Review
Rajiv has a liability on his car. How is this BEST demonstrated? A. He owns his car with no debts. B. He is trying to sell his car. C. He has insurance in case of an accident. D. He owes $15,000 on his car.
D. He owes $15,000 on his car.
River bought a new washing machine that came with a warranty. How will this warranty be MOST helpful for River? A. It will allow free repairs to the machine if needed. B. It will take a percentage off the next purchase. C. It will be used to get a tax deduction on yearly taxes. D. It will guarantee a large tax refund next year.
A. It will allow free repairs to the machine if needed.
The advantage of using a safe deposit box at a financial institution is that it is protected by the financial institution’s security system, which usually provides greater protection than the security systems of a private home.
True or False
True
Sofia bought a couch that required a $60 down payment and $60 per month for the next eight months. Which type of liability does this describe?
A. a non-liquid liability B. a current liability C. a consumer liability D. a long-term liability
B. a current liability
Carlos and Keisha have a monthly income of $25,000. They have monthly expenditures that total $30,000. What is TRUE about their cash flow? A. They have a $5,000 surplus. B. They have a positive cash flow. C. They have extra money that they could use for investments. D. They have a $5,000 deficit.
D. They have a $5,000 deficit.
Only individuals who make over $50,000 per year should create a cash flow statement.
True or False
False
You are creating a budget with your family. What is one important thing to keep in mind as you come up with a plan for spending? A. Remember to include unexpected income, such as gifts or tips. B. Don’t forget to include a way to save money for possible emergency situations. C. Ignore your past spending habits because a budget focuses on future spending. D. If your income varies every month, use the higher estimates for your budget.
B. Don’t forget to include a way to save money for possible emergency situations.
While the information from a balance sheet is helpful, it doesn’t clearly show whether someone can cover their liabilities in the short term.
True or False
True
What is the term for assets that can be quickly and easily converted to cash? A. deficits B. liquid assets C. non-liquid assets D. liabilities
B. liquid assets
How are budgets different from other financial statements? A. Budgets include details from past accounts. B. Budgets focus on future spending. C. Budgets are available at any financial institution. D. Budgets must be stored in a safe deposit box.
B. Budgets focus on future spending.
Rupali’s financial advisor tells her that she needs a personal balance sheet. Rupali has no idea what this is. What should the financial advisor tell her about a personal balance sheet? A. It ultimately will show her what her net worth totals. B. Her bank can print one out for her if she requests it. C. It describes her cash flow situation over the past few months. D. Emergency expenses are listed at the top of the document
A. It ultimately will show her what her net worth totals.
What is NOT one of the main components of money management? A. personal financial statements B. tracking interest rates C. financial records D budgeting
B. tracking interest rates
Ira budgeted $1000 for his expenses this month, but he spent $1500. In order to be fiscally responsible, what does Ira need to do now? A. Invest his extra $500 in stocks, so he can earn something from his surplus. B. Reexamine his budget; he had a $500 deficit this month. C. Nothing; he managed to have a surplus this month. D. Apply for more credit because he has more expenses than he realized.
B. Reexamine his budget; he had a $500 deficit this month.
Gianna and Nadia want to create a cash flow statement. What will this process MOST likely include? A. They will include this statement on their tax return. B. They will decide what they will be spending for the next month. C. They will record their income and expenses for a month. D. They will determine what their total net worth is.
C. They will record their income and expenses for a month.
Jubi’s family budgeted $2000 in expenses for this month, but they spent $2500. This $500 difference is known as what? A. an asset B. a budget C. a liability D. a budget variance
D. a budget variance