Free Certified Trust and Financial Advisor MCQ Questions and Answers

Question 1

An excess of spending over revenue that results in both insufficient finances and a decline in net worth is known as:

Accepted Answer

Cash deficit

Answer

Cash basis

Answer

Net worth

Answer

Limited Liability

Question 2

The ability to pay current debts is calculated by dividing total liquid assets by total current liabilities. It is:

Accepted Answer

Liquidity ratio

Answer

Savings ratio

Answer

Debt service ratio

Answer

Solvency ratio

Question 3

Total net worth divided by total assets determines how vulnerable a company is to bankruptcy:

Accepted Answer

Solvency ratio

Answer

Debt service ratio

Answer

Liquidity ratio

Answer

Savings ratio

Question 4

The relative amount of cash surplus achieved during a given period is shown by dividing cash surplus by net income (after taxes) as follows:

Accepted Answer

Savings ratio

Answer

Debt service ratio

Answer

Solvency ratio

Answer

Liquidity ratio

Question 5

The ability to pay off debts on time is indicated by the total monthly loan payments divided by the gross (before-tax) income for the previous month.

Accepted Answer

Debt service ratio

Answer

Savings ratio

Answer

Solvency ratio

Answer

Liquidity ratio

Question 6

A cash budget is a helpful tool for money management, EXCEPT:

Accepted Answer

Enhance needles spending so you can increase the funds allocated to savings and investments

Answer

Decide how to allocate your income to reach your financial goals

Answer

Maintain the necessary information to monitor and control your finances

Answer

Implement a system of disciplined spending-as opposed to just existing from one paycheck to the next

Question 7

What is a  budget control schedule?

Accepted Answer

A summary that shows how actual income and expenses compare with the various budget categories and where variances (surplus or deficit) exist

Answer

The interest earned each year

Answer

A graphical presentation of cash flows

Answer

A summary that shows how actual income and expenses compare with the various budget categories