WorksheetsManaging Your Money (Unit 2 Review)
Total questions: 50
Worksheet time: 2hrs 44mins
One key difference commercial banks and credit unions is that:
Commercial banks are ‘for-profit’ and credit unions are ‘not-for-profit’
Commercial banks typically pay higher interest rates than credit unions
Credit unions are commonly located in rural areas while commercial banks are more commonly located in urban areas.
Commercial banks offer services such as online banking that credit unions do not offer.
Which of the following is NOT a consideration when choosing a depository institution?
Where the depository institution is located and the number of locations
How long the depository institution has been in business
The financial services provided by the depository institutions
Interest rates percentages, different fees that you may have to pay and the amount of each fee.
Jeremy is planning on opening an account with a local credit union. Which of the following is NOT something he will likely have when doing so?
He will have to meet a membership requirement
He will have higher interest rates and lower fees
He will have more financial services offered than a commercial bank
He will have his money insured by the NCUA
Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants to open a special account at a depository institution to keep her saved money safe. She has asked you for advice on which type of account would be best for her. What would be the best advice for Ariel?
Check several depository institutions and choose one with a free, no-interest checking account. That way, when Ariel has saved enough for her computer, she can simply write a check to pay for it.
Shop around for the depository institution with the highest interest rates for their savings accounts. She would be able to make regular savings deposits and earn interest while she is saving up for the computer.
Look for a credit union that offers share draft accounts. These secure accounts are designed especially for savings for long term goals.
Shop around for a depository institution that offers safe deposit boxes. These accounts offer extra security for deposits and can be set up to allow her to withdraw money when she needs it.
Since Taylor was a young child, she has kept her savings in a piggy bank. She likes this method of saving because she can have immediate access to the money if she needs it. Recently, in a class at school, discussion focused on why depository institutions are safer than her piggy bank. Some students’ comments were based on fact while others were based on myth. Which aspect of security at a depository institution is NOT TRUE?
Depository institutions have insurance protection up to $250,000 per depositor per account type. If something happens to the money in the bank, you would get the value of your account back as long as the deposited amount was no more than the insurance limit.
All money stored at a depository institution is kept safe at all times by numerous security measures
Information about depositors and their accounts is kept in secure data storage
Depository institutions have insurance protection. Depositors can have multiple accounts insured at the same depository institution as long as each account has no more than $100,000
Sanjay is concerned about the safety of the money in his savings account. Which type of depository institution should he choose?
A commercial bank since his deposits would be insured by the Federal Deposit Insurance Corporation (FDIC)
A credit union since his deposits would be insured by the National Credit Union Association (NCUA)
He could safely choose either a commercial bank or a credit union as long as his savings account balance meets the insurance requirements.
Neither a commercial bank nor a credit union. Money is most safely kept at home ins a personal safe or vault.
Samantha wants to be able to use funds in her checking account but finds going to the bank to withdraw cash to be inconvenient. She would like a more effective way to access her checking account funds. What would you suggest she do?
Apply for mobile banking. That way she can access her money with her smartphone to pay for the things she needs. The amount she spends would automatically be deducted from her savings account.
Apply for a debit card. That way she can use the card instead of cash to purchase the things she needs and the amount spent is immediately deducted from her account.
Apply for a credit card. That way she can use the card to purchase the things she needs and pay for it from her checking account when the credit card statement comes.
Request a cashier’s check from her depository institution. That way she can spend money from her checking account without risk of an overdraft fee.
Savings tools offered by depository institutions may earn interest. Which of the following statements is NOT TRUE about interest?
Interest is the price paid for using someone else’s money
When earning interest, look for low rates
When paying interest, look for low rates
The amount of interest earned or paid is determined by the interest rate
Common fees that may be charged by a depository institution include all EXCEPT:
Overdraft fees
Late fees
ATM fees
Minimum balance fees
David made a mistake in his checking account recordkeeping and spent $50 more than he had deposited in his account. As a result, he can expect to be charged:
ATM fee
Contact fee
Safe Deposit fee
Overdraft fee
In the United States, we have a marginal tax rate system. What does this mean?
