8.1 Budgeting and Planning

Most financial experts agree that families should set aside _____ percent of their disposable income each pay period.

• 15
• 25
• 20
• 10

Net worth is calculated by subtracting your variable expenses from your fixed expenses.

• True
• False

The IRS can audit your tax returns for a period of ____ year(s), except in the case of fraud, where there is no time limit.

• 3
• 6
• 1
• 10

A house payment and utilities are examples of 

• variable expenses
• investments
• income
• fixed expenses

A personal property inventory is most commonly used for  

• a car loan application
• proof of loss from fire, theft, or property damage
• an employment application
• a credit card application

Receipts and documents showing income and expenses should be kept in a safe place because they are proof or evidence to use in the event of an audit. 

• True
• False

Lunches, medical bills, personal care items, and clothing are all examples of

• variable expenses
• investments
• fixed expenses
• income

When your assets are less than your liabilities, you are said to be solvent, which is a good financial position.  

• True
• False

A common purpose for the net worth statement is

• fire- loss proof
• damage report
• employment application
• loan or credit application

^{A major reason for financial planning is to prevent careless spending}

• True

• False