Personal Balance Sheet Changes Quiz 9
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Questions and Answers

What is a personal cash flow statement?

  • A document that includes only large expenses
  • A document that measures a person's cash inflows and outflows (correct)
  • A document that forecasts cash flows
  • A document that lists only cash inflows
  • Which of the following is considered a cash inflow in a personal cash flow statement?

  • Large expenses
  • Dividends (correct)
  • Expenses
  • Salaries
  • What are liquid assets?

  • Assets that can be easily sold without a loss in value (correct)
  • Assets that do not hold any financial value
  • Assets that always result in a loss when sold
  • Assets that cannot be sold easily
  • What are net cash flows in a personal cash flow statement?

    <p>The difference between cash inflows and cash outflows</p> Signup and view all the answers

    How is a personal balance sheet created?

    <p>By recording assets and liabilities at a specific point in time</p> Signup and view all the answers

    What are current liabilities?

    <p>Debts that will be paid within a year</p> Signup and view all the answers

    What are household assets?

    <p>Items normally owned by a household, like a home or car</p> Signup and view all the answers

    Which of the following is NOT included in a personal cash flow statement?

    <p>Assets</p> Signup and view all the answers

    What is the purpose of forecasting cash flows?

    <p>To predict future cash inflows and outflows</p> Signup and view all the answers

    What do stocks represent?

    <p>Certificates representing partial ownership in a firm</p> Signup and view all the answers

    What do bonds represent?

    <p>Certificates issued by borrowers to raise funds</p> Signup and view all the answers

    How is net worth calculated?

    <p>Difference between what you own and what you owe</p> Signup and view all the answers

    What is Stephanie's decision regarding increasing her salary?

    <p>She is satisfied with her current job and has no plans to search for another job.</p> Signup and view all the answers

    How does Stephanie plan to increase her monthly net cash flows?

    <p>By decreasing recreation expenses by $100 per month.</p> Signup and view all the answers

    What adjustment did Stephanie identify in her budget to increase monthly net cash flows?

    <p>Reducing recreation expenses by $100 per month.</p> Signup and view all the answers

    What was Stephanie's original savings goal per year?

    <p>$4,800</p> Signup and view all the answers

    How much does Stephanie plan to save monthly by reducing recreation expenses?

    <p>$500</p> Signup and view all the answers

    What is the main way Stephanie plans to increase her savings according to the text?

    <p>Decreasing the amount spent on recreation.</p> Signup and view all the answers

    What impact can favorable economic conditions have on the personal balance sheet?

    <p>Increase job opportunities and income</p> Signup and view all the answers

    What builds wealth according to the text?

    <p>Investing in assets with net cash flows without increasing liabilities</p> Signup and view all the answers

    What can decrease liabilities and increase net worth according to the text?

    <p>Using net cash flows to decrease liabilities</p> Signup and view all the answers

    How can net worth change even if net cash flows are zero?

    <p>By changing the value of assets or investments</p> Signup and view all the answers

    Which category of assets does not change for Stephanie Spratt when she purchases a new car?

    <p>Stocks</p> Signup and view all the answers

    What does the liquidity ratio measure in the context of a personal balance sheet?

    <p>Liquidity</p> Signup and view all the answers

    How does unfavorable economic conditions impact the personal balance sheet?

    <p>Result in lost jobs and income</p> Signup and view all the answers

    What impact does purchasing a new car have on Stephanie Spratt's net worth?

    <p>It remains unchanged.</p> Signup and view all the answers

    What happens to Stephanie Spratt's personal balance sheet if she purchases a new car?

    <p>Her assets and liabilities increase by the same amount.</p> Signup and view all the answers

    How does the purchase of a new car affect Stephanie Spratt's household assets?

    <p>It does not affect household assets.</p> Signup and view all the answers

    What is the impact of Stephanie Spratt's mortgage on her personal balance sheet if she purchases a new car?

    <p>The mortgage remains unchanged.</p> Signup and view all the answers

    What happens to Stephanie Spratt's total liabilities after the purchase of a new car?

    <p>They increase.</p> Signup and view all the answers

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