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

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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.