Question

Identify the False Statements

Stocks are not classified as liquid assets because their value can fluctuate daily.

Debt payments over the next year are classified as current liabilities on the personal balance sheet.

Increases in net worth occur primarily as a result of net positive cash flows.

A positive budgeting forecasting error occurs when budgeted income is overstated and budgeted expenses are understated.

The envelope budgeting method relies on transferring money from your bank account before you have an opportunity to spend it.

The cut-off between current and long-term liabilities is one year.

Answer 1

False statements are as under:-

(a) Stocks are liquid assets since they can be converted to cash in small span of time. So false.

(b) Principle of debt payment due within one year are current liabilities so false statement.

(c) Increase in net worth occurs primarily because of increase in assets and decrease in liabilities hence false.

(e) It is false statement as Envelope Budgeting means dividing your budget into envelops, putting cash into each envelope for the budget allocated and spending as per that cash available in the envelope.