Money Management and Budgeting Test Bank Docx Chapter 3

Personal Finance, 13e (Kapoor)

Chapter 3 Money Management Strategy: Financial Statements and Budgeting

1) Money management refers to long-term investment decisions.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

2) Opportunity costs are only associated with money management decisions involving long-term financial security.

Difficulty: 2 Medium

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

3) A budget is a spending plan that outlines how you will spend available income.

Difficulty: 1 Easy

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

4) A personal balance sheet reports your personal income and expenditures.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

5) A person's net worth is the difference between the value of the items owned and the amounts owed to others.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

6) Furniture, jewelry, and an automobile are examples of liquid assets.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

7) Insolvency occurs when liabilities far exceed available assets.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

8) Take-home pay is a person's earnings after deductions for taxes and other items.

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

9) Financial payments that do not vary from month to month are referred to as variable expenses.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

10) Discretionary income is money left over after paying for housing, food, and other necessities.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

11) For many years, the United States has ranked highest among industrial nations in savings rate.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-04 Relate money management and savings activities to achieving financial goals.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

12) In order to calculate a person's savings ratio, the amount saved each month is divided by net income.

Difficulty: 2 Medium

Topic: Evaluating your personal finances

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

13) WiseBanyan is an innovative website that offers a free financial advisor that suggests and manages investments for your financial goals.

Difficulty: 3 Hard

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

14) Opportunity costs refer to:

A) current spending habits.

B) changing economic conditions that affect a person's cost of living.

C) storage facilities to make financial documents easily available.

D) trade-offs associated with money management decisions.

E) avoiding the use of consumer credit.

Difficulty: 1 Easy

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

15) A home file should be used for:

A) storing all financial documents and records.

B) financial records for current needs.

C) documents that require maximum security.

D) obsolete financial documents.

E) records that are difficult to replace.

Difficulty: 1 Easy

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

16) Which of the following financial documents would most likely be stored in a safe-deposit box?

A) W-2 forms

B) Personal financial statements

C) Warranties

D) Birth certificates

E) Checking account statements

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

17) Which of the following would be organized as a personal and employment record in a home file?

A) Budget

B) Paycheck stub

C) Social Security number

D) Property tax bill

E) Lease

Difficulty: 1 Easy

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

18) Which category of a home file includes stock and bond purchase documents?

A) Investment records

B) Insurance records

C) Estate planning records

D) Tax records

E) Consumer purchase records

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

19) Warranties are commonly kept with ________ purchase and automobile records in a home file.

A) investment

B) insurance

C) credit

D) financial service

E) consumer

Difficulty: 1 Easy

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

20) Which of the following are considered to be personal financial statements?

A) Budget and credit card statements

B) Personal balance sheet and cash flow statement

C) Checkbook and budget

D) Tax returns

E) Bank statement and savings statement

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

21) A personal balance sheet presents:

A) amounts budgeted for spending.

B) income and expenses for a period of time.

C) earnings on savings and investments.

D) items you own and amounts you owe.

E) family financial goals.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

22) The current financial position of an individual or family is best presented with the use of a:

A) budget.

B) cash flow statement.

C) balance sheet.

D) bank statement.

E) time value of money report.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

23) A family with $50,000 in assets and $22,000 of liabilities would have a net worth of:

A) $50,000.

B) $28,000.

C) $22,000.

D) $67,000.

E) $41,000.

Explanation: Assets − Liabilities = Net worth; $50,000 − $22,000 = $28,000

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

24) Cash and other tangible property (with a monetary value) that you own are referred to as:

A) liabilities.

B) variable expenses.

C) net worth.

D) income.

E) assets.

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

25) The value of items owned minus the amounts owed to others equals:

A) net assets.

B) net worth.

C) total liabilities.

D) total income.

E) budgeted expenses.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

26) Liquid assets refer to:

A) amounts that must be paid soon.

