Financial Planning - Exam 1 (Questions) || With Complete Solution.
Which of the following is not normally considered an area of personal finance? correct answers
Choice of marriage partner.
Personal financial planning skills are applicable only in the early years of a person's life. correct
answers FALSE
Which of the following is the best definition for personal finance? correct answers The study of
personal money management
Which of the following is not one of the steps in the personal financial planning process? correct
answers Determining the appropriate risk level of a participant
An effective financial plan should be inflexible in order to achieve goals. correct answers FALSE
A person's fundamental beliefs concerning what is important in life are referred to as: correct
answers Values
For a person's standard of living to improve, his or her. correct answers Income must be above
the average standard of living
For the overall US market, inflations is measured by the change in the: correct answers Gross
Domestic Product
You are considering adding a wood shop to your home. You enjoy woodworking and could make
items for sale. In considering this addition, you look only at the extra cost if the shop and the
potential benefits having the shop. This is an example of: correct answers Opportunity Cost
Decision Making
, When a person begins to spend his or her accumulated wealth, this is known as the distribution
phase. correct answers TRUE
You decide to take a part-time job to help with your college expenses. The hours available for
study are thus reduced. The reduction in study hours would be your: correct answers Opportunity
Cost
Because IRS audits occur within three years of when a return is filed, it is recommended that tax
records be kept no more than five years. correct answers FALSE (Seven Years Recommended)
When saving documents, it is recommended that you keep utility bills. correct answers FALSE
A personal balance sheet shows assets and debts at a single point in time, and a personal cash
flows statement reflects cash inflows and outflows that occur over a period of time. correct
answers TRUE
Which of the following formulas is used to calculate personal net worth? correct answers Total
Assets - Total Debts
What is the best definition for insolvency? correct answers The inability to pay your debts as
they come due
If you buy money to buy a new car, which of the following items on the balance sheet are
affected? correct answers Assets & Liabilities (Debts)
The savings ratio is negative if cash outflows exceed cash inflows. correct answers TRUE
If you have an insurance policy that has a cash surrender value. correct answers ????
Which of the following is not normally considered an area of personal finance? correct answers
Choice of marriage partner.
Personal financial planning skills are applicable only in the early years of a person's life. correct
answers FALSE
Which of the following is the best definition for personal finance? correct answers The study of
personal money management
Which of the following is not one of the steps in the personal financial planning process? correct
answers Determining the appropriate risk level of a participant
An effective financial plan should be inflexible in order to achieve goals. correct answers FALSE
A person's fundamental beliefs concerning what is important in life are referred to as: correct
answers Values
For a person's standard of living to improve, his or her. correct answers Income must be above
the average standard of living
For the overall US market, inflations is measured by the change in the: correct answers Gross
Domestic Product
You are considering adding a wood shop to your home. You enjoy woodworking and could make
items for sale. In considering this addition, you look only at the extra cost if the shop and the
potential benefits having the shop. This is an example of: correct answers Opportunity Cost
Decision Making
, When a person begins to spend his or her accumulated wealth, this is known as the distribution
phase. correct answers TRUE
You decide to take a part-time job to help with your college expenses. The hours available for
study are thus reduced. The reduction in study hours would be your: correct answers Opportunity
Cost
Because IRS audits occur within three years of when a return is filed, it is recommended that tax
records be kept no more than five years. correct answers FALSE (Seven Years Recommended)
When saving documents, it is recommended that you keep utility bills. correct answers FALSE
A personal balance sheet shows assets and debts at a single point in time, and a personal cash
flows statement reflects cash inflows and outflows that occur over a period of time. correct
answers TRUE
Which of the following formulas is used to calculate personal net worth? correct answers Total
Assets - Total Debts
What is the best definition for insolvency? correct answers The inability to pay your debts as
they come due
If you buy money to buy a new car, which of the following items on the balance sheet are
affected? correct answers Assets & Liabilities (Debts)
The savings ratio is negative if cash outflows exceed cash inflows. correct answers TRUE
If you have an insurance policy that has a cash surrender value. correct answers ????
