Question 1

If your total assets equal $50,000 and your total liabilities equal $15,000; your debt ratio is

Accepted Answer

A)  30%. 
B)  70%. 
C)  143%. 
D)  233%. 
E)  333%.

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-[Borrowing money from relatives | cutting low-priority expenses] is the preferable way to deal with budget deficits.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 3

Your auto loan payments would be listed as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 4

The need for budget adjustments is indicated when

Accepted Answer

A)  income is stable. 
B)  account deficits and surpluses balance out. 
C)  account deficits are more than surpluses. 
D)  a new calendar year begins. 
E)  short-term financial goals are achieved.

Question 5

Net worth peaks at about age 65 and then diminishes throughout retirement years.

Accepted Answer

A) True 
 B)False

Question 6

The equity in your home is the difference between the loan balance and the purchase price.

Accepted Answer

A) True 
 B)False

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A deficit on your income/expense statement will have [an | no] effect on your balance sheet.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 8

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

Accepted Answer

A)  the balance sheet. 
B)  the income statement. 
C)  income and expenditure records. 
D)  year-end financial statements. 
E)  financial goals.

Question 9

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

Accepted Answer

A)  solvency 
B)  liquidity 
C)  cash 
D)  savings 
E)  debt service

Question 10

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

Accepted Answer

A)  11.5%. 
B)  13.0%. 
C)  77.0%. 
D)  87.0%. 
E)  88.5%.

Question 11

Only the current month's payment on your mortgage loans would be listed on the balance sheet as a liability.

Accepted Answer

A) True 
 B)False

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-[Present | Future] value is the value today of an amount to be received in the future.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 13

Which of the following is not among the four categories accounting for almost three-quarters of consumer spending?

Accepted Answer

A)  Utilities 
B)  Food 
C)  Transportation 
D)  Housing 
E)  Personal insurance and pensions

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A detailed forecast used to monitor and control expenses is called a [financial plan | income/expenditures statement].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 15

One could use statements from their various financial institutions to help complete a balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment?

Accepted Answer

The answer of The Hart family spends 30 percent of...

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-[Medical expenses | Rent payments] would be more difficult to estimate for the coming year.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 19

An income statement deficit would increase net worth.

Accepted Answer

A) True 
 B)False

Question 20

The balance sheet describes a family's wealth

Accepted Answer

A)  at a certain point in tine. 
B)  as an annual summary. 
C)  as a time period less than one year. 
D)  at a future time. 
E)  none of these

Exam 2: Using Financial Statements and Budgets

If your total assets equal $50,000 and your total liabilities equal $15,000; your debt ratio is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -[Borrowing money from relatives | cutting low-priority expenses] is the preferable way to deal with budget deficits.

Your auto loan payments would be listed as an expense on the income statement.

The need for budget adjustments is indicated when

Net worth peaks at about age 65 and then diminishes throughout retirement years.

The equity in your home is the difference between the loan balance and the purchase price.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A deficit on your income/expense statement will have [an | no] effect on your balance sheet.

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

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

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

Only the current month's payment on your mortgage loans would be listed on the balance sheet as a liability.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -[Present | Future] value is the value today of an amount to be received in the future.

Which of the following is not among the four categories accounting for almost three-quarters of consumer spending?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A detailed forecast used to monitor and control expenses is called a [financial plan | income/expenditures statement].

One could use statements from their various financial institutions to help complete a balance sheet.

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

The Hart family spends 30 percent of their disposable income on housing,5 percent on medical expenses,25 percent on food,10 percent on clothing,14 percent on loan repayments,and 8 percent on entertainment.How much of their disposable income is available for savings and investment?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -[Medical expenses | Rent payments] would be more difficult to estimate for the coming year.

An income statement deficit would increase net worth.

The balance sheet describes a family's wealth