B) cash and items of value that can be easily converted to cash.

C) total income available to a family for spending.

D) the value of investments.

E) amounts on which taxes must be paid.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

27) Funds set aside for retirement is an example of a(n) ________ asset.

A) personal

B) common

C) investment

D) household

E) budgeted

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

28) Liabilities are amounts representing:

A) debts owed now.

B) items of value.

C) living expenses.

D) taxable income.

E) current assets.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

29) Current liabilities differ from long-term liabilities based on:

A) the amount owed.

B) the financial situation of the creditor.

C) the interest rate charged.

D) when the debt is due.

E) current economic conditions.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

30) Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due within one year?

A) Budget variance

B) Investment assets

C) Long-term liabilities

D) Current assets

E) Current liabilities

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

31) Which of the following would be considered a long-term liability?

A) Charge account

B) Mortgage

C) Six month cash loan

D) Tax payment

E) Insurance premium

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

32) A person's net worth is computed by:

A) adding assets and liabilities.

B) deducting current living expenses from total assets.

C) subtracting total liabilities from total assets.

D) subtracting assets from current liabilities.

E) adding liabilities and budgeted expenses.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

33) Which one of the following illustrates an insolvent situation?

A) Assets $56,000; annual expenses $60,000

B) Assets $78,000; net worth $22,000

C) Liabilities $45,000; net worth $6,000

D) Assets $40,000; liabilities $60,000

E) Annual cash inflows $45,000; liabilities $50,000

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

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

A) reducing the amounts you owe to others.

B) decreasing savings.

C) increasing spending for current living expenses.

D) decreasing the value of personal possessions.

E) decreasing the value of investments.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

35) A cash flow statement reports a person's or a family's:

A) net worth.

B) cash receipts and payments.

C) plan for spending.

D) value of investments.

E) balance of savings.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

36) Which one of the following presents a summary of cash receipts and payments for a period of time?

A) Balance sheet

B) Credit card statement

C) Investment summary

D) Cash flow statement

E) Asset report

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

37) Total earnings of a person minus the deductions for taxes and other items is called:

A) budgeted income.

B) gross pay.

C) net worth.

D) total revenue.

E) take-home pay.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

38) A common deduction from a person's paycheck is for:

A) interest.

B) Social Security taxes.

C) rent.

D) unemployment.

E) current liabilities.

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

39) Payments that do not vary from month to month are ________ expenses.

A) fixed

B) usage

C) variable

D) luxury

E) output

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

40) Edward Boston wants to reduce his fixed expenses. Which action would be appropriate?

A) Get a part-time job

B) Eat more meals at home rather than in restaurants

C) Find a place to live with a lower rent

D) Save more money for the future

E) Buy on credit items that might cost more later

Difficulty: 2 Medium

Topic: Evaluating your personal finances

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

41) Which of the following payments would be considered a variable expense?

A) Rent

B) Installment loan payment

C) Mortgage payment

D) Monthly train ticket for commuting to work

E) Electricity bill

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

42) A decrease in net worth could be the result of:

A) inflows exceeding outflows for a month.

B) outflows exceeding inflows for a month.

C) assets exceeding expenses.

D) increased earnings on the job.

E) inflows and outflows being equal for a month.

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-04 Relate money management and savings activities to achieving financial goals.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

43) During the past month, Jennifer Johnson had income of $3,500. During the month, her net worth declined by $300. If no other financial activities occurred, this means Jennifer's payments for the month were: 

A) $3,800.

B) $3,500.

C) $3,200.

D) $300.

E) $0.

Explanation: Net worth will decrease if outflows are greater than inflows. Outflows = $3,500 − (−$300) = $3,800.

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-04 Relate money management and savings activities to achieving financial goals.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

44) Improvements in a person's financial position are the result of:

A) increasing liabilities.

B) reducing earnings.

C) saving current income and investing

D) increasing purchases on credit.

