Section 4: Financial Statements, Tools, and Budgets

Which of the following is the best example of a well-stated financial goal?

• Buy a $3,000 computer in 18 months

• Purchase a three-bedroom home in five years

• Buy a $2,000 stereo

• Pay off your credit cards as soon as possible

Vincent and Paula Farelli have decided to pay off their $875 MasterCard debt by  taking $875 out of their money market savings account. This transaction will:

• increase their net worth on their balance sheet.

• not change their net worth on their balance sheet.

• decrease the surplus on their income and expense statement.

• not change the surplus on their income and expense statement.

The primary purpose of setting long-term financial goals is to help

•  measure financial success or failure.

•  provide direction for overall financial planning.

• acquire great wealth

•  achieve a comfortable retirement.

A balance sheet includes ____, ____, and ____.

• income;expenses; net worth

• assets; expenses; liabilities 

•  income; liabilities; net worth

• assets; liabilities; net worth

The concept of "pay myself first," saving and investing before you pay other  expenses, is a characteristic of successful financial managers. 

• True

• False

A(n) ________________ is a statistic that suggests how well the economy is doing  now and in the future

• economic isolator

• procyclical investment

• economic indicator

• countercyclic investment

The U.S. government measures inflation using

•  the gross domestic product.

•  the index of leading economic indicators.

• the consumer price index.

•  the consumer confidence index.

______________is the cost of decision measured by the value of the next best  alternative that must be foregone

• Decision cost

•  Marginal utility

• Marginal cost

•  Opportunity cost

Which of the following is not an activity listed in the statement of cash flows?

•  Investing Activities

•  Funding Activities

• Operating Activities

•  Financing Activities

Which of the following is a snapshot of the financial condition of the company at a  particular time?

• The income statement

•  The balance sheet

• The statement of cash flows

• All of these