Test Bank For PFIN 6th Edition by Billingsley

Test Bank For PFIN 6th Edition by Billingsley

Chapter 02: Using Financial Statements and Budgets

1. The balance sheet shows an individual’s financial condition as of the time the statement is prepared.a.  Trueb.  FalseANSWER:   True 2. A budget is a financial report that forecasts an individual’s current income as a percentage of his or her past earnings.a.  Trueb.  FalseANSWER:   False 3. An income and expense statement provides a measure of financial performance over a period of time.a.  Trueb.  FalseANSWER:   True 4. Financial planning is necessary only if an individual earns a lot of money.a.  Trueb.  FalseANSWER:   False 5. The preparation of an income and expense statement is the first step in the personal financial planning process.a.  Trueb.  FalseANSWER:   False 6. Knowing how to prepare and interpret personal financial statements is a cornerstone of personal financial planning.a.  Trueb.  FalseANSWER:   True 7. Financial plans provide direction to annual budgets.a.  Trueb.  FalseANSWER:   True  8. If an individual obtains a loan to purchase a car in June, this loan amount will be included as income for the month of June.a.  Trueb.  FalseANSWER:   False 9. An individual’s auto loan payments are listed as an expense on the income and expense statement.a.  Trueb.  FalseANSWER:   True 10. If an individual lists his or her gross salary in the income portion of the budget, the expenditures section will include income taxes and social security taxes.a.  Trueb.  FalseANSWER:   True