E) withdrawing amounts from savings.

Difficulty: 2 Medium

Topic: Evaluating your personal finances

Learning Objective: 03-04 Relate money management and savings activities to achieving financial goals.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

45) To determine a person's solvency, which financial document should be consulted?

A) Cash flow statement

B) Budget

C) Debt consolidation statement

D) Personal balance sheet

E) Credit report

Difficulty: 2 Medium

Topic: Evaluating your personal finances

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

46) Which one of the following is the best example of a long-term goal for a married couple with no children?

A) Buy a new car

B) Increase life insurance

C) Increase savings

D) Provide for retirement income

E) Complete college

Difficulty: 3 Hard

Topic: Budgeting process

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

47) Which one of the following cash outflows should be listed first on a Cash Flow Statement?

A) Variable expenses

B) Food expenses

C) Fixed expenses

D) Utility expenses

E) Recreation expenses

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

48) Changes in the cost of living:

A) vary depending on where you live.

B) are the same for different locations.

C) are constant from month to month.

D) are the same for all goods and services.

E) are not a factor when preparing a budget.

Difficulty: 3 Hard

Topic: Budgeting process

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

49) If a family planned to spend $400 for food during April but only spent $350, this difference would be referred to as a:

A) surplus.

B) deficit.

C) fixed living expense.

D) budget reduction.

E) contribution to net worth.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

50) A budget deficit would result when a person's or family's:

A) actual spending is less than planned spending.

B) actual spending is greater than planned spending.

C) actual spending equals planned spending.

D) assets exceed liabilities.

E) net worth decreases.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

A) have an adequate emergency fund.

B) devote large portions of their income to savings.

C) find saving difficult.

D) keep substantial amounts in a regular savings account.

E) reduce the amount they save during their working life.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-04 Relate money management and savings activities to achieving financial goals.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

52) Leeanna Roberts uses a computer to organize her personal financial records and update her budget activities. These activities are an example of: 

A) money management.

B) an opportunity cost.

C) a balance sheet.

D) creative accounting.

E) electronic analysis.

Difficulty: 2 Medium

Topic: Budgets; Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

53) Kyle Burroughs has decided to put $30 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his emergency fund is important. This would be an example of:

A) a budget variance.

B) an opportunity cost.

C) a balance sheet.

D) an accounting error.

E) a budget anomaly.

Difficulty: 2 Medium

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

54) Nicholas Bowman has a savings account with $825 in it. He knows that he can easily withdraw this money and spend it whenever he wishes. This would be an example of: 

A) money management.

B) a personal possession.

C) a limited asset.

D) a liquid asset.

E) net worth analysis.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

55) Karen Phillips has created a financial statement for herself that lists all of the assets she owns as well as the debts she owes. This would be an example of:

A) money management.

B) opportunity cost analysis.

C) a personal balance sheet.

D) a liquidation exercise.

E) a budget variance.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

56) A personal balance sheet:

A) predicts income and expenses.

B) reports what an individual or a family owns and owes.

C) reports income and expenses for an individual or a family.

D) predicts investment success.

E) analyzes debt payment activities.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

57) Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $135,000, the value of her personal possessions is $58,000, and the value of her investment assets is $72,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Patricia's net worth?

A) $269,500

B) $105,500

C) $164,000

D) $205,500

E) $132,000

Explanation: Net worth = total assets - total liabilities = ($4,500 + $135,000 + $58,000 + $72,000) - ($7,500 + $98,000) = $164,000.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

58) Patricia McDonald has determined the following information about her own financial situation. Her checking account is worth $545 and her savings account is worth $1,000. She owns her own home that has a market value of $119,000. She has furniture and appliances worth $8,500 and a  laptop worth $1,200. She has a car worth $9,700 and owes $8,200 on her auto loan. She has also purchased some stock worth $5,500 and she has a retirement account worth $27,655. What is the total value of her assets? 

