WorksheetsIncome and Expense Test
Total questions: 28
Worksheet time: 14mins
Financial Literacy Assessment: Understanding Income and Expense
1. What is the primary purpose of an Income and Expense Statement?
To predict future investment returns
To list and summarize income and expense transactions over a specific time period
To calculate total assets and liabilities
To determine credit score
How can an Income and Expense Statement help improve financial management?
By providing tax deductions
By increasing credit limits automatically
By making changes to increase net worth and reach financial goals
By determining insurance rates
Which money management tool helps you understand how you've managed your money in the past?
Spending Plan
Statement of Financial Position
Income and Expense Statement
Balance Sheet
What does a net gain indicate on an Income and Expense Statement?
Total expenses exceed total income
Total income equals total expenses
Total income exceeds total expenses
Total savings exceed total investments
Which of these is considered earned income?
Interest from savings accounts
Child support payments
Government grants
Wages and salary before deductions
What does a net loss on an Income and Expense Statement suggest you should do?
Immediately file for bankruptcy
Increase income and/or decrease expenses
Take out a loan to cover expenses
Cancel all insurance policies
Which of these expense categories typically includes property taxes?
Transportation
Housing
Insurance
Other expenses
Why is it important to customize income and expense categories in your statement?
To make the statement look more professional
To represent all your specific income and expenses effectively
To impress financial advisors
To qualify for more loans
What is the recommended way to track income and expenses?
Keep a mental record of spending
Use a system like apps, software, or paper records
Only track large expenses
Review bank statements once a year
What is the primary goal regarding income and expenses in financial management?
To have income equal to expenses
To have expenses greater than income
To have income (excluding savings withdrawals) greater than expenses
To have zero expenses each month
What is the primary purpose of a spending plan?
To track past expenses only
To record daily transactions
To create a forward-looking income and expense statement
To calculate net worth only
Which of the following is NOT one of the five steps in the spending plan development process?
Track current income and expenses
Implement and control
Predict future market trends
Evaluate and make adjustments
What type of expenses are considered contractual?
Entertainment and dining out
Groceries and personal care
Rent and internet service
Clothing and gifts
What should you do if you have a net loss in your spending plan?
Borrow money from friends
Ignore the deficit
Wait for your next paycheck
Increase income, decrease expenses, or both
Which of the following is a valid control system for maintaining a spending plan?
Social media tracking
Envelope system
Daily journal entries
Random receipt collection
What should be included in the "Unearned Income" category of a spending plan?
Salary and wages
Interest from savings and investments
Overtime pay
Commission earnings
What percentage of net income is recommended for housing costs according to the spending plan guide?
15- 20%
25- 35%
40%-45%
10v-15%
Which expense category falls under "Pay Yourself First"?
Entertainment expenses
Contributions to savings and investments
Credit card payments
Insurance premiums
What is the recommended first step when creating a spending plan?
Sell all of your assets
Track current income and expenses
Open a new bank account
Calculate net worth
How should goals be written in a spending plan?
As general statements
As SMART goals
As weekly targets
As yearly objectives
What is net worth?
The total amount of money earned in a year
The monetary value of possessions minus total amounts owed
The sum of all assets without considering debts
The total amount in savings accounts
Which of the following is considered a tangible asset?
Money in a checking account
Stocks and bonds
A personal computer
Retirement savings
How should the value of tangible assets be recorded on a Statement of Financial Position?
The original purchase price
The current market value
The expected future value
The insured value
What distinguishes a liability from an expense?
Liabilities are paid monthly while expenses are paid annually
Expenses are long-term while liabilities are short-term
Liabilities are money owed while expenses are money spent
Expenses are debts while liabilities are bills
How often should a Statement of Financial Position be created?
Monthly
Weekly
Daily
At least annually
Which category of assets includes cash and checking account balances?
Tangible assets
Investment assets
Monetary assets
Fixed assets
What is the primary purpose of a Statement of Financial Position?
To track monthly expenses
To calculate annual income
To measure financial wealth at a specific point in time
To project future earnings
How can someone increase their net worth?
Only by increasing income
Only by decreasing expenses
By increasing assets or decreasing liabilities
By maintaining current spending habits
