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Question 1 of 10
1. Question
What are the different types of assets?
I. Credit Card Balance
II. Cash and Cash Equivalents
III. Invested Assets
IV. Use AssetsCorrect
Assets may be either categorized as cash and cash equivalents (checking or savings account), invested assets (stocks, bonds, mutual funds), or use assets (homes, furniture, cars).
Incorrect
Assets may be either categorized as cash and cash equivalents (checking or savings account), invested assets (stocks, bonds, mutual funds), or use assets (homes, furniture, cars).
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Question 2 of 10
2. Question
What are the different types of Long Term Liabilities?
I. Credit Card Balance
II. Auto Loans
III. Real Estate Mortgages
IV. Life Insurance LoansCorrect
Liabilities are either current liabilities (credit card balances, for instance) or long-term liabilities (auto loans, life insurance loans, or real estate mortgages).
Incorrect
Liabilities are either current liabilities (credit card balances, for instance) or long-term liabilities (auto loans, life insurance loans, or real estate mortgages).
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Question 3 of 10
3. Question
Which financial statement should an individual refer to, to know about the financial resources?
Correct
A cash flow statement shows where an individual’s financial resources are going. To be accurate, it must indicate the period of coverage, which is usually a calendar year.
Incorrect
A cash flow statement shows where an individual’s financial resources are going. To be accurate, it must indicate the period of coverage, which is usually a calendar year.
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Question 4 of 10
4. Question
How do we calculate the Net Cash Flow?
Correct
Next, determine the excess or shortfall of income during the budget period. The net cash flow is the total income minus the total expenses.
Incorrect
Next, determine the excess or shortfall of income during the budget period. The net cash flow is the total income minus the total expenses.
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Question 5 of 10
5. Question
Identify the tools used to analyse the possible effects of planned financial decisions:
I. Modelling
II. Simulation
III. Profitability Analysis
IV. Sensitivity AnalysisCorrect
Financial planners use modeling and simulation as tools to analyze the possible effects of planned financial decisions. Probability analysis is used to determine the likelihood that a certain event will occur. This is often used to forecast the development of insurance rates and insurance risk. Probability analysis is often combined with modeling and simulation to give financial planners a window into the possible performance of planned investments. Sensitivity analysis is a form of modeling in which financial planners consider how small changes in the market or in investment will affect the client’s portfolio.
Incorrect
Financial planners use modeling and simulation as tools to analyze the possible effects of planned financial decisions. Probability analysis is used to determine the likelihood that a certain event will occur. This is often used to forecast the development of insurance rates and insurance risk. Probability analysis is often combined with modeling and simulation to give financial planners a window into the possible performance of planned investments. Sensitivity analysis is a form of modeling in which financial planners consider how small changes in the market or in investment will affect the client’s portfolio.
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Question 6 of 10
6. Question
What are the three scenarios to be considered to create pro forma statement?
I. Best-case budget
II. Medium-case budget
III. Average-case budget
IV. Worst-case budgetCorrect
A pro forma statement forecasts future balance sheets and cash flow statements. Sometimes, the best way to create a pro forma statement is to consider three scenarios: the worst-case budget, in which income is lowest and expenditures are highest possible; an average-case budget, in which both income and expenditures are at a reasonable level; and a best-case budget, in which income is highest and expenditures are at lowest possible.
Incorrect
A pro forma statement forecasts future balance sheets and cash flow statements. Sometimes, the best way to create a pro forma statement is to consider three scenarios: the worst-case budget, in which income is lowest and expenditures are highest possible; an average-case budget, in which both income and expenditures are at a reasonable level; and a best-case budget, in which income is highest and expenditures are at lowest possible.
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Question 7 of 10
7. Question
What is the most common time period for Personal Income Statement?
Correct
The personal income statement, also known as the statement of cash flows, is a physical representation of a client’s cash flows during a certain period of time. The most common time period for this statement is January 1 through December 31 of a given year.
Incorrect
The personal income statement, also known as the statement of cash flows, is a physical representation of a client’s cash flows during a certain period of time. The most common time period for this statement is January 1 through December 31 of a given year.
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Question 8 of 10
8. Question
What are the examples of Fixed Outflows?
I. Monthly Auto Loans
II. Monthly Food Spending
III. Unpredictable Expenses
IV. Property TaxesCorrect
Fixed outflows include such items as monthly auto loans, home mortgages, and property taxes. Variable outflows cover expenses such as monthly food spending, entertainment spending, and other unpredictable expenses.
Incorrect
Fixed outflows include such items as monthly auto loans, home mortgages, and property taxes. Variable outflows cover expenses such as monthly food spending, entertainment spending, and other unpredictable expenses.
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Question 9 of 10
9. Question
Identify the types of Variable outflows:
I. Monthly Auto Loans
II. Monthly Food Spending
III. Unpredictable Expenses
IV. Entertainment ExpensesCorrect
Fixed outflows include such items as monthly auto loans, home mortgages, and property taxes. Variable outflows cover expenses such as monthly food spending, entertainment spending, and other unpredictable expenses.
Incorrect
Fixed outflows include such items as monthly auto loans, home mortgages, and property taxes. Variable outflows cover expenses such as monthly food spending, entertainment spending, and other unpredictable expenses.
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Question 10 of 10
10. Question
What are the common taxes shown on the Income Statement?
I. Client’s Property Tax
II. Income Tax
III. Self-Employment Tax
IV. Service TaxCorrect
The most common taxes shown on the income statement are the client’s property taxes, income taxes, self-employment taxes (if any), and FICA taxes. The income statement is useful in helping illustrate to clients whether or not their lifestyle is within their means.
Incorrect
The most common taxes shown on the income statement are the client’s property taxes, income taxes, self-employment taxes (if any), and FICA taxes. The income statement is useful in helping illustrate to clients whether or not their lifestyle is within their means.