A) $1,545

B) $119,000

C) $27,800

D) $44,050

E) $173,100

Explanation: Total Assets = $545 + $1,000 + $19,000 + $8,500 + $1,200 + $9,700 + $5,500 + $27,655 = $173,100.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

59) Kathy Thompson has determined that the value of her assets is $64,000 and the value of her debts is $23,000. The difference between these two is $41,000. The $41,000 could be referred to as her:

A) nest egg.

B) total assets.

C) adjusted assets.

D) debt equity.

E) net worth.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

60) A family has a net worth of $165,000 and liabilities of $176,000, what is the amount of their assets?

A) $11,000

B) $165,000

C) $176,000

D) $341,000

E) $506,000

Explanation: Net worth = total assets - total liabilities; therefore, total assets = net worth + total liabilities = $165,000 + $176,000 = $341,000.

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

61) Chris Carter needs to store monthly statements from his bank, his credit card company and his savings accounts. Where is the most appropriate place for Chris to store this information? 

A) Home file

B) Safe deposit box

C) File at work

D) Best friend's house

E) No storage needed

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

62) Jeremy Allison needs to store the title to his car and his military papers. Where is the most appropriate place for Jerry to store this information?

A) Home file

B) Safe deposit box

C) Personal computer

D) Best friend's house

E) No storage needed

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

63) Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $500 and her savings account is worth $900. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased an annuity worth $5,500 and she has a retirement account worth $38,550. What is the value of her liquid assets?

A) $1,400

B) $98,000

C) $27,800

D) $44,050

E) $171,900

Explanation: Liquid assets, in this case, would include checking and savings account balances; $500 + $900 =  $1,400

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

64) Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $119,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a mutual fund worth $5,500 and she has a retirement account worth $38,550. What is the value of her real estate assets?

A) $2,050

B) $119,000

C) $27,800

D) $44,050

E) $171,900

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

65) Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $8,500 and a laptop worth $1,200. She has a car worth $9,700. She has recently purchased a mutual fund worth $5,500 and she has a retirement account worth $38,550. What is the value of her personal possessions?

A) $2,050

B) $98,000

C) $19,400

D) $44,050

E) $171,900

Explanation: Personal possessions, in this case, would include furniture and appliances, a laptop, and a car; $8,500 + $1,200 + $9,700 = $19,400

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

66) Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a mutual fund worth $4,500 and she has a retirement account worth $62,300. What is the value of her investment assets? 

A) $2,050

B) $98,000

C) $27,800

D) $66,800

E) $171,900

Explanation: Investment assets, in this case, would include mutual fund and retirement account assets; $4,500 + $62,300 = $66,800

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

67) Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $800 and her savings account is worth $1,100. She owns her own home that has a market value of $122,000. She has furniture and appliances worth $9,500 and a laptop worth $1,400. She has a car worth $12,500. She has recently purchased a mutual fund worth $5,500 and she has a retirement account worth $32,500. What is the total value of her assets? 

A) $127,850

B) $122,000

C) $168,600

D) $159,900

E) $185,300

Explanation: $800 + $1,100 + $122,000 + $9,500 + $1,400 + $12,500 + $5,500 + $32,500 = $185,300

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

68) Jamie McFarland has determined that the value of her liquid assets is $5,400, the value of her real estate is $182,000, the value of her personal possessions is $26,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long-term liabilities is $98,000. What is the total value of her assets? 

A) $286,400

B) $182,000

C) $73,000

D) $26,000

E) $7,500

Explanation: The total value of Jamie's assets would include the value of her liquid assets, real estate, personal possessions, and investment assets.  $5,400 + $182,000 + $26,000 + $73,000 = $286,400

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

69) Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $5,700 and the value of her long-term liabilities is $89,000. What is the total value of her debts?

