Question 1

Which of the following is not a key budgeting influence for a personal financial plan?
A) Change investments from risky stocks to more conservative stocks
B) Improve near term net cash flow
C) Reduce debt payments by 50%
D) Improve long term net cash flow

Accepted Answer

Changing investments from risky stocks to more conservative stocks is more related to investment strategy rather than budgeting. Budgeting typically involves planning and managing current income and expenses to meet financial goals, not the specific allocation of investments.

Question 2

Which of the following will not increase your net worth?
A) Country club dues paid monthly
B) Contributions to a mutual fund paid monthly
C) Car payments paid monthly
D) Home mortgage payments paid monthly

Accepted Answer

Country club dues are a monthly expense and do not add value to your assets. B, C, and D are all payments that contribute to an asset (mutual fund, car, and home) which can increase your net worth.

Question 3

Your net worth can change even if your net cash flows are zero.

Accepted Answer

Net worth is determined by subtracting liabilities from assets, which can change even if net cash flows are zero. This can occur if the value of assets (such as real estate or investments) increase or decrease in value, or if liabilities (such as loans or mortgages) are paid off.

Question 4

Why is it important to monitor your debt level?
A) So it does not become so high that you cannot cover the monthly payments
B) So that you maintain a liquidity ratio of at least 2.5
C) In order to qualify for another credit card to capture the introductory points
D) So that your total debt does not exceed your annual income

Accepted Answer

Monitoring your debt level is important to ensure that it does not become so high that you cannot cover the monthly payments, which can lead to missed payments, late fees, and damage to your credit score. It is also important to maintain a good debt-to-income ratio, but this is not accurately represented by a liquidity ratio of 2.5. Qualifying for another credit card to capture introductory points should not be the sole reason for monitoring debt level, as this can lead to overspending and increased debt.

Question 5

A person's net worth would increase as a result of
A) reducing amounts owed to others.
B) reducing earnings.
C) decreasing the value of assets.
D) increasing spending on current living expenses.

Accepted Answer

Net worth is calculated by subtracting the total amount owed by a person from the total value of their assets. Therefore, reducing amounts owed to others will increase a person's net worth. The other options - reducing earnings, decreasing the value of assets, and increasing spending on current living expenses - will all decrease a person's net worth.

Question 6

The net worth of an individual or family can be increased by
A) increasing spending.
B) increasing liabilities.
C) decreasing assets.
D) increasing income.

Accepted Answer

The best way to increase net worth is to increase income, which can be achieved through various means such as seeking a higher paying job or starting a business. Increasing spending, liabilities, or decreasing assets would have the opposite effect and decrease net worth.

Question 7

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

The answer of Judy has cash inflows of $3,000 for...

Question 8

Analyzing your expected income and expenses over the coming 6 months is
A) called budgeting and is worthwhile no matter your life stage.
B) generally not necessary early in your career.
C) not necessary until you are nearing retirement.
D) only necessary once a year.

Accepted Answer

Analyzing your expected income and expenses over the coming months is called budgeting and is a valuable practice for everyone, regardless of their life stage. It helps in ensuring financial stability and achieving financial goals.

Question 9

Indicate whether the following are liquid assets or household assets by placing an L or H beside them.
________ Car
________ Home
________ Checking account
________ Furniture
________ Cash
________ Savings account

Accepted Answer

The answer of Indicate whether the following are liquid assets...

Question 10

If your net cash inflows exceed your net cash outflows,you can increase your net worth by investing the difference in more ________.

Accepted Answer

The answer of If your net cash inflows exceed your...

Question 11

If your cash outflows are $600 and your cash inflows are $1,000,you can increase your net worth by
A) $1,000.
B) $600.
C) $1,600.
D) $400.

Accepted Answer

Net worth is calculated by subtracting total liabilities from total assets. Having $600 in cash outflows and $1,000 in cash inflows means you gained $400 ($1,000 - $600) in cash. However, without knowing your liabilities, we cannot determine the impact on your net worth. Therefore, the best answer is D, as it is the only option that reflects the specific information provided.

Question 12

A personal balance sheet is comprised of
A) your assets, liabilities and net worth.
B) your loans and credit card balances.
C) monthly loan, credit card and other "fixed" payments.
D) gross monthly income less "fixed" payments.

Accepted Answer

A personal balance sheet is a financial statement that reports the assets, liabilities, and net worth of an individual or a family at a specific point in time. It provides a snapshot of an individual's financial situation and helps them understand their financial position. The assets in a personal balance sheet include cash, investments, and personal property, while the liabilities include debts, loans, and mortgages. The net worth is the difference between total assets and total liabilities. Thus, option A is the correct choice.

Question 13

List three components of your personal balance sheet and two components of your income statement.

Accepted Answer

The answer of List three components of your personal balance...

Question 14

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

Accepted Answer

Net worth includes all assets (including investments and real estate) minus all liabilities (including mortgages and other debt). It gives a more complete picture of a person's or family's overall financial situation than just looking at salary or individual asset values.

Question 15

Lucky Louie just inherited $50,000 from his great aunt,has $1,500 in his checking account,owns a car with a value of $8,000,and has $20,000 in his 401(k)at work.Louie owes $6,000 on his car,$12,000 on school loans and $3,000 on his credit card.What is Louie's net worth?
A) $58,500
B) $58,000
C) $38,500
D) He has no net worth since he does not own a house.

Accepted Answer

The answer of Lucky Louie just inherited $50,000 from his...

Quiz 2: Planning With Personal Financial Statements

Which of the following is not a key budgeting influence for a personal financial plan?

Which of the following will not increase your net worth?

Your net worth can change even if your net cash flows are zero.

Why is it important to monitor your debt level?

A person's net worth would increase as a result of

The net worth of an individual or family can be increased by

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?

Analyzing your expected income and expenses over the coming 6 months is

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. Car Home Checking account Furniture Cash Savings account

If your net cash inflows exceed your net cash outflows,you can increase your net worth by investing the difference in more ________.

If your cash outflows are $600 and your cash inflows are $1,000,you can increase your net worth by

A personal balance sheet is comprised of

List three components of your personal balance sheet and two components of your income statement.

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

Lucky Louie just inherited $50,000 from his great aunt,has $1,500 in his checking account,owns a car with a value of $8,000,and has $20,000 in his 401(k) at work.Louie owes $6,000 on his car,$12,000 on school loans and $3,000 on his credit card.What is Louie's net worth?

Quiz 2: Planning With Personal Financial Statements

Which of the following is not a key budgeting influence for a personal financial plan?

Which of the following will not increase your net worth?

Your net worth can change even if your net cash flows are zero.

Why is it important to monitor your debt level?

A person's net worth would increase as a result of

The net worth of an individual or family can be increased by

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?

Analyzing your expected income and expenses over the coming 6 months is

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. ________ Car ________ Home ________ Checking account ________ Furniture ________ Cash ________ Savings account

If your net cash inflows exceed your net cash outflows,you can increase your net worth by investing the difference in more ________.

If your cash outflows are $600 and your cash inflows are $1,000,you can increase your net worth by

A personal balance sheet is comprised of

List three components of your personal balance sheet and two components of your income statement.

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

Lucky Louie just inherited $50,000 from his great aunt,has $1,500 in his checking account,owns a car with a value of $8,000,and has $20,000 in his 401(k) at work.Louie owes $6,000 on his car,$12,000 on school loans and $3,000 on his credit card.What is Louie's net worth?

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. Car Home Checking account Furniture Cash Savings account