Personal Finance Chapter 4 Review TrueFalse 1 Consumers

Personal Finance Chapter 4 Review

True/False � 1. Consumers should always make quick decision about financial matters