A) $267,500

B) $94,700

C) $162,000

D) $205,500

E) $172,800

Explanation: The total value of Jamie's debts would include the value of her current and long-term liabilities.  $5,700 + $89,000 = $94,700

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

70) Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000 and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $5,700 and the value of her long-term liabilities is $89,000. What is Jamie's net worth?

A) $267,500

B) $94,700

C) $172,800

D) $205,500

E) $162,000

Explanation: Net worth = Value of assets - Value of liabilities;  ($4,500 + $128,000 + $62,000 + $73,000) − ($5,700 + $89,000) = $172,800

Difficulty: 3 Hard

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

71) This month, Kenneth Goldberg has cash inflows of $2,950 and cash outflows of $2,800, resulting in a: 

A) balanced budget.

B) surplus of $150.

C) deficit of $150.

D) surplus of $2,950.

E) deficit of $2,800.

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

72) A person has $1,550 in liabilities, monthly savings of $200, and monthly gross income of $2,000. What is the person's savings ratio? 

A) 0.77

B) 0.10

C) 2.35

D) 0.16

E) 12.90

Explanation: Savings ratio = amount saved each month / monthly gross income = $200 / $2,000 = 0.10

Difficulty: 2 Medium

Topic: Financial ratios

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

73) When preparing her monthly budget, Maria Kent has projected income of $3,700. Each month she pays $1,200 in rent, $42 for life insurance, and $240 for her auto loan. What percentage of her budget goes for these fixed expenses?

A) 6 percent

B) 12 percent

C) 27 percent

D) 40 percent

E) 60 percent

Explanation: Total Fixed expenses / projected income = ($1,200 + $42 + $240) / $3,700 = $1,482 / $3,700 = 0.40 = 40%

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

74) The Garcia family budgets $400 a month for food. Last month they spent $393, which creates a:

A) budget surplus of $7.

B) budget deficit of $7.

C) budget surplus of $400.

D) budget deficit of $393.

E) balanced budget.

Difficulty: 1 Easy

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

75) Andrew Smith has developed a budget that he follows each month. This is a budget that he keeps in his head. He does not write anything down, nor does he use a computer to keep track of this budget. What type of budget has Andrew created?

A) Mental budget

B) Physical budget

C) Written budget

D) Computerized budget

E) Cloud budget

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

76) Jonathan Winters has developed a budget that he follows each month. Jonathan has an envelope for each type of expenditure. After he cashes his paycheck, he puts the amount of cash in each envelope that he plans to spend on that category each month. What type of budget has Jonathan created?

A) Mental budget

B) Physical budget

C) Written budget

D) Computerized budget

E) Cloud budget

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

77) Amy Farmer has developed a budget that she follows each month. She went to the office supply store and purchased a spiral notebook. Each month she writes in what she plans to spend in the various categories. At the end of the month, she writes in the amount that she actually spent in each of these categories and compares this with the budgeted amounts. What type of budget has Amy created? 

A) Mental budget

B) Physical budget

C) Written budget

D) Computerized budget

E) None of these

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

78) Jeff Willis has a budget that he follows each month. He has used spreadsheet software to help him determine what he wants to spend each month. At the end of the month, the spreadsheet software automatically compares what he budgeted with what he spent. Jeff can also graph these results if he wants to. What type of budget has Jeff created?

A) Mental budget

B) Physical budget

C) Written budget

D) Computerized budget

E) None of these

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

79) George Green has determined that the amount of money he spends on his mortgage payment, car loan payment, and home insurance payment totals $1,200 every month. What type of expenses has George determined with this calculation?

A) Current liabilities

B) Long-term liabilities

C) Net worth

D) Variable expenses

E) Fixed expenses

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

80) Which of the following is typically considered to be a personal and employment record?

A) Birth certificate

B) Current résumé

C) Employee benefit information

D) Social Security number

E) All of these

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

81) Copies of tax returns and supporting data should be kept for ________ year(s).

