Personal Finance 101
Financial experts often recommend having 3–6 months of expenses saved in this type of fund.
What is an emergency fund?
When prices rise over time and your dollar buys less, economists call it this.
What is inflation?
This form reports wages earned from an employer.
What is a W-2?
Under the accounting equation, assets equal liabilities plus this.
What is equity?
This credit score factor typically carries the most weight in determining your score.
What is payment history?
This law says that when prices go up, consumers generally buy less of a product.
What is the law of demand?
This tax is automatically withheld from most employees' paychecks to help fund retirement benefits.
What is Social Security tax?
A company pays insurance for next year in advance. Initially, the payment is recorded as this type of asset.
What is prepaid insurance?
If you invest $1,000 and earn 10% annually, the growth generated on prior growth is called this.
What is compound interest?
A country experiences a recession when economic activity declines significantly; a common rule of thumb is this many consecutive quarters of negative GDP growth.
What is two?
This federal agency is responsible for collecting taxes and enforcing federal tax laws.
What is the IRS?
A company earns revenue but has not yet received cash. Under accrual accounting, the company records this asset.
What is accounts receivable?
This retirement account allows tax-free withdrawals in retirement if certain requirements are met.
What is a Roth IRA?
When you choose one option, this is the value of the next best alternative you gave up.
What is opportunity cost?
If your tax withholding exceeds what you owe, you receive one of these.
What is a tax refund?
This principle requires expenses to be recognized in the same period as the revenues they help generate.
What is the matching principle?
This investing concept describes spreading money across different assets to reduce risk.
What is diversification?
This term describes the total value of all goods and services produced within a country in a given period.
What is GDP (Gross Domestic Product)?
Unlike a deduction, this tax benefit reduces your tax bill dollar-for-dollar.
What is a tax credit?
A company has current assets of $120,000 and current liabilities of $40,000. This liquidity ratio equals 3.0.
What is the current ratio?