Personal Finance Review 2.03-2.05 Question Preview (ID: 46372)


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To increase his net worth, Jackson could:
a) increase his liabilities
b) decrease his assets
c) increase his market value
d) increase his assets.

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) Samantha, because her income minus her net worth is a larger amount than Maggie’s.
c) Maggie, because her net worth is higher than Samantha’s.
d) Samantha, because her annual income is higher than Maggie’s.

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

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 value of his retirement account
c) the combined total of his savings and checking accounts.
d) the balance on his credit card

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) Money in his checking account
b) Money in the paycheck he will receive next week
c) His hockey equipment
d) The market value of his car

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) Money she received from her grandparents for her birthday
c) Social Security income her mother is receiving for her since her father died of cancer last year
d) Taxes she paid based on her income last year

Which would most likely be considered a contractual expense?
a) Cell phone
b) Food
c) Entertainment
d) Clothing

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. They need find a way to balance their income and expenses by
b) Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it
c) Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time
d) Amanda and Marcus are earning more money than they are spending. They should increase spending for noncontractual items to br

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) Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance
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) The scholarship he receives for studying Chinese at the local community college, his car insurance payment, and stock dividen
d) Clothing he purchased for a job interview, tuition for a class he is taking at the local community college, and interest from

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) Internet bill, entertainment, and clothing
c) Motorcycle payment, food, and cell phone bill
d) Gasoline, food, and entertainment

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) Spending plans are used to record planned income.
b) Spending plans are used to record planned expenses.
c) A spending plan includes items not usually included when creating a budget.
d) When creating a spending plan, it is recommended that one examines trade-offs and opportunity costs.

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 what income and spending categories would reflect his values, needs, and wants.
b) Decide how much money he can spend for each of the bills he pays each month.
c) Track his current income and expenses—if he has already created an Income and Expense Statement then he has completed this st
d) Develop a control system that will work with his life style.

If expenses were to exceed income on a spending plan, what would be a financially smart solution?
a) Decrease expenses
b) Use a credit card more often
c) Earn less income
d) Increase purchases

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

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