Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
1. (p. 78) Money management activities refer to long-term investment decisions.
2. (p. 78) When one money management decision is made, an alternative must be given up.
3. (p. 78-79) Opportunity costs are only associated with money management decisions involving
long-term financial security.
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
4. (p. 80) Financial records that are referred to on a regular basis should be kept in a safe-deposit
box.
5. (p. 88) A budget is a specific plan of how a person or family will spend their money.
6. (p. 82) A personal balance sheet reports your income and expenses.
7. (p. 82) A person’s net worth is the difference between the value of the items owned and the
amounts owed to others.
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
8. (p. 83) Furniture, jewelry, and an automobile are examples of liquid assets.
9. (p. 84) Insolvency is a result of having more liabilities than assets.
10. (p. 85) A personal cash flow statement presents income and outflows of cash for a given
time period, such as a month.
11. (p. 86) Take-home pay is a person’s earnings after deductions for taxes and other items.
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
12. (p. 88) If expenses for a month are greater than income, an increase in net worth will result.
13. (p. 90) A personal cash flow statement can serve as the basis for the budget categories used
by an individual or family.
14. (p. 88) Definite financial obligations are referred to as variable expenses.
15. (p. 78) Opportunity costs refer to:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
16. (p. 81) A home file should be used for:
17. (p. 80) Which of the following financial documents would most likely be stored in a safe-
deposit box?
18. (p. 81) Which of the following would be an example of a personal and employment
document?
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
19. (p. 81) Which type of financial records includes stock and bond reports?
20. (p. 81) Warranties are commonly associated with ____________ purchases.
21. (p. 82) Which of the following are considered to be personal financial statements?
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
22. (p. 82) A personal balance sheet presents:
23. (p. 82) The current financial position (including net worth) of an individual or family is best
presented with the use of a(n):
24. (p. 84) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
25. (p. 82) Items that you own with a monetary worth are referred to as:
26. (p. 82) The value of items owned minus the amounts owed to others equals:
27. (p. 83) Liquid assets refer to:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
28. (p. 83) An individual retirement account is an example of a(n) ____________ asset.
29. (p. 84) Liabilities are amounts representing:
30. (p. 84) Current liabilities differ from long-term liabilities based on:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
31. (p. 82) 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 in the near future?
32. (p. 84) Which of the following would be considered a long-term liability?
33. (p. 84) A person’s net worth is computed by:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
34. (p. 84) Which one of the following illustrates an insolvent situation?
35. (p. 84) A person’s net worth would increase as a result of:
36. (p. 85) A cash flow statement reports a person’s or a family’s:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
37. (p. 85) Which one of the following presents a summary of income and outflows for a period
of time?
38. (p. 86) Total earnings of a person minus the deductions for taxes and other items is called:
39. (p. 86) A common deduction from a person’s paycheck is for:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
40. (p. 87-88) Payments that do not vary from month to month are ____________ expenses.
41. (p. 87-88) Ed Bostrom wants to reduce his fixed expenses. Which action would be
appropriate?
42. (p. 88) Which of the following payments would be considered a variable expense?
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
43. (p. 84, 88) A decrease in net worth could be the result of:
44. (p. 84, 88) During the past month, Jennifer Ernet had income of $3,000. During the month,
her net worth declined by $200. If no other financial activities occurred, this means Jennifer’s
payments for the month were:
45. (p. 97) Improvements in a person’s financial position are the result of:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
46. (p. 82) To determine a person’s solvency, which financial document should be consulted?
47. (p. 90) Which one of the following is the best example of a long-term goal for a young
couple?
48. (p. 87-88) Which one of the following should be budgeted first?
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
49. (p. 93) Changes in the cost of living are:
50. (p. 93) If a family planned to spend $370 for food during March but only spent $348, this
difference would be referred to as a:
51. (p. 93) A budget deficit would result when a person’s or family’s:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
52. (p. 97) When it comes to savings, most Americans:
53. (p. 78) Jennifer Rodrick uses a computer to help her record her spending each month. She
updates her records weekly. This would be an example of:
54. (p. 78) Kyle Burroughs has decided to put $25 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 savings is
important. This would be an example of:
Chapter 03 – Money Management Strategy: Financial Statements and Budgeting
55. (p. 83) Nick Boss has a savings account with $550 in it. He knows that he can withdraw this
money whenever he wishes. This would be an example of:
56. (p. 82) Karen Price 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:
57. (p. 82) A personal balance sheet: