BUSI 223 Smartbook Chapter 3 solutions complete answers

BUSI 223 Smartbook Chapter 3 solutions complete answers 

 

Money management involves financial activities to manage current personal economic resources while planning for the achievement of long-term financial security.

 

Which of the following is an example of an opportunity cost?

 

A balance sheet is a personal financial statement that shows:

 

Karen James owes $10,000 in medical bills, $500 to the public utility, $300 on a car payment, $15,000 on a 5 year student loan, and $100,000 on a 15 year home mortgage. What is the total of Karen's current liabilities? Look carefully at what constitutes current and long-term liabilities in the discussion of determining amounts owed.

 

If Joe and Mary Smith have money market accounts of $100,000, real estate holdings of $300,000, loans of $25,000, and investments of $10,000, what would their total assets be?

 

Which of the following activities offers the most comprehensive concept of money management?

 

Which of the following statements is NOT true?

 

When making a purchase, which of the following is an opportunity cost?

 

True or false: The four categories of assets on most personal balance sheets include liquid assets, personal possessions, investment assets, and net worth.

 

A balance sheet is a listing of ______ as of a certain date.

 

Which of the following assets are liquid assets?

 

Steve Marks owes $20,000 in medical bills, $300 to the public utility, $400 on a dental bill due this month, $35,000 on a 10 year student loan, and $120,000 on a 30 year home mortgage. What is Steve's total for current liabilities?

 

Personal property may have value, but usually cannot be converted into cash quickly. Which of the following would be classified as personal property on the balance sheet?

 

If Tom and Liz Gomes have liquid assets of $200,000, real estate of $350,000, loans of $250,000, and investments of $30,000, what would their total assets be?

 

True or false: Liabilities are amounts owed to others.

 

After categorizing assets and calculating total assets, what do you do next when preparing the balance sheet?

 

Debts due within the next 12 months would be classified as ______ liabilities, while debts that will come due in a period beyond the next 12 months would be categorized as ______-term liabilities.

 

In which category of assets would you list your individual retirement account (IRA)?

 

Joe borrowed $100,000 (a four-year loan at 10% interest) on January 2, 20x8. During the course of the year, he paid back $30,000 on that debt. What would his December 31, 20x8 balance sheet show for this debt?

 

Which of the following are NOT liquid assets?

 

True or false: Net worth is found by adding assets and liabilities.

 

True or false: Personal property such as automobiles and personal belongings may be difficult to convert to cash.

 

Cash flow is the ______ of cash during a given period of time.

 

On the balance sheet, credit card bills, medical bills, car loans, and mortgages are all examples of ______.

 

Cash flow statements show the inflows (______) and outflows (payments).

 

Current (short-term) liabilities include:

 

Which of the following statements are true about a balance sheet that you are reviewing on 1/15/2018 that shows an "as of" date of 12/31/2017 and assets of $600,000 and liabilities of $425,000?

 

How is a cash surplus (or deficit) on a statement of cash flows calculated?

 

Which of the following provide an accurate explanation of net worth? (Select all that apply.)

 

Which of the following are common sources of income?

 

The inflow and outflow of cash during a given period is called:

 

Take-home pay is:

 

True or false: The statement of cash flow is a summary of cash receipts and payments for a given period.

 

True or false: Discretionary income is the same as net pay.

 

Expenses that do not vary from month to month are referred to as __________ expenses.

 

If Mary has cash inflow for the year of $120,000 with cash outflows of $135,000, her cash flow statement would show a:

 

Flexible payments that change from month to month are called __________ expenses.

 

For most people, the main source of income is money received from their ______.

 

True or false: When cash outflows, or expenses, exceed cash inflows, or income, there will be a cash surplus.

 

True or false: Take-home pay is the same as discretionary income and disposable income.

 

To keep an eye on changes taking place in your financial situation, you probably need to calculate financial ______.

 

Discretionary income is what you have left after you have paid for housing, food, and ______.

 

Which of the following are fixed expenses?

 

The debt ratio is calculated as a:

 

Which of the following are variable expenses?

 

True or false: If last year your debt ratio was 1 and this year it is 0.25, that is good news.

 

When inflows are greater than outflows during a given period of time the result is a _____.

 

Based on the following data, calculate the current ratio and select the correct answer. Data: liabilities = $10,000; liquid assets = $3,000; monthly credit payments = $300; monthly savings = $200; net worth = $50,000; current liabilities = $600; take-home pay = $1,100; and gross income = $1,900.

 

Financial ratios are guidelines for:

 

A high current ratio indicates ___ cash available to pay bills.

 

The liquidity ratio is calculated as:

 

Based on the following data, calculate the debt ratio and select the correct answer. Data: liabilities = $10,000; assets = $50,000.

 

True or false: If the liquidity ratio is 7, that means your have to wait for 7 weeks to get payment from you.

 

Which of the following is true about debt ratio?

 

Your monthly credit payments are $1200, your gross income is $3600 a month, and your take-home pay is $3,000. What is your debt-payments ratio.

 

How is current ratio calculated?

 

How is the savings ratio calculated?

 

True or false: A smaller current ratio is best. For example, if last year's current ratio was 3 and this year it is 1, things are improving.

 

Budgets allow you to live within your income while increasing your chances of achieving your financial goals.

 

Based on the following data, what would be the liquidity ratio if monthly expenses are $5,000? Data: liabilities = $10,000; liquid assets = $6,000; monthly credit payments = $300; monthly savings = $200; net worth = $50,000; current liabilities = $600; take-home pay = $1,100; and gross income = $1,900.

 

An increased net worth is evidence of a ____ financial position.

 

A measure that indicates a person's ability to weather an emergency financially is:

 

Which of the following is a common short term goal for a single person?

 

Your debt-payments ratio is 0.2, your gross pay is $2800 per month and your take-home pay is $2400 per month. What are your monthly debt payments?

 

The steps to prepare a budget include setting financial goals, estimating expected income, budgeting for emergency funds and expenses, recording actual expenses, calculating variances, and evaluating.

 

Based on the following data, calculate the savings ratio and select the correct answer. Data: liabilities = $10,000; liquid assets = $3,000; monthly credit payments = $300; monthly savings = $200; net worth = $50,000; current liabilities = $600; take-home pay = $1,100; and gross income = $1,900.

 

If your earnings this year were $20,000, which of the following is a reasonable estimate for next year's earnings assuming you don't change jobs?

 

People create budgets to help them:

 

The rule of thumb when saving for ______ fund is to set aside three to six months of living expenses.

 

A personal ____ is an effective scorecard for measuring financial progress.

 

True or false: The size of your household and the ages of its members affect your lifestyle and spending priorities.

 

Which of the following could be intermediate-term goals for a single college student in his senior year? This is found in an exhibit for common financial goals.

 

If expected expenditures for food were $1,000 while the actual food costs were $750, what would be the variance?

 

Place the steps of budgeting in the correct order.This is found under the budgeting process.

 

One of the main financial planning activities that helps give you direction is the setting of financial ______.

 

If your income is irregular, it is best to ____ next year's earnings for budgeting purposes.

 

True or false: Financial goals should be realistic, measurable, have a time frame, and imply the type of action to be taken.

 

The rule of thumb when saving for an emergency fund is to set aside:

 

A personal balance sheet should be prepared

 

True or false: The amounts you budget for various items will depend on your current needs and plans for the future.

 

Most Americans do not have

 

When you calculate ___________, you determine the difference between actual expenditures and expected (budgeted) expenditures.

 

Your goals and budget allocations are revised when a       shortage occurs.

 

Budgeting should be well planned,

 

People should prepare a personal balance sheet on a periodic basis to evaluate financial progress.

 

True or false: Most Americans do not have adequate amounts of money set aside for emergencies.

 

When comparison shopping, you can incur an opportunity cost because:

 

Which of the following are the basic major money management activities?

 

True or false: Credit records include payment records, monthly statements, lists of credit account numbers, and telephone numbers of issuers.

 

Spending money on current living expenses involves an opportunity cost because you forgo saving and ______.

