Chapter 2 Terms Flashcards
Personal Financial Statements
Balance sheets and income and expense statements that serve as a way to monitor your personal financial plans.
Balance Sheet
A financial statement that describes a persons financial standing at a given point in time.
Income and Expense Statements
A financial statement that measures your financial performance over time.
Budget
A detailed financial statement that looks forward from your expected income and expenses.
Assets
Items that one owns
Liquid Assets
Items that can be converted to cash with little or no loss in value.
Investments
Assets such as stocks, bonds, and mutual funds that are acquired in order to earn a return rather than provide a service.
Net worth
The difference between your assets and liabilities.
Liabilites
What you owe
Real Property
Assets that are immovable such as land and anything fixed to it such as a house.
Personal Property
Assets that are movable and used in everyday life.
Fair market Value
The actual value of an asset, or the price for which it can reasonably be expected to sell in the open market.
Equity
The actual ownership interest in a specific asset or group of assets.
Insolvency
The state in which your net worth is less than zero.
Fixed Expenses
Predetermined expenses involving equal payments each period
