FIN533 : CHAPTER 2 - FINANCIAL STATEMENTS AND BUDGETING

1. 1. A balance sheet is also known as:

• A. Cash Flow Report

• B. Net Worth Statement

• C. Income Statement

• D. Budget Plan

2. The formula for Net Worth is:

• A. Assets + Liabilities

• B. Liabilities - Assets

• C. Assets - Liabilities

• D. Income - Expenses

3. 3. Which of the following is NOT a liquid assets?

• A. Savings account

• B. Cash in hand

• C. Real estate

• D. Stocks

4. 4. A Cash Flow Statement is also called a:

• A. Net Worth Report

• B. Statement of Liabilities

• C. Statement of Assets

• D. Income & Expenditure Statement

5. When expenses are higher than income, the result is:

• A. Surplus

• B. Deficit

• C. Profit

• D. Balance

6. 6. The main purpose of budgeting is to:

• A. Calculate net worth

• B. Control and plan spending

• C. Reduce liabilities

• D. Prepare tax forms

7. 7. Which of the following is a current liability?

• A. 15-year mortgage loan

• B. Fixed deposit

• C. Investment in shares

• D. Outstanding credit card bill

8. 8. The Current Ratio measures:

• A. Long-term debts vs assets

• B. Value of fixed assets

• C. Level of monthly savings

• D. Ability to pay short-term obligations

9. 9. A healthy Current Ratio should be at least:

• A. 0.5

• B. 1.0

• C. 5.0

• D. 0.8

10. 10. Debt Ratio is calculated using:

• A. Liabilities / Assets

• B. Assets / Liabilities

• C. Expenses / Income

• D. Savings / Take-home pay