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Personal Finance Review 2.03-2.05
Test Description: Exam Review
Instructions: Answer all questions to get your test result.
1) To increase his net worth, Jackson could:
A
decrease his assets
B
increase his assets.
C
increase his liabilities
D
increase his market value
2) Maggie earns $62,000 per year and has a net worth of $20,000. Samantha earns $96,000 and has a net worth of $15,000. Who is wealthier?
A
Maggie, because her income minus her net worth is a smaller amount than Samantha’s
B
Maggie, because her net worth is higher than Samantha’s.
C
Samantha, because her income minus her net worth is a larger amount than Maggie’s.
D
Samantha, because her annual income is higher than Maggie’s.
3) Which formula should Jordyn use to calculate her net worth?
A
Assets – liabilities = net worth
B
Assets / liabilities = net worth
C
Assets × liabilities = net worth
D
Assets + liabilities = net worth
4) Jonah is writing down his liabilities to complete his Statement of Financial Position. The item he should include would be:
A
the value of his retirement account
B
the market value of his car
C
the combined total of his savings and checking accounts.
D
the balance on his credit card
5) Brett is creating a Statement of Financial Position and needs to list his assets. Which of the following should he not list as an asset?
A
The market value of his car
B
Money in the paycheck he will receive next week
C
Money in his checking account
D
His hockey equipment
6) Erin and her mother are putting together an Income and Expense Statement for Erin to use as she applies for a college scholarship. Which income source does she not need to include for this statement?
A
Interest earned on her savings account
B
Social Security income her mother is receiving for her since her father died of cancer last year
C
Money she received from her grandparents for her birthday
D
Taxes she paid based on her income last year
7) Which would most likely be considered a contractual expense?
A
Clothing
B
Entertainment
C
Cell phone
D
Food
8) Amanda and Marcus just finished their Income and Expense Statement for last month. They discovered that they have a net gain. What does this mean and what should they do?
A
Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time
B
Amanda and Marcus are spending more money than they are earning. They need find a way to balance their income and expenses by
C
Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it
D
Amanda and Marcus are earning more money than they are spending. They should increase spending for noncontractual items to br
9) Andy is developing an Income and Expense Statement. He has gathered all his receipts, bank statements, paycheck stubs, and spending records. He needs to categorize them into income and expenses. He is unsure which items should be recorded as expenses
A
Clothing he purchased for a job interview, tuition for a class he is taking at the local community college, and interest from
B
Money saved from his paycheck for emergencies, interest paid on his car loan, and his tax refund from filing last year’s tax
C
Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance
D
The scholarship he receives for studying Chinese at the local community college, his car insurance payment, and stock dividen
10) Chase has decided to work with a spending plan so he can build up an emergency fund for when he is in college. He learned in class that he could probably reduce his spending the most by looking at his noncontractual expenses. Which of his expenses be
A
Cell phone bill, gasoline, and car payment
B
Gasoline, food, and entertainment
C
Internet bill, entertainment, and clothing
D
Motorcycle payment, food, and cell phone bill
11) Diana and Aaron have decided to develop a spending plan to help them gain control over their finances. Which statement is not true about spending plans?
A
A spending plan includes items not usually included when creating a budget.
B
Spending plans are used to record planned expenses.
C
Spending plans are used to record planned income.
D
When creating a spending plan, it is recommended that one examines trade-offs and opportunity costs.
12) Michael wants to develop a spending plan for himself to use during his final year of high school. What will he need to do as his first step?
A
Decide how much money he can spend for each of the bills he pays each month.
B
Track his current income and expenses—if he has already created an Income and Expense Statement then he has completed this st
C
Decide what income and spending categories would reflect his values, needs, and wants.
D
Develop a control system that will work with his life style.
13) If expenses were to exceed income on a spending plan, what would be a financially smart solution?
A
Earn less income
B
Decrease expenses
C
Use a credit card more often
D
Increase purchases
14) When is your spending plan complete?
A
When you have all of your current income and expenses recorded
B
Spending plans are complete each December 31st as one year ends and another year begins
C
Spending plans are always under revision so they are never complete.
D
When you have allocated all your income into categories for the month
*select an answer for all questions
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