Chapter 4 Test: Budgeting and Records

The two elements to consider in budgeting and planning are your income and your expenses.

• False

• True

You should always create a monthly budget—weekly or biweekly budgets tend to be inaccurate.

• True

• False

Only people with considerable wealth need to create a personal record keeping system.

• True

• False

The IRS has the legal right to audit your tax returns and supporting records for ___ years from the date of filing.

A person who creates and signs the promissory note and agrees to pay it on a certain date is called the

• maker

• payee

• negotiator

• co-signer

__________ expenses are costs that vary in amount and type, depending on the choices you make.

Use the following information to calculate Diana’s liabilities: Savings account: $2,500, Checking account: $400, Car value: $5,000, Personal property value: $5,500, Loan for vacation: $2,000, Loan from grandparents: $250. Which of the following is considered a liability?

• Cash in hand

• Stock investments

• Real estate property

• Outstanding loan

What are items of value that a person owns called?

• Expenses

• Assets

• Liabilities

• Wealth

What is the financial ability to repay a loan with present income known as?

• Disposable Income

• Fixed Expenses

• Cash Deficit

• Capacity

When are estimated expenses greater than estimated income?

• Cash Surplus

• Fixed Expenses

• Cash Deficit

• Variable Expenses