FNCE 2820 Midterm 1 Exam, Questions All with
Verified Answers
Assets - ✔✔Items of value owned (measured by their fair market values)
Liabilities - ✔✔Bills and obligations to be paid in the future
Amounts owed to creditors
Net Worth - ✔✔Your wealth
=Assets - Liabilities
Liquid Assets - ✔✔assets in the form of cash (or easily convertible into cash) with little
inconvenience and with no loss in market value
Lifestyle Assets - ✔✔Assets that influence our quality of life
ex. house purchase, cars, hobby expenses, etc.
Investment Assets - ✔✔Money which has been invested long-term which will provide future
income
Current Liabilities - ✔✔Accounts payable (debts) that must be paid within one year
Noncurrent Liabilities - ✔✔Debt obligations not due within one year
Positive Contribution to Savings - ✔✔Increased net worth
when cash income > cash expenses
, Dissavings - ✔✔Negative savings. You spend more than your disposable income.
Income Statement - ✔✔Detailed breakdown of cash income and expenses over a past
period.
Income - ✔✔Cash inflow
Salaries and wages
Expenses - ✔✔Cash outflows
that sustain scale of living
Inflexible expenses - ✔✔Fixed expenses that are hard to control in the short run
ex. mortgage payments, car loan payments, etc.
Sunk Costs - ✔✔Costs that cannot be avoided reguardless of what happens in th future
Costs that have already been incurred as a result of past decisions. Sometimes referred to as
historical costs.
Flexible expenses - ✔✔Expenses generally controllable in the short run.
Sosts that do not stay the same such as utilities, clothes, and food
Financial Ratios - ✔✔calculations typically used to measure financial strength and progress
Nominal Income - ✔✔The amount of money income received in a given time period,
measured in current dollars
actual income received
Verified Answers
Assets - ✔✔Items of value owned (measured by their fair market values)
Liabilities - ✔✔Bills and obligations to be paid in the future
Amounts owed to creditors
Net Worth - ✔✔Your wealth
=Assets - Liabilities
Liquid Assets - ✔✔assets in the form of cash (or easily convertible into cash) with little
inconvenience and with no loss in market value
Lifestyle Assets - ✔✔Assets that influence our quality of life
ex. house purchase, cars, hobby expenses, etc.
Investment Assets - ✔✔Money which has been invested long-term which will provide future
income
Current Liabilities - ✔✔Accounts payable (debts) that must be paid within one year
Noncurrent Liabilities - ✔✔Debt obligations not due within one year
Positive Contribution to Savings - ✔✔Increased net worth
when cash income > cash expenses
, Dissavings - ✔✔Negative savings. You spend more than your disposable income.
Income Statement - ✔✔Detailed breakdown of cash income and expenses over a past
period.
Income - ✔✔Cash inflow
Salaries and wages
Expenses - ✔✔Cash outflows
that sustain scale of living
Inflexible expenses - ✔✔Fixed expenses that are hard to control in the short run
ex. mortgage payments, car loan payments, etc.
Sunk Costs - ✔✔Costs that cannot be avoided reguardless of what happens in th future
Costs that have already been incurred as a result of past decisions. Sometimes referred to as
historical costs.
Flexible expenses - ✔✔Expenses generally controllable in the short run.
Sosts that do not stay the same such as utilities, clothes, and food
Financial Ratios - ✔✔calculations typically used to measure financial strength and progress
Nominal Income - ✔✔The amount of money income received in a given time period,
measured in current dollars
actual income received
