test review

What is a budget?

• a) A plan to track your income and expenses
• b) A list of your assets and liabilities
• c) A calculation of your net worth
• d) A type of investment account

Which of the following is NOT included in a personal balance sheet?

• a) Assets
• b) Liabilities
• c) Net worth
• d) Discretionary expenses

What does a positive net worth indicate?

• a) Your assets exceed your liabilities
• b) Your liabilities exceed your assets
• c) You have no assets or liabilities
• d) You have a high income

Which of the following is an example of a fixed expense?

• a) Groceries
• b) Entertainment
• c) Rent
• d) Utilities

What is the primary purpose of implementing a budget?

• a) To track your income and expenses
• b) To calculate your net worth
• c) To increase your assets
• d) To reduce your liabilities

Which strategy can help increase your assets?

• a) Taking on more debt
• b) Spending more on discretionary expenses
• c) Exploring additional sources of income
• d) Neglecting to save or invest

What is the recommended approach to reducing liabilities?

• a) Focus on paying off high-interest debt first
• b) Avoid paying off any debt
• c) Take on more debt to consolidate existing debt
• d) Ignore interest rates when repaying debt

What is the purpose of an emergency fund?

• a) To cover unexpected expenses
• b) To save for retirement
• c) To invest in high-risk ventures
• d) To pay for discretionary expenses

What is the total amount of money you earn before any deductions are made?

• a. Net income
• b. Gross income
• c. Take-home pay
• d. Disposable income

Which of the following is NOT a fixed expense?

• a. Rent
• b. Car insurance
• c. Groceries
• d. Student loan payment