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Test Review Chap 4-6

Total questions: 25

Worksheet time: 13mins

Name
Class
Date
1.

Susan and Maria both invest $5,000 in savings accounts with the same interest rate. Susan’s account earns simple interest, while Maria’s account earns compound interest. After 10 years, Mariass account balance is higher than Susan’s. What is the reason for the difference in their account balances?

a)

Simple interest is calculated on the initial deposit only, while compound interest is calculated on both the initial deposit and the accumulated interest.

b)

Jake’s account had a higher interest rate than Emma’s account.

c)

Compound interest decreases over time, while simple interest remains constant.

d)

Simple interest applies only to small deposits, while compound interest applies to large deposits.

2.
You should always create a monthly budget—weekly or biweekly budgets tend to be inaccurate.
a)
True
b)
False
3.

Which expenses are easier to change quickly?

a)

Fixed expenses

b)

Variable expenses

4.
In a balanced budget,
a)
expenses = savings.
b)
gross income = disposable income.
c)
expenses – savings = gross income.
d)
expenses + savings = earnings + borrowing
5.
Most financial experts recommend that a family have fixed expenses of no more than
a)
50 to 60 percent of net pay.
b)
50 to 60 percent of gross pay.
c)
50 to 60 percent of variable expenses.
d)
50 percent of gross pay or 60 percent of net pay, whichever is higher.
6.
Which of the following is a variable expense?
a)

electric bill

b)

insurance premium

c)

mortgage

d)

streaming subscription

7.
Which of the following would be considered an asset?
a)
a car loan
b)
a checking account
c)
a credit card account
d)
all of the above are assets
8.
The IRS has the legal right to audit your tax returns and supporting records for ___ years from the date of filing.
a)
2
b)
5
c)
10
d)
3
9.

Kenyatta often checks her banking app to monitor her account balance before making purchases. Her financial advisor suggests keeping a personal account register as well. What is the primary reason why depending solely on a banking app's balance might result in financial mismanagement?

a)

Banking apps do not provide a comprehensive view of all financial accounts a person holds.

b)

Pending transactions, automatic payments, and processing delays might not be shown in the app’s balance, causing potential overspending.

c)

Maintaining an account register can help individuals secure loans by providing a detailed transaction history.

d)

Frequent updates to banking app interfaces can confuse users who rely on them for balance checks.

10.

Yi Ming is evaluating his financial health by determining his net worth. He has the following assets and liabilities: Credit card debt: $1,000 Checking account: $2,000 Savings account: $4,000 Car value: $12,000 Student loan balance: $17,000 Retirement account: $29,000 Car loan balance: $5,000 Based on this information, what is Yi Ming’s net worth?

a)

$24,000

b)

$22,000

c)

$26,000

d)

$14,000

11.
The person to whom a check is payable is called the
a)
demander.
b)
depositor.
c)
payee.
d)
maker.
12.

A small business owner is evaluating the benefits of using a peer-to-peer (P2P) payment app versus a digital wallet for customer transactions. Which of the following considerations highlights a primary distinction between these two payment options?

a)

P2P payment apps are primarily intended for personal use, while digital wallets are more suitable for commercial and retail transactions.

b)

Digital wallets necessitate a connection to a traditional bank account, whereas P2P payment apps do not.

c)

P2P payment apps provide superior security features compared to digital wallets.

d)

Digital wallets are restricted to online transactions, whereas P2P payment apps support both in-store and online transactions.

13.
Which part of a check provides a place for you to write the purpose of the check?
a)
the routing number
b)
the memo line
c)
the payee line
d)
the signature line
14.

Alejandro pays his internet bill of $60.75 using a check. In which column should he record this transaction in his checkbook register?

a)

Deposit/Credit column.

b)

Payment/Withdrawal/Debit column.

c)

Balance column.

d)

Fee column.

15.

When you buy a house, the larger your down payment, the larger your monthly mortgage payments will be.

a)
True
b)
False
16.
Financial experts say you should save _______ of your income.
a)
10%
b)
15%
c)
20%
d)
25%
17.
Work-study programs allow students to earn money by working
a)
from home.
b)
at their parents’ place of employment.
c)
on campus.
d)
all of the above.
18.
An interest-bearing checking account that pays a higher rate of interest than a usual account, but typically has more restrictions, is called a
a)
share account.
b)
standard account.
c)
money market account.
d)
special account
19.

What is the primary reason for regularly comparing your bank statement with your personal financial records?

a)

To verify that the bank has applied the correct interest rate to your savings.

b)

To detect any inconsistencies, such as unauthorized charges, mistakes, or overlooked automatic transactions.

c)

To prevent incurring overdraft charges by maintaining a minimum account balance.

d)

To ensure that all checks and deposits are processed by the bank on the exact date they were issued.

20.
Savings accounts protected by the FDIC are protected from loss for up to
a)
$250,000.
b)
$500,000.
c)
$100,000.
d)
$1,000,000.
21.

Jamila is considering taking out federal student loans for her college education. She is eligible for both a subsidized and an unsubsidized Direct Loan. Which statement accurately describes a primary difference between these two loan types?

a)

Interest on subsidized loans is covered by the government while the student is in school, whereas interest on unsubsidized loans accumulates during this period.

b)

Subsidized loans require immediate repayment, while unsubsidized loans do not require repayment until after graduation.

c)

Only students with financial need can access unsubsidized loans, while subsidized loans are available to all students.

d)

Unsubsidized loans are forgiven if the student graduates on time, while subsidized loans must be repaid regardless of graduation status.

22.
You can authorize your employer to make automatic deductions from your paycheck each period with a(n)
a)
payroll savings plan.
b)
direct deposit plan.
c)
money market deposit account.
d)
electronic funds transfer plan
23.
The more liquid an investment, the less earning potential it is likely to have.
a)
True
b)
False
24.
A computer program that organizes data in columns and rows and can perform calculations using the data is called a
a)
scheduler.
b)
spreadsheet.
c)
calculator.
d)
database.
25.
When one person makes an offer and another person changes it, the second person is
a)
committing fraud.
b)
making a counteroffer.
c)
entering into an agreement.
d)
providing consideration.

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