Budgeting Quiz

Why is creating a budget so important?

• A budget is needed for a successful financial plan.

• A budget helps you spend more money.

• A budget is only for businesses.

• A budget is not necessary for personal finance.

What is the first step in the budgeting process? What are examples of cash inflows? What are examples of outflows?

• Identify your current cash inflows and outflows.

• Spend all your money immediately.

• Ignore your expenses.

• Only focus on inflows.

What is the purpose of a personal cash flow statement?

• It can record your cash inflows and outflows to see where your money is coming from and what it is going towards.

• It is used to hide your financial information.

• It only tracks your debts.

• It is only for large corporations.

T/F: Budgets will vary annually.

• True

• False

What does a budget help its user with?

• A budget will help the user save money on large purchases, unexpected expenses, and unexpected opportunities.

• A budget will help the user spend more on luxury items.

• A budget will help the user avoid all expenses.

• A budget will help the user increase their debt.

What is a cash shortfall?

• When you do not have cash inflow in a month to cover the expenses of that month.

• When you have extra cash at the end of the month.

• When your income exceeds your expenses.

• When you have a surplus of cash.

When should a person reevaluate their budget and plan?

• When you start to have less money than what you should have from month to month during the budgeting process.

• When you have more money than expected.

• When you win a lottery.

• When you receive a gift.

Label which of the following as a household asset or a liquid asset: Stocks

• Household

• Liquid

Label which of the following as a household asset or a liquid asset: Bonds

• Household

• Liquid

Label which of the following as a household asset or a liquid asset: Checking account

• Household

• Liquid