Chapter 16 Review

A W-2 is a summary of a worker’s earnings for the previous year and includes the amount deducted for taxes.

• True

• False

A balance sheet reports assets, liabilities, and net worth on a given date.

• True

• 

A cash flow statement examines changes in the value of your personal assets.

• True

• False

The process of good money management should start with knowing your current financial status.

• True

• False

Financial planning generally reduces an individual’s financial uncertainties.

• True

• False

An amount of money an insurance company pays to a person who has previously deposited money with the company is called a pension.

• True

• False

All the following are examples of tax deductions EXCEPT

• interest paid on a home mortgage or home equity loan.

• certain medical expenses.

• rent expense.

• contributions to charitable organizations.

Which of the following would be a personal asset?

• your college loan

• your home mortgage

• your personal computer

• your car payment

Take-home pay is

• the amount you will receive when you cash your paycheck.

• cash inflows minus cash outflows.

• the money you have available to spend as a result of working plus any other income, such as a gift or stock dividend

• the amount of a paycheck before taxes and other payroll deductions

Which of the following would probably be a short-term financial goal?

• buying a new luxury automobile

• purchasing a new CD

• going to college

• going on a three-week cruise