset ratio of 0.75.

Students with a negative net worth are essentially bankrupt.

If your net cash flow is $1000,the total value of your assets is $14 000,and your total debts are $4000,then your net worth is $11 000.

Which of the following is the worst approach to solving the problem of an annual budget deficit?

Paying off a credit card with savings will have what effect on net worth?

Jerry has assets of $200 000,net worth of $150 000,gross income of $60 000 and disposable income of $50000 .What are Jerry's liabilities?

A budget is

Net worth always increases when you increase the value of your assets.

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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Exam 1: Tools for Financial Planning - Planning with Personal Financial Statements

Use an example with numbers to illustrate financial ratios are important when considering someone's balance sheet.

This month Jill received $1000 income from her job and $200 in stock dividends.Her expenses were rent and utilities of $300 and $300 on groceries and $200 on clothing.Which of the following is true?

A cash flow statement is

Which of the following actions will decrease your net worth?

Kim has a net worth of -$20 000 and a debt-to-asset ratio of three.Which of the following do you know is true?

Which of the following is not a cash inflow?

If Jo Ann had $4000 in liquid assets and $1000 in current liabilities,she would have a current ratio of

Which of the following is required in creating a cash flow statement?

What are net cash flows?

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Mutual funds are portfolio investments that require investors to make individual stock or bond investment decisions themselves.

Assets valued at $400 000 with liabilities of $300 000 means a debt-to-asset ratio of 0.75.

Students with a negative net worth are essentially bankrupt.

If your net cash flow is $1000,the total value of your assets is $14 000,and your total debts are $4000,then your net worth is $11 000.

Which of the following is the worst approach to solving the problem of an annual budget deficit?

Paying off a credit card with savings will have what effect on net worth?

Jerry has assets of $200 000,net worth of $150 000,gross income of $60 000 and disposable income of $50000 .What are Jerry's liabilities?

A budget is

Net worth always increases when you increase the value of your assets.

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

Filters