Test Bank For Personal Financial Planning 13th Edition by Lawrence J. Gitman

Test Bank For Personal Financial Planning 13th Edition by Lawrence J. Gitman

Chapter 2—Using Financial Statements and Budgets

TRUE/FALSE

1.A balance sheet shows your financial condition as of the time the statement is prepared.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

2.One could use statements from their various financial institutions to help complete a balance sheet.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

3.The income statement includes information on your latest paycheck.

ANS: F PTS: 1 DIF: Challenging OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Analysis

4.The income and expenditures statement provides a measure of financial performance over a period of time.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

5.Financial planning is necessary only if you earn a lot of money.

ANS: F PTS: 1 DIF: Easy OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

6.Assets listed on your balance sheet must have monetary value.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

7.A budget is a detailed statement of what income and expenses occurred over a past period.

ANS: F PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

8.A budget is a detailed financial forecast.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

9.Financial assets are intangible assets acquired to achieve long-term personal financial goals.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

10.Assets purchased on credit should be included on the asset side of the balance sheet.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

11.Jewelry, furniture and computers are examples of personal property.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

12.A house and land are examples of financial property.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

13.Most types of personal property depreciate, or decline in value, shortly after being put into use.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

14.Investment assets include items such as boats or automobiles.

ANS: F PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

15.All assets are recorded on the balance sheet at their original cost.

ANS: F PTS: 1 DIF: Challenging OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

16.The financial planning process is regulated by state governments when done by professionals.

ANS: F PTS: 1 DIF: Challenging OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

17.Money I loaned to a friend is a liability on my balance sheet.

ANS: F PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Application

18.A charge made on your credit card becomes a liability as soon as the charge is incurred.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Application

19.You are more likely to achieve your goals if a definite goal date is set.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY: Bloom’s: Comprehension

20.Your auto loan payments would be listed as an expense on the income statement.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 2-3

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Application

21.Only the current month’s payment on your mortgage loans would be listed on the balance sheet as a liability.

ANS: F PTS: 1 DIF: Moderate OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Application

22.Inability to reach short-term goals will significantly affect your ability to reach long-term goals.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 2-1

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

23.Your net worth and your equity in owned assets are the same basic concept.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

24.The balance sheet equation is assets plus liabilities equals net worth.

ANS: F PTS: 1 DIF: Easy OBJ: LO: 2-2

NAT: BUSPROG: Analytic skills STA: DISC: Financial Analysis and Cash Flows

KEY:Bloom’s: Knowledge

25.A budget is an orderly estimate of income and expenditures.