1.

Which of the following is a component of money management?

Storing and maintaining personal financial records and documents.

Creating a balance sheet.

Creating and implementing a plan for spending and saving.

All of these choices are components of money management.

2.

Last year your salary was $32,000. This year it increased to $35,000. What is the percentage increase in your salary from last year to this year?

8.57%

9.38%

9.14%

33.5%

3.

The things you own, such as cash or a car, are referred to as

Assets

Liabilities

Income

Net worth

4.

The document that would tell you what you received and spent over the past month is the

Balance sheet

Cash flow statement

Budget

Bank statement

5.

Which of the following is NOT a main purpose of a budget? There are multiple answers; choose all that are correct.

Spend your money without financial worry

Help to live within your income

Reach financial goals

Prepare for financial emergencies

Develop wise financial management habits

6.

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

actual spending is less than planned spending.

assets exceed liabilities.

actual spending equals planned spending.

actual spending exceeds planned spending.

7.

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)?

Debt payments ratio

Savings ratio

Liquidity ratio

Current ratio

8.

After having established a spending plan, it is important to

keep track of your actual income and expenses.

file the budget in a safe deposit box.

pay attention only to expenses that are more than 10 percent of your salary.

None of these are true since budgets are just estimates.

9.

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

0%

5-10%

20%

25-35%

10.

Which of the following ratios indicates the number of months that living expenses can be paid using current assets if an emergency arises?

Current ratio

Debt ratio

Liquidity ratio

Savings ratio

11.

An example of a variable expense is a(n)

Mortgage or rent payment.

Monthly light rail pass for commuting to work.

Monthly car insurance premium.

Monthly utility bill.

12.

The equation to calculate net worth is

Assets minus Liabilities = Net worth.

Assets minus Cash outflows = Net worth.

Cash inflows minus Liabilities = Net worth.

Cash inflows minus Cash outflows = Net worth.

13.

The debt payment ratio shows the percentage of after-tax income that is required to make the minimum debt payments of all types of debts.

True

False

14.

When creating a personal balance sheet, which of the following is a current liability?

Checking account

Thirty year Mortgage

5 year home equity loan

Credit card balance due this month

15.

The savings ratio will be negative if cash outflows exceed cash inflows.

True

False