U.E.T Taxila

COURSE TITLE : FREE 101

TRUE/FALSE QUESTIONS 1 TO 25

Chapter 2

1)Money management refers to day-to-day financial activities necessary to manage personal economic resources.   

2. Money management refers to annual financial activities necessary to manage personal economic resources.                                                
3. The focus of an organized system of financial records is to reduce credit card usage.

4. A budget is a record of how a person or family has spent their money.                                                             
5. Programs are available to help low-income older or disabled people who have difficulty budgeting.

6. In an organized system, credit card records belong in a safe deposit box.                                                        
7. In an organized system, birth and marriage certificates belong in a safe deposit box.

8. In an organized system, a will belongs in a home file.                                                
9. Financial records that may need to be referred to on a regular basis should be kept in a safe-deposit box.                                     
10. In an organized system, an annual stock investment statement belongs in a safe deposit box.

11. Records related to tax returns should be saved for ten years.                                               
12. Wills and Social Security data should be kept for up to ten years.                                                         
13. The two primary personal financial statements include the personal balance sheet and a credit card payoff statement.                                                           
14. The current financial position of an individual or family is a common starting point for financial planning.                                                       
15. Net worth is the amount owed to others.                                      
16. Current liabilities are the debts you must pay within a short time.                                                       
17. Most people liquidate their assets to calculate their net worth.                                                            
18. A cash flow statement uses the equation: assets - liabilities = net worth.                                                  

19. A cash flow statement uses the equation: cash inflows - cash outflows = cash surplus (deficit)

20. When completing a cash flow statement, deductions are subtracted from salary to determine take home pay.                                            
21. When completing a cash flow statement, take home pay less deductions equals salary.
22. Financial advisers suggest that an emergency fund should cover one to two months of living expenses.                                 
23. When creating a budget, it is important to save the amount you have left at the end of the month.

24. One method to spend more money is to use a direct deposit system from payroll.

25. One method to save more money is to write a check each payday and deposit it in a savings account not readily available for regular spending.                                                          
26. Money management refers to
27. Which of the following is NOT a component of money management?

28. A home file should be used for storing
29. Which of the following financial documents would most likely be stored in a safe deposit box?

30. Which of the following is most correct?

31. Which of the following is most correct?
32. A broker statement is an example of a(n)                                                        record.

33. The number of personal financial records a household has to organize may seem overwhelming. How long should you keep copies of your tax returns?
34. The number of personal financial records a household has to organize may seem overwhelming. How long should you keep documents relating to the purchase of real estate?
35. How long should you keep documents relating to investments?
36. How long should you keep your most current will?
37. The main purposes of personal financial statements are to:

38. Which of the following are considered to be the primary personal financial statements?
39. A personal balance sheet presents

40. The current financial position of an individual or family is best presented with the use of a(n)

41. Another name for a statement of financial position is a

42. The statement that includes liquid assets, real estate, personal possessions, and investment assets is known as a

E. Assets.

43. Which of the following is NOT a liquid asset?

44. When creating a personal balance sheet, which of the following is a real estate asset?
45. When creating a personal balance sheet, which of the following is considered to be a personal possession asset?
46. When creating a personal balance sheet, which of the following is an investment asset?
47. When creating a personal balance sheet, which of the following is a current liability?

48. The amount you would have if everything of value would be sold and all debts would be paid in full.

49. The equation to calculate net worth is:

50. The inability to pay debts when they are due is called:

51. Which of the following situations describes a person who could be insolvent?
52. All of the following are ways that households can increase their net worth except:

53. Which of the following will increase the net worth of a household?

54. Which of the following is a cash inflow?
55. Which of the following appears on a cash flow statement?
56. Which of the following appears on a cash flow statement?
57. Financial experts recommend a monthly savings ratio of at least                                                    of gross income.

58. Financial experts recommend a debt/payments ratio of less than                                                    of take-home pay.

59. A current ratio of 2 means:
60. A debt ratio of 0.5 indicates:

61. Which of the following ratios shows the relationship between debt and net worth?

62. Which of the following ratios indicates that liquid assets are available to pay liabilities for a household?

63. Which of the following ratios indicates the number of months in which living expenses can be paid if an emergency arises?
64. Which of the following ratios indicates the amount of a person's earnings that goes for payments for credit cards, auto loans, and other debt (except mortgage)?

65. Which of the following ratios shows the relationship between gross income and money not spent?

66. All of the following are sources of income except

67. Which of the following is a deduction to determine take-home pay?

68. Disposable income equals

69. Discretionary income equals

70. The money left over after paying for housing, food, and other necessities is called

71. Another name for take-home pay is

72. An example of a variable expense is

73. All of the following are fixed expenses except
74. An example of a fixed expense is

75. Which of the following is NOT a main purpose of a budget?
76. When creating a budget, which of the following statements is ?

77. When creating a budget, it is important to:

78. The difference between the amount budgeted and the actual amount received or spent is called the

79. A budget deficit would result when a person's or family's

80. After the budget is created, it is important to
81. Which of the following categories would be most difficult to cut from a household budget?
82. A budget that involves envelopes, folders or containers to hold money or slips of paper is called a
83. A budget that can be kept on notebook paper or budgeting paper is called a

84. The document that would be most useful to track spending patterns for the past few months is

85. The document that would be most useful to track planned spending patterns for the next month is
86. The document that would be most useful to track current value of investment accounts is
87. A family with $45,000 in assets and $22,000 of liabilities would have a net worth of
88. Patrick Guitman has a net worth of $156,000 and liabilities of $167,000. What are his total assets?
89. Given the following information, calculate the net worth: Assets = $5000

Cash inflows = $4500 Cash outflows = $2000

Liabilities = $1000

90. Given the following information, calculate the debt ratio percentage: Liabilities $24,000

Liquid assets $4,400

Monthly credit payments $300 Monthly savings $260

Net worth $72,000 Current liabilities $1,100 Take-home pay $1,800 Gross income $3,000

Monthly expenses $1,540

91. Given the following information, calculate the liquidity ratio: Liabilities $24,000

Liquid assets $4,400

Monthly credit payments $300 Monthly savings $260

Net worth $72,000 Current liabilities $1,100 Take-home pay $1,800 Gross income $3,000

Monthly expenses $1,540

92. Given the following information, calculate the debt payments ratio: Liabilities $24,000

Liquid assets $4,400

Monthly credit payments $300 Monthly savings $260

Net worth $72,000 Current liabilities $1,100 Take-home pay $1,800 Gross income $3,000

Monthly expenses $1,540

93. Given the following information, calculate the debt payments ratio: : Liabilities $24,000

Liquid assets $4,400

Monthly credit payments $300 Monthly savings $260

Net worth $72,000 Current liabilities $1,100 Take-home pay $1,800 Gross income $3,000

Monthly expenses $1,540