A) 0

B) 1

C) 3

D) 5

E) 7

Difficulty: 1 Easy

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

82) Which of the following would most likely be classified as a current liability?

A) Monthly balance due on a credit card

B) Total amount of a mortgage

C) Balance of an education loan

D) Total amount of a five year home improvement loan

E) Balance of a 60 month auto loan

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

83) Which of the following would be considered a fixed expense?

A) Electric bill

B) Food at home

C) Rent

D) Donations

E) Medical expenses

Difficulty: 1 Easy

Topic: Budgets

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

84) Your aunt gives you some money for your birthday and you decide to put it into your savings account instead of spending it. The trade-off of not being able to spend the money now is an example of ________ cost.

A) fixed

B) opportunity

C) variable

D) transaction

E) total

Difficulty: 2 Medium

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

85) For January, Beth Rhodes had cash inflows of $3,500 and cash outflows of $4,050, resulting in a: 

A) balanced budget.

B) surplus of $550.

C) deficit of $550.

D) surplus of $3,500.

E) deficit of $4,050.

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

86) The value of the home you own would be included in which section of your balance sheet?

A) Liquid assets

B) Investment assets

C) Real estate assets

D) Personal possessions

E) Current liabilities

Difficulty: 1 Easy

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

87) Characteristics of successful budgets include being:

A) well planned.

B) realistic.

C) flexible.

D) clearly communicated.

E) All of these

Difficulty: 1 Easy

Topic: Budget characteristics

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

88) A person with erratic or seasonal income may need an emergency fund of ________ months or more.

A) 2

B) 3

C) 6

D) 10

E) 12

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

89) Calculate the debt ratio for an individual who has $45,000 in assets and $17,500 in liabilities.

A) 0.26

B) 2.57

C) 0.45

D) 0.39

E) 1.75

Explanation: Debt ratio = liabilities / assets = $17,500 / $45,000 = 0.389 = 0.39

Difficulty: 3 Hard

Topic: Financial ratios

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

90) An example of a liquid asset is:

A) furniture.

B) jewelry.

C) automobile.

D) money in a checking account.

E) home computer.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

91) The amount of income that a person or household has available to spend after deductions for taxes and other items is called:

A) take-home pay.

B) discretionary income.

C) surplus.

D) budget variance.

E) cash flow.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

92) Flexible payments that change from month to month are referred to as:

A) variable expenses.

B) fixed expenses.

C) cash flow.

D) insolvency.

E) budget variance.

Difficulty: 1 Easy

Topic: Budgets

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

93) In order to determine net worth, you would create what kind of report?

A) Written budget

B) Personal balance sheet

C) Cash flow statement

D) SWOT analysis

E) Physical budget

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

94) Which of the following items is something that would typically not be stored in a safe deposit box?

A) Rare coins

B) Passport

C) Car title

D) Birth certificate

E) Bank statements

Difficulty: 1 Easy

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

95) Common long-term liabilities include:

A) Auto loans

B) Medical bills

C) Insurance premiums

D) Charge accounts

E) Cash loans

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

96) Discretionary income is:

A) a person's earnings after deducting taxes and other items.

B) referred to as net pay.

C) referred to as disposable income.

D) money left over after paying for housing, food, and other necessities.

E) referred to as take-home pay.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

97) The debt ratio is calculated as:

A) Net worth divided by liabilities.

B) Monthly credit payments divided by take-home pay.

C) Liabilities divided by assets.

D) Liquid assets divided by current liabilities.

E) Liquid assets divided by monthly expenses.

Difficulty: 3 Hard

Topic: Financial ratios

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

98) Financial goals should take a SMART approach with goals that are:

A) Time-based.

B) Realistic.

C) Action-oriented.

D) Specific and Measurable.

E) All of these

Difficulty: 2 Medium

Topic: SMART approach

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

99) One of the main purposes of a budget is to help you:

A) Live within your income.

B) Spend your money quickly.

C) Reach your career goals.

