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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
increase his assets.
B
decrease his assets
C
increase his market value
D
increase his liabilities
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
Samantha, because her annual income is higher than Maggie’s.
B
Samantha, because her income minus her net worth is a larger amount than Maggie’s.
C
Maggie, because her income minus her net worth is a smaller amount than Samantha’s
D
Maggie, because her net worth is higher than Samantha’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 market value of his car
B
the balance on his credit card
C
the value of his retirement account
D
the combined total of his savings and checking accounts.
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
His hockey equipment
B
The market value of his car
C
Money in his checking account
D
Money in the paycheck he will receive next week
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
Taxes she paid based on her income last year
D
Money she received from her grandparents for her birthday
7) Which would most likely be considered a contractual expense?
A
Food
B
Clothing
C
Entertainment
D
Cell phone
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 should increase spending for noncontractual items to br
D
Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it
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
The scholarship he receives for studying Chinese at the local community college, his car insurance payment, and stock dividen
B
Clothing he purchased for a job interview, tuition for a class he is taking at the local community college, and interest from
C
Money saved from his paycheck for emergencies, interest paid on his car loan, and his tax refund from filing last year’s tax
D
Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance
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
Motorcycle payment, food, and cell phone bill
B
Cell phone bill, gasoline, and car payment
C
Gasoline, food, and entertainment
D
Internet bill, entertainment, and clothing
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
Develop a control system that will work with his life style.
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 how much money he can spend for each of the bills he pays each month.
D
Decide what income and spending categories would reflect his values, needs, and wants.
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
Increase purchases
D
Use a credit card more often
14) When is your spending plan complete?
A
When you have allocated all your income into categories for the month
B
When you have all of your current income and expenses recorded
C
Spending plans are always under revision so they are never complete.
D
Spending plans are complete each December 31st as one year ends and another year begins
*select an answer for all questions
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