Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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Which of the following defines a budget?
a. | A plan to match expected income with expected outflow | b. | Something that will
decrease your wants and needs | c. | A plan to increase income | d. | A plan to match
spending with saving |
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2.
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An agreement that is missing an essential element, such as consideration, is
____.
a. | Valid | c. | Void | b. | Illegal | d. | Verifiable |
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3.
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Savings, house payments, car loans, and utilities are all examples of
____.
a. | Disposable income | c. | Fixed expenses | b. | Variable expenses | d. | Personal
records |
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4.
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A personal property inventory is most commonly used for what purpose?
a. | As proof of loss in the event of fire or theft | b. | In deciding which
items to buy | c. | When applying for credit | d. | In the event of a tax
audit |
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5.
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Which of the following is not a reason for financial planning?
a. | To prioritize your options in order to get the most from your
income | b. | To prepare your income tax returns | c. | To evaluate how wisely you are using your
money | d. | To prevent careless and wasteful spending |
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6.
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Which of the following is not an element of an enforceable contract?
a. | Agreement | c. | Contractual capacity | b. | Net worth | d. | Consideration |
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7.
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Shown on your net worth statement are things of value that you own, known as
____.
a. | Collateral | c. | Disposable income | b. | Liabilities | d. | Assets |
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8.
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Shown on your net worth statement are debts you owe to others, known as
____.
a. | Liabilities | c. | Collateral | b. | Disposable income | d. | Assets |
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Matching
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For each description listed below, find the corresponding term. a. | Void | h. | Co-signer | b. | Maker | i. | Insolvent | c. | Competent
parties | j. | Promissory
note | d. | Explicit | k. | Implied | e. | Legally collectible | l. | Contract | f. | Voidable | m. | Solvent | g. | Payee | n. | Warranty |
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9.
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Persons who are legally able to give sane and intelligent consent and enter
into contracts.
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10.
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A warranty that is assumed to exist.
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11.
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One who agrees to pay a note if the maker does not pay.
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12.
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A written promise to pay on a specified date.
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13.
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The person to whom a note is made payable.
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14.
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Contracts that are missing one or more essential ingredients.
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15.
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Contracts that contain an element that could make them unenforceable.
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16.
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The person who creates and signs a note.
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17.
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A person is _____ if he or she can pay all bills as they are due.
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18.
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The meaning of the term negotiable instrument.
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True/False
Indicate whether the statement is true or
false.
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19.
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An example of a variable expense is the amount you spend on groceries, which can
be changed relatively easily.
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20.
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It is not a good idea to take photographs of your valuables because other people
might see the photos.
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21.
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Receipts are valuable to use as evidence or proof of payment.
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22.
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Fixed expenses will change according to your needs and short-term goals.
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23.
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An organized plan whereby you match expected income with expected outflow is
called a net worth statement.
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24.
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For a contract to be binding, all who enter into the contract must be legally
obligated to abide by its terms.
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25.
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You should keep copies of tax returns and supporting records for a period of
atleast three years.
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26.
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It is your responsibility as a consumer to keep a copy of each agreement you
sign in a safe place for future reference.
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27.
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Keeping good personal records will not help your long-range financial
planning.
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28.
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When your debts are greater than your assets, you are said to be solvent, or in
a favorable credit position.
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29.
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You can use a spreadsheet program to maintain a list of your income and
expenses.
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30.
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Most financial experts recommend that a family have no more than 50-60 percent
of take-home pay set aside for fixed expenses.
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