D) Prepare for financial non-emergencies.

E) Develop spontaneous financial management habits.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

100) Which of the following can be minimized through budgeting?

A) Overusing credit

B) Lacking a regular savings program

C) Failing to ensure future financial security

D) All of these

E) None of these

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

101) Which of these is an example of an opportunity cost?

A) Spending for current living expenses increases the amount you have for saving and investing.

B) Saving and investing for the future reduces the amount you can spend now.

C) Buying on credit results in payments later and increases the amount of future income available.

D) Using savings for purchases results in additional interest earnings.

E) Comparison shopping can cost you money and time.

Difficulty: 3 Hard

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

102) An organized system of financial records provides a basis for:

A) handling daily business activities.

B) planning and measuring financial progress.

C) completing required tax reports.

D) making effective investment decisions.

E) All of these

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

103) One of the main purposes of personal financial statements is to:

A) Report your future financial position relating to the value of items owned and owed.

B) Measure your progress toward financial goals.

C) Maintain information about your professional work activities.

D) Provide data you can use when rating a restaurant.

E) Provide data you can use when applying for a job.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

104) The 50/30/20 financial rule of thumb suggests that 50 percent of income be used for:

A) necessities.

B) wants.

C) savings.

D) car buying.

E) education.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

105) The 50/30/20 financial rule of thumb suggests that 30 percent of income be used for:

A) necessities.

B) wants.

C) savings.

D) car buying.

E) education.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

106) The 50/30/20 financial rule of thumb suggests that 20 percent of income be used for:

A) necessities.

B) wants.

C) savings.

D) car buying.

E) education.

Difficulty: 2 Medium

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

107) Financial experts recommend monthly savings of:

A) 1 percent.

B) 2 to 3 percent.

C) 4 percent.

D) 5 to 10 percent.

E) 15 percent.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

108) What types of financial records and documents should be kept in a safe deposit box?

Difficulty: 2 Medium

Topic: Financial records

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

109) Describe the main components and purpose of a personal balance sheet and a cash flow statement?

The main purposes of personal financial statements include the following:

∙ To Report your current financial position in relation to the value of items you own and amounts you owe.

∙ To Measure your progress toward financial goals.

∙ To Maintain information about your financial activities.

∙ To Provide data you can use when preparing tax forms or applying for credit.

Difficulty: 2 Medium

Topic: Financial statements and cash flows

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

110) Diane Rucker lives with her two sons, ages 6 and 9. They have had difficulty managing their finances. What purposes could a budget serve for the Ruckers? What actions would you suggest for the budgeting process to be successful?

Difficulty: 2 Medium

Topic: Budgeting process

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

111) Darlene Edwards has the following financial amounts: checking account $750, savings account $2,200, credit card balance $500, jewelry $1,200, real estate valued at $119,000, a mortgage on the real estate of $23,000. What is the total of Darlene's assets? What actions could she take to increase her net worth?

Difficulty: 2 Medium

Topic: Evaluating your personal finances

Learning Objective: 03-02 Develop a personal balance sheet and cash flow statement.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

112) Explain why opportunity cost is an important concept in money management.

∙ Spending for current living expenses reduces the amount you have for saving and investing for long-term financial security.

∙ Saving and investing for the future reduces the amount you can spend now.

∙ Buying on credit results in payments later and reduces the amount of future income available for spending.

∙ Using savings for purchases results in lost interest earnings and an inability to use savings for other purposes.

∙ Comparison shopping can save you money and improve the quality of your purchases but uses up something of value you cannot replace: your time.

Difficulty: 2 Medium

Topic: Opportunity costs

Learning Objective: 03-01 Recognize relationships among financial documents and money management activities.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

113) List the four phases of creating and implementing a budget and describe the details of each phase.

Difficulty: 3 Hard

Topic: Budgets

Learning Objective: 03-03 Create and implement a budget.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual