Personal Financial Statements
What does cash inflow represent?
Cash inflow represents money received, such as income from a job or investments.
What is the SMART approach to setting financial goals?
SMART stands for Specific, Measurable, Action-oriented, Realistic, and Time-based.
What is an exemption?
An exemption is a portion of income that is not subject to tax, typically based on personal circumstances like dependents.
What is estate planning?
Estate planning involves arranging for the management and distribution of a person's assets after their death.
What is a check?
A check is a written order directing a bank to pay a specified amount of money from the writer's account to the person named on the check.
Define money management.
Money management refers to the day-to-day financial activities associated with using limited income to satisfy your unlimited needs and wants.
What is budget variance?
Budget variance is the difference between the budgeted amount of expenses or revenue and the actual amount.
What is taxable income?
Taxable income is the amount of income that is subject to taxation, after deductions and exemptions are applied.
What is the purpose of an individual retirement account (IRA)?
An IRA is designed to help individuals save for retirement with tax advantages.
What is a debit card?
A debit card is a payment card that deducts money directly from a consumer's checking account to pay for a purchase.
What is net worth?
Net worth is the difference between an individual's total assets and total liabilities.
What is a fixed expense?
A fixed expense is a cost that does not change regardless of the level of production or sales, such as rent or a mortgage payment.
What is a tax deduction?
A tax deduction is an expense that can be deducted from taxable income to reduce the tax liability.
Name common sources of income during retirement.
Common sources include Social Security, pensions, individual retirement accounts, and annuities.
What is electronic banking?
Electronic banking refers to the use of technology to conduct financial transactions, such as online banking and mobile banking.
What are the components of a personal balance sheet?
The components are assets, liabilities, and net worth.
Describe the characteristics of successful budgeting.
A successful budget is realistic, flexible, regularly evaluated, well-planned, and clearly communicated.
Explain how to prepare a federal income tax return.
The steps include determining gross income, calculating adjusted gross income, subtracting deductions, determining exemptions, computing taxable income, calculating taxes owed, and making payments or asking for a refund.
What actions are involved in reviewing a financial plan?
Actions include revising financial goals, reviewing financial activities, engaging in estate planning, and making changes to spending and saving habits as needed.
What are the types of financial institutions?
Types of financial institutions include commercial banks, credit unions, savings and loan associations, and investment companies.
What is a personal cash flow statement?
It is a financial document that outlines the inflows and outflows of cash in an individual's finances over a specified period.
What are three main purposes of a budget?
To help people live within their income, achieve financial goals, and avoid credit problems.
What are the four main categories of taxes?
Taxes on purchases, property, wealth, and earnings.
What are the steps in the financial planning process?
The steps include analyzing your current financial condition, developing financial goals, creating a financial plan, implementing the plan, and revising the financial plan.
What is the purpose of the Federal Reserve System?
The Federal Reserve System supervises and regulates member banks and helps maintain a stable economy by managing monetary policy.