AAMS - MODULE 1 EXAM QUESTIONS
AND ANSWERS
assets - Correct Answers -things the client owns (even if not fully paid for)
cash/cash equivalents(8): anything that can be transformed quickly into cash with little
or no loss of principal, and with small or no transaction costs - Correct Answers -bank
savings
checking accounts
CDs
treasury bills
US savings bonds
money market mutual funds
money market deposit accounts
commercial paper
(etc)
invested assets(9) - Correct Answers -retirement account balances
partnership interests
ownership of stock in closely held corporations
stocks
bonds
mutual funds
growth fund
401(k) plans
rental house
(etc)
use assets(4): assets used in the course of daily living - Correct Answers -automobiles
homes
boats
personal property
(etc)
liabilities(4): what the clients owes - Correct Answers -credit cards
bank loans
mortgages
notes
(etc)
, net worth (formula): what the client would have if all assets were converted to cash at
the fair market value listed and then used to pay off all outstanding debts - Correct
Answers -assets - liabilities = net worth
income statement aka statement of cash flows (formula): lists sources of income and
expenses, with the difference between the two resulting in a surplus or deficit. The
income statement covers a specific period of time, typically a year. - Correct Answers -
gross income - expenses = surplus (deficit)
gross income(4): all cash flows into the household (on income statement) - Correct
Answers -gross salaries and wages
dividends
interest
misc inflows (tax refunds, financial gifts received)
(etc)
expenses(4+): (on income statement) - Correct Answers -mortgages
other loan payments
insurance payments
costs (for clothing, food, vacations, taxes, utilities, cable, internet, cell phone and data
service, savings and investments, etc).
(etc)
employee benefits(4) - Correct Answers -participation in employee stock ownership plan
employee group benefit plans
incentive stock options
participation in a thrift or deferred salary plan
(etc)
cognitive error - Correct Answers -those that are based on faulty cognitive reasoning
(aka belief perseverance or processing errors)
emotional biases - Correct Answers -those that arise from feelings and emotions
belief perseverance - Correct Answers -the tendency to irrationally or illogically hold
onto one's beliefs
retirement planning data(): - Correct Answers -employee-sponsored plans
other retirement accounts
current invested assets
pension plans
(etc)
foundation goals(4): most basic needs - Correct Answers -food
shelter
AND ANSWERS
assets - Correct Answers -things the client owns (even if not fully paid for)
cash/cash equivalents(8): anything that can be transformed quickly into cash with little
or no loss of principal, and with small or no transaction costs - Correct Answers -bank
savings
checking accounts
CDs
treasury bills
US savings bonds
money market mutual funds
money market deposit accounts
commercial paper
(etc)
invested assets(9) - Correct Answers -retirement account balances
partnership interests
ownership of stock in closely held corporations
stocks
bonds
mutual funds
growth fund
401(k) plans
rental house
(etc)
use assets(4): assets used in the course of daily living - Correct Answers -automobiles
homes
boats
personal property
(etc)
liabilities(4): what the clients owes - Correct Answers -credit cards
bank loans
mortgages
notes
(etc)
, net worth (formula): what the client would have if all assets were converted to cash at
the fair market value listed and then used to pay off all outstanding debts - Correct
Answers -assets - liabilities = net worth
income statement aka statement of cash flows (formula): lists sources of income and
expenses, with the difference between the two resulting in a surplus or deficit. The
income statement covers a specific period of time, typically a year. - Correct Answers -
gross income - expenses = surplus (deficit)
gross income(4): all cash flows into the household (on income statement) - Correct
Answers -gross salaries and wages
dividends
interest
misc inflows (tax refunds, financial gifts received)
(etc)
expenses(4+): (on income statement) - Correct Answers -mortgages
other loan payments
insurance payments
costs (for clothing, food, vacations, taxes, utilities, cable, internet, cell phone and data
service, savings and investments, etc).
(etc)
employee benefits(4) - Correct Answers -participation in employee stock ownership plan
employee group benefit plans
incentive stock options
participation in a thrift or deferred salary plan
(etc)
cognitive error - Correct Answers -those that are based on faulty cognitive reasoning
(aka belief perseverance or processing errors)
emotional biases - Correct Answers -those that arise from feelings and emotions
belief perseverance - Correct Answers -the tendency to irrationally or illogically hold
onto one's beliefs
retirement planning data(): - Correct Answers -employee-sponsored plans
other retirement accounts
current invested assets
pension plans
(etc)
foundation goals(4): most basic needs - Correct Answers -food
shelter
