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PF - 2.03 Statement Of Financial Position
Test Description: Calculating Net Worth
Instructions: Answer all questions to get your test result.
1) Net worth is a measure of your what?
A
Future Spending Plans
B
Past income and expenses
C
Income
D
Wealth
2) What is the formula for Net Worth?
A
Total Assets / Total Liabilities
B
Total Liabilities - Total Assets
C
Total Assets + Total Liabilities
D
Total Assets - Total liabilities
3) Does having a high income indicate that you have a high net worth?
A
No, a person can have a high income and have a low net worth
B
Yes, your wealth is equal to your income
C
Yes, having a high income always indicates you have a high net worth
D
No, having a high income always indicates that you have a low net worth
4) The purpose of this is to show the financial condition of a person or family on a specified date, made up of assets, liabilities, and net worth.
A
Spending Plan
B
Budget
C
Income and Expense Statement
D
Statement of Financial Position
5) What is a Statement of Financial Position also sometime called?
A
Spending Plan
B
Statement of Net Worth or Balance Sheet
C
Budget
D
Income and Expense Statement
6) What are the 3 main components of a Statement of financial position?
A
Income, Assets, and Liabilities
B
Assets, Liabilities, Net gain/loss
C
Assets, Liabilities, Net Worth
D
Income, Expenses, Net gain/loss
7) Everything that a person owns that has a monetary value is referred to as this.
A
Liabilities
B
Expenses
C
Asset
D
Net worth
8) This is a debt or obligation owed to others.
A
Expense
B
Liability
C
Net Worth
D
Asset
9) Balance on a credit card would be placed in this section of a statement of financial position.
A
Investment Asset
B
Liabilities
C
Tangible Asset
D
Monetary Asset
10) Money in a checking account would be placed in this section of a statement of financial position.
A
Investment
B
Monetary Asset
C
Liability
D
Tangible Asset
11) Money in a 401 K or an IRA would be placed in this section of a statement of financial position.
A
Liability
B
Monetary Asset
C
Investment Asset
D
Tangible Asset
12) Car loan would be placed in this section of a statement of financial position.
A
Investment Asset
B
Tangible Asset
C
Monetary Asset
D
Liability
13) You took out a home mortgage for 15 years and you still owe 30,000 but the bank has told you if you paid if off today you could do it for 24,000 because you would avoid the future interest payments. What amount would you record under the liability s
A
54,000
B
6,000
C
24,000
D
30,000
14) Where would things such as bills paid on a regular basis such as gas, power, or rent go on your statement of financial position?
A
They do not belong on the statement of financial position...they are “Expenses” NOT Liabilities
B
Tangible Assets
C
Liabilities
D
Monetary Assets
15) How can you increase your Net Worth?
A
Decrease Assets or Increase Liabilities
B
Increase Assets or Decrease Liabilities
C
You have no control over your Net Worth
D
Decrease Assets or Decrease Expenses
16) How often should you create a Statement of Financial Position?
A
Once a year or during special times when making big decisions about assets and liabilities
B
When you are getting married
C
Every month
D
Never, it is not necessary
17) What does liquidity refer to?
A
How quickly you can purchase an asset
B
How easily it is to melt down an asset into liquid
C
How easy it is to pay off a liability
D
How easily you can convert an asset into cash in your hand
*select an answer for all questions
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