 

True or false: The basics of money management include storing and maintaining your records, creating financial goals, and creating a budget.

 

Which of the following is an example of personal and employment records?

 

Common types of real estate held by individuals include:

 

True or false: Medical bills, credit card balances, and home equity loans are all examples of current liabilities.

 

Real estate includes cash and other items of value that can be easily converted to cash.

 

The balance sheet equation is:

 

If assets are $1,500,000 and liabilities are $850,000, then the net worth is:

 

True or false: Insolvency is defined as having adequate liquid assets.

 

Increasing _____ will improve your net worth.

 

True or false: TOTAL assets minus CURRENT liabilities equal net worth.

 

Tommy White has the following financial items on his balance sheet: $10,000 of liquid assets, $15,000 of personal property, $300,000 of real estate, $5,000 of current liabilities, and $120,000 of home mortgages. What is his net worth?

 

When a person's liabilities far exceed available assets, they are said to be:

 

All of the following will increase net worth, except:

 

Your debt-payments ratio was 0.3 last year. This year, it is 0.24. This means your ratio has ____.

 

True or false: If your debt-payments ratio is 0.25, that means that about 25% of your net pay goes toward debt payments.

 

True or false: Financial experts recommend that you save 5% to 10% of your income.

 

In assessing your current financial situation, you not only should measure your current financial position, but also should determine your personal needs, values, and life situation.

 

When evaluating your budget, you should revise your financial goals and budget allocations and review your financial progress.

 

Which of the following people is following the guidelines of financial experts regarding savings ratio?

 

Which of the following is NOT an activity involved in assessing your current financial situation?

 

Which of the following activities are involved with the evaluation of your budget?

 

Which of the following statements is true?

 

Which of the following spending actions will NOT help a family save each month?

 

Which of the following are factors that influence variable expenses?

 

Which of the following statements are correct about the various types of budgeting systems that an individual can use to create, implement, and monitor a budget?

 

Which of the following actions may be combined to help families save a significant amount of money each month?

 

A common budget format is best described as monthly columns:

 

One the most compelling reasons to set aside money is to ready yourself for irregular and 

 

A successful budget should be:

 

Chris puts money in envelopes each month to help him avoid overspending. Which of the following budgeting systems is he using?

 

A written budget can be in:

 

True or false: When saving for a specific goal, you can choose a lump-sum amount or periodic deposits that will grow to the desired amount.

 

Which of the following are common reasons to save money?

 

Which of the following can help you establish an adequate savings account?

 

When inflow are greater than outflow during a given period of time the result is a ___.

 

On the balance sheet, credit card bills, medical bills, car loans, and mortgages are all example of___.

 

Cash flow is the ___ of case during a given period of time.

 

How is saving ratio calculated?

 

True or false: Insurance records should include originals of your insurance policies, a list of premiums and due date, copies of claims you have made, and property tax records.

 

Which of the following are NOT records filled under consumer purchases and automobile records? This is found in an exhibit on where to keep financial records.

 

Which of the following is NOT a type of investment record?

 

Which if the following are NOT financial services records? This is found in the exhibit on where to keep your financial records?

 

Which of the following should be kept in a safe deposit box? This is found in the exhibit on where to keep your financial records.

 

Which of the following are money management records? This is found in the exhibit on where to keep you financial records.

 

Which of the following are not estate and retirement planning records?

 

True or false: Tax records include pay stubs. W-2 forms, receipts of justify tax deductions, and copies of past income tax returns.

 

True or false: The amount you budget for various items will depend on your current needs and plans for the future. This is found in the discussion of budgeting fixed expenses.

 

Which of the following action may be combined to help families save a significant amount of money each month.

 

Which of the following can help you establish an adequate saving account?

 

True or false: The advantage of a mental budget is that it is simple while the drawback is that it can be forgotten.

 

True or false: A physical budget can be on paper or in an electronic spreadsheet.

 

Which is a popular money management software program that contains a computerized budgeting system?

 

Discretionary income is what you have left after you have paid for housing, food, and____