Businesses only pay taxes on their profit margins
You pay a percentage of tax on all money you make each year
You pay different tax percentages on different amounts of money
All tax calculations are done in the margins of the tax form
Paying your income taxes on an ongoing basis means:
Taxes will be withheld from each paycheck
You won’t owe as big of a tax bill later in the year
You were meeting part of your civic duty
All of the above
Which tax form do you have to fill out when you are first hired at a job?
Form W-2
Form W-4
Form 1040
Form 1099
When should you update or complete a new Form W-4?
Never. You only need to fill it out once.
Every year
Every 5 years
Any time a major life event such as marriage or gaining/losing a new job
Hannah decides to have an additional $100 withheld from her income taxes, included on her Form W-4. Which of the following is a reason she might do this?
A. By reducing the amount of money on her net income, she is reducing the amount of taxes and other deductions
B. Hannah wants to guarantee that she has a large tax return
C. Hannah has other income that she will need to pay income taxes
D. By having more money for income tax withheld now, her future taxes next year will already be paid off.
What is the first step to take when getting ready to do your income taxes?
A. Sign your tax form(s)
B. Fill out IRS form 1040
C. Gather all documents such as W-2 statements, Social Security number, receipts, etc. that could affect your tax liability that you owe to the government.
D. Submit your tax form(s)
Which of the following best describes your adjusted gross income?
A. All sources of income minus the standard deduction
B. All sources of income minus your adjustments
C. Income from W-2 minus adjustments
D. Income from W-2 minus the standard deduction
Makayla is paying her income taxes and filing as a single person. If her taxable income is $27,680 then (based on the table provided) the tax she owes is:
A. $3,095
B. $3,101
C. $2,768
D. $27,680
The Sandersons have a tax liability of $3,490. According to their federal income tax withholding, they have paid $2,350. Which of the following is true?
They owe $2,350 in taxes
They owe $1,140 in taxes
They will get a refund of $2,350
They will get a refund of $1,140
Chris is doing his income taxes for the year. His W-2 says that he made $46,700 at his job. He also made $2,950 in tips and $80 in interest not reported on his W-2. He is filing as a single person. According to his W-2, he had $5,260 withheld. Based on this information, the result of his taxes is:
He will get a tax refund of $1,277
He will owe $1,277 in taxes
He will owe $733
He will owe $35,130
Which of the following is NOT included on Form 1040 when signing the form?
Your name (and spouse’s name)
Your Social Security number (and spouse’s social security number)
Your occupation (and spouse’s occupation)
The date you are signing
Which of the following is true about a Statement of Financial Position?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Jordyn is creating a Statement of Financial Position. Which of the following best describes her net worth?
All of her assets minus all of the liabilities she has.
All of her money plus the value of her possessions.
How much money she is paid minus her expenses
How much money she has, including her paycheck
Maggie earns $62,000 per year and has a net worth of $20,000. Samantha earns $96,000 per year and has a net worth of $15,000. Who is wealthier?
Maggie because her income minus her net worth is smaller than Samantha’s
Samantha because her income minus her net worth is larger than Maggie’s
Maggie because her net worth is higher than Samantha’s
Samantha because she is making more money than Maggie
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
His hockey equipment
The market value of his car
Money in the paycheck he will receive next week
Where on a statement of financial position would you put your electronics?
Monetary Asset
Tangible Asset
Investment Asset
Liability
Nicole has a cell phone worth $500 that she pays $60 a month for. What would she put on a Statement of Financial Position?
$500 in tangible assets for the value of her phone
$500 in liabilities because she paid $500 for the phone
$60 as an expense
$60 as a liability
Jonah is writing down his liabilities to complete his Statement of Financial Position. Which of the following is a liability?
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
Rachel is creating a Statement of Financial Position. She currently has a student loan that she pays $230 a month on. The full amount of the loan will be $98,000 but if she were to pay it off all today, that amount is only $54,000. Which number does she put on her Statement of Financial Position?
$230 because that is what she pays
$98,000 because it is the full amount she owes
$54,000 because it is what the loan is if she paid it off today
$44,000 because that is the amount remaining
To increase his net worth, Jackson could
Increase his liabilities
Decrease his assets
Increase his market value
Increase his assets
Why is it important to keep a written record of your financial condition, income, and expenses?
You do not want other people accessing it online
It provides an accurate record that you can refer back to
Writing your financial information down means you remember it more
It is not important to keep a written record, mentally tracking your finances is fine
Which of the following is true about an Income and Expense Statement?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Why is it important to create an Income and Expense Statement?
You can see your net worth and how wealthy you are
You can determine where you should be spending your money based on the income you have
You can see a record of your expenses in the past and set financial goals based on that record
It is not important to create an Income and Expense Statement
Kaylee earned $2,300 on her paycheck before deductions were taken out. After deductions she only had $1,800. Which number would she use on her Income and Expense Statement and why?
$2,300 because it is her gross income
$2,300 because it is her net income
$1,800 because it is her gross income
$1,800 because it is her net income
Gabe gets a scholarship from the local library for $5,000. Where would he put this on his Income and Expense Statement?
Earned Income
Unearned Income
Income Received from Government Sources
Expenses (Educational)
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 that 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
Last month, Eric had a problem with his car and had to take out $500 to get it repaired. How should he record this on an Income and Expense Statement?
Earned Income
Unearned Income
Income Received from Government Sources
Expense
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. Which should be recorded as expenses?
Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance
Money saved from his paycheck for emergencies, interest paid on his car loan, 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
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 to find a way to balance their income and expenses by spending less on non-contractual 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 non-contractual items to bring their income into balance with their expenses
Ethan spends $1.50 per day to get a soda from the vending machine. He doesn’t record this because he believes $1.50 isn’t a lot of money so it won’t affect his finances much. What is the best response to his thinking?
It is correct thinking
Small expenses add up so you should be recording all expenses
It depends on how often he gets the soda. If the expense is less than $50, he doesn’t need to keep track of it
As long as he is paying in cash, he doesn’t need to record the expense
Which of the following is true about a Spending Plan?
It is a document used to check your financial condition today
It is a document used to record income and expenses in the past
It is a document used to determine income and expenses for the future
It is a document used to calculate your taxes
Diana and Aaron have decided to develop a spending plan to help them gain control over their finances. Which of the following statements is NOT TRUE about spending plans?
Spending plans are used to record planned income
Spending plans are used to record planned expenses
A spending plan includes items NOT usually included when creating a budget
When creating a spending plan, it is recommended that you examine your trade-offs and opportunity costs
What does it mean to “Pay Yourself First”?
Set aside money for savings and investing before spending money on anything else
Set aside money for things you enjoy before spending money on anything else
Set aside money for your known expenses before spending money on anything else
Set aside money for contractual expenses before spending money on anything else
Which of the following is NOT a reason why a spending plan is an important part of financial planning?
Helps manage your money in a positive manner
Helps increase your income
Helps set and reach financial goals
Helps analyze opportunity costs and trade-offs to maximize financial wellbeing
Which of the following would most likely be considered a contractual expense?
Cell phone
Food
Entertainment
Clothing
Chase has decided to work with a spending plan so he can build up an emergency fund for when he is in college. He learned in class that he could probably reduce his spending the most by looking at his non-contractual expenses. Which of the following best fit that category?
Cell phone bill, gasoline, and car payment
Internet bill, entertainment, and clothing
Motorcycle payment, food, and cell phone bill
Gasoline, food, and entertainment
It is recommended that about 33% of your income should go towards housing. Jared makes $2,400 a month after deductions. How much should he be spending on housing?
$300
$500
$800
$1,200
Paige is struggling financially. She makes $2,100 a month after deductions working full time. She really enjoys shopping and regularly spends $500 on clothes each month. She also spends $900 in rent and utilities, $100 for gasoline, $200 on food, $200 on insurance, $100 on her internet bill, $50 for her cell phone, and $150 for other entertainment. Which of the following is the best financial advice to give Paige?
Reduce your spending on clothes.
Reduce your spending on food.
Skip some of your utilities and other bills because there is a grace period for them.
Get another full time job to increase your income.
If expenses were to exceed income on a spending plan, what would be a financially smart solution?
Decrease expenses
Use a credit card more often
Earn less income
Increase purchases
When is your spending plan complete?
When you have allocated all your income into categories for the month
When you have all of your current income and expenses recorded
Spending plans are always under revision so they are never complete
Spending plans are complete each December 31st as one year ends so another begins
