2.03.4.5 Personal Finance Test

Jonah is writing down his liabilities to complete his Statement of Financial Position. The item he should include would be:

• the market value of his car.

• the value of his retirement account

• the combined total of his savings

  and checking accounts.

• the balance on his credit card.

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?

• Maggie, because her income minus her net worth is a smaller amount than Samantha’s.

• Samantha, because her income minus her net worth is a larger amount than Maggie’s

• Maggie, because her net worth is

  higher than Samantha’s.

• Samantha, because her annual income is higher than Maggie’s.

Which formula should Jordyn use to calculate her net worth

• Assets – liabilities = net worth

• Assets × liabilities = net worth

• Assets + liabilities = net worth

• Assets / liabilities = net worth

To increase his net worth, Jackson

could:

• increase his liabilities.

• decrease his assets.

• increase his market value.

• 
  

  increase his assets.

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?

• Money in his checking account

• Money in the paycheck he will receive

  next week

• His hockey equipment

• The market value of his car

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. Which should be recorded as expenses?

• Money saved from his paycheck for emergencies, interest paid on his car loan, and his tax refund from filing last year’s tax return

• The scholarship he receives for studying Chinese at the local community college, his car insurance payment, and stock dividends he received from his grandmother

• Clothing he purchased for a job interview, tuition for a class he is taking at the local community college, and interest from his savings account

• Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance

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?

• Amanda and Marcus are spending more money than they are earning. They need find a way to balance their income and expenses by spending less on noncontractual expenses

• Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it on other expenses.

• Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time to help boost their income.

• Amanda and Marcus are earning more money than they are spending. They should increase spending for noncontractual items to bring their income into balance with the expenses.

Which would most likely

be considered a contractual expense?

• Cell phone

• Food

• Entertainment

• Clothing

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

• Interest earned on her savings

  account

• Money she received from her

  grandparents for her birthday

• Social Security income her mother is receiving for her since her father died of cancer last year

• Taxes she paid based on her income

  last year

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?

• Decide what income and spending categories would reflect his values, needs, and wants

• Decide how much money he can spend for each of the bills he pays each month.

• Develop a control system that

  will work with his life style.

• Track his current income and expenses—if he has already created an Income and Expense Statement then he has completed this step.