Personal Finance Jack Kapoor 13th Edition- Test Bank

 

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Sample Test

Personal Finance, 13e (Kapoor)

Chapter 3   Money Management Strategy: Financial Statements and Budgeting

 

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

 

Answer:  FALSE

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.

 

Answer:  FALSE

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.

 

Answer:  TRUE

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.

 

Answer:  FALSE

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.

 

Answer:  TRUE

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.

 

Answer:  FALSE

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.

 

Answer:  TRUE

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.

 

Answer:  TRUE

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.

 

Answer:  FALSE

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.

 

Answer:  TRUE

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.

 

Answer:  FALSE

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.

 

Answer:  FALSE

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.

 

Answer:  TRUE

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:

1.   A) current spending habits.

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

3.   C) storage facilities to make financial documents easily available.

4.   D) trade-offs associated with money management decisions.

5.   E) avoiding the use of consumer credit.

 

Answer:  D

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:

1.   A) storing all financial documents and records.

2.   B) financial records for current needs.

3.   C) documents that require maximum security.

4.   D) obsolete financial documents.

5.   E) records that are difficult to replace.

 

Answer:  B

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?

1.   A) W-2 forms

2.   B) Personal financial statements

3.   C) Warranties

4.   D) Birth certificates

5.   E) Checking account statements

 

Answer:  D

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?

1.   A) Budget

2.   B) Paycheck stub

3.   C) Social Security number

4.   D) Property tax bill

5.   E) Lease

 

Answer:  C

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?

1.   A) Investment records

2.   B) Insurance records

3.   C) Estate planning records

4.   D) Tax records

5.   E) Consumer purchase records

 

Answer:  A

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.

1.   A) investment

2.   B) insurance

3.   C) credit

4.   D) financial service

5.   E) consumer

 

Answer:  E

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?

1.   A) Budget and credit card statements

2.   B) Personal balance sheet and cash flow statement

3.   C) Checkbook and budget

4.   D) Tax returns

5.   E) Bank statement and savings statement

 

Answer:  B

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:

1.   A) amounts budgeted for spending.

2.   B) income and expenses for a period of time.

3.   C) earnings on savings and investments.

4.   D) items you own and amounts you owe.

5.   E) family financial goals.

 

Answer:  D

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:

1.   A) budget.

2.   B) cash flow statement.

3.   C) balance sheet.

4.   D) bank statement.

5.   E) time value of money report.

 

Answer:  C

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:

1.   A) $50,000.

2.   B) $28,000.

3.   C) $22,000.

4.   D) $67,000.

5.   E) $41,000.

 

Answer:  B

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:

1.   A) liabilities.

2.   B) variable expenses.

3.   C) net worth.

4.   D) income.

5.   E) assets.

 

Answer:  E

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:

1.   A) net assets.

2.   B) net worth.

3.   C) total liabilities.

4.   D) total income.

5.   E) budgeted expenses.

 

Answer:  B

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:

1.   A) amounts that must be paid soon.

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

3.   C) total income available to a family for spending.

4.   D) the value of investments.

5.   E) amounts on which taxes must be paid.

 

Answer:  B

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.

1.   A) personal

2.   B) common

3.   C) investment

4.   D) household

5.   E) budgeted

 

Answer:  C

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:

1.   A) debts owed now.

2.   B) items of value.

3.   C) living expenses.

4.   D) taxable income.

5.   E) current assets.

 

Answer:  A

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:

1.   A) the amount owed.

2.   B) the financial situation of the creditor.

3.   C) the interest rate charged.

4.   D) when the debt is due.

5.   E) current economic conditions.

 

Answer:  D

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?

1.   A) Budget variance

2.   B) Investment assets

3.   C) Long-term liabilities

4.   D) Current assets

5.   E) Current liabilities

 

Answer:  E

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?

1.   A) Charge account

2.   B) Mortgage

3.   C) Six month cash loan

4.   D) Tax payment

5.   E) Insurance premium

 

Answer:  B

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:

1.   A) adding assets and liabilities.

2.   B) deducting current living expenses from total assets.

3.   C) subtracting total liabilities from total assets.

4.   D) subtracting assets from current liabilities.

5.   E) adding liabilities and budgeted expenses.

 

Answer:  C

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?

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

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

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

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

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

 

Answer:  D

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:

1.   A) reducing the amounts you owe to others.

2.   B) decreasing savings.

3.   C) increasing spending for current living expenses.

4.   D) decreasing the value of personal possessions.

5.   E) decreasing the value of investments.

 

Answer:  A

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:

1.   A) net worth.

2.   B) cash receipts and payments.

3.   C) plan for spending.

4.   D) value of investments.

5.   E) balance of savings.

 

Answer:  B

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?

1.   A) Balance sheet

2.   B) Credit card statement

3.   C) Investment summary

4.   D) Cash flow statement

5.   E) Asset report

 

Answer:  D

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:

1.   A) budgeted income.

2.   B) gross pay.

3.   C) net worth.

4.   D) total revenue.

5.   E) take-home pay.

 

Answer:  E

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:

1.   A) interest.

2.   B) Social Security taxes.

3.   C) rent.

4.   D) unemployment.

5.   E) current liabilities.

 

Answer:  B

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.

1.   A) fixed

2.   B) usage

3.   C) variable

4.   D) luxury

5.   E) output

 

Answer:  A

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?

1.   A) Get a part-time job

2.   B) Eat more meals at home rather than in restaurants

3.   C) Find a place to live with a lower rent

4.   D) Save more money for the future

5.   E) Buy on credit items that might cost more later

 

Answer:  C

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?

1.   A) Rent

2.   B) Installment loan payment

3.   C) Mortgage payment

4.   D) Monthly train ticket for commuting to work

5.   E) Electricity bill

 

Answer:  E

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:

1.   A) inflows exceeding outflows for a month.

2.   B) outflows exceeding inflows for a month.

3.   C) assets exceeding expenses.

4.   D) increased earnings on the job.

5.   E) inflows and outflows being equal for a month.

 

Answer:  B

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:

800.             A) $3,800.

801.             B) $3,500.

802.             C) $3,200.

803.             D) $300.

804.             E) $0.

 

Answer:  A

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:

1.   A) increasing liabilities.

2.   B) reducing earnings.

3.   C) saving current income and investing

4.   D) increasing purchases on credit.

5.   E) withdrawing amounts from savings.

 

Answer:  C

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?

1.   A) Cash flow statement

2.   B) Budget

3.   C) Debt consolidation statement

4.   D) Personal balance sheet

5.   E) Credit report

 

Answer:  D

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?

1.   A) Buy a new car

2.   B) Increase life insurance

3.   C) Increase savings

4.   D) Provide for retirement income

5.   E) Complete college

 

Answer:  D

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?

1.   A) Variable expenses

2.   B) Food expenses

3.   C) Fixed expenses

4.   D) Utility expenses

5.   E) Recreation expenses

 

Answer:  C

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:

1.   A) vary depending on where you live.

2.   B) are the same for different locations.

3.   C) are constant from month to month.

4.   D) are the same for all goods and services.

5.   E) are not a factor when preparing a budget.

 

Answer:  A

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:

1.   A) surplus.

2.   B) deficit.

3.   C) fixed living expense.

4.   D) budget reduction.

5.   E) contribution to net worth.

 

Answer:  A

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:

1.   A) actual spending is less than planned spending.

2.   B) actual spending is greater than planned spending.

3.   C) actual spending equals planned spending.

4.   D) assets exceed liabilities.

5.   E) net worth decreases.

 

Answer:  B

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

 

51) When it comes to savings, most Americans:

1.   A) have an adequate emergency fund.

2.   B) devote large portions of their income to savings.

3.   C) find saving difficult.

4.   D) keep substantial amounts in a regular savings account.

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

 

Answer:  C

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:

1.   A) money management.

2.   B) an opportunity cost.

3.   C) a balance sheet.

4.   D) creative accounting.

5.   E) electronic analysis.

 

Answer:  A

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:

1.   A) a budget variance.

2.   B) an opportunity cost.

3.   C) a balance sheet.

4.   D) an accounting error.

5.   E) a budget anomaly.

 

Answer:  B

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:

1.   A) money management.

2.   B) a personal possession.

3.   C) a limited asset.

4.   D) a liquid asset.

5.   E) net worth analysis.

 

Answer:  D

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:

1.   A) money management.

2.   B) opportunity cost analysis.

3.   C) a personal balance sheet.

4.   D) a liquidation exercise.

5.   E) a budget variance.

 

Answer:  C

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:

1.   A) predicts income and expenses.

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

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

4.   D) predicts investment success.

5.   E) analyzes debt payment activities.

 

Answer:  B

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?

1.   A) $269,500

2.   B) $105,500

3.   C) $164,000

4.   D) $205,500

5.   E) $132,000

 

Answer:  C

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?

1.   A) $1,545

2.   B) $119,000

3.   C) $27,800

4.   D) $44,050

5.   E) $173,100

 

Answer:  E

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:

1.   A) nest egg.

2.   B) total assets.

3.   C) adjusted assets.

4.   D) debt equity.

5.   E) net worth.

 

Answer:  E

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?

1.   A) $11,000

2.   B) $165,000

3.   C) $176,000

4.   D) $341,000

5.   E) $506,000

 

Answer:  D

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?

1.   A) Home file

2.   B) Safe deposit box

3.   C) File at work

4.   D) Best friend’s house

5.   E) No storage needed

 

Answer:  A

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?

1.   A) Home file

2.   B) Safe deposit box

3.   C) Personal computer

4.   D) Best friend’s house

5.   E) No storage needed

 

Answer:  B

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?

1.   A) $1,400

2.   B) $98,000

3.   C) $27,800

4.   D) $44,050

5.   E) $171,900

 

Answer:  A

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?

1.   A) $2,050

2.   B) $119,000

3.   C) $27,800

4.   D) $44,050

5.   E) $171,900

 

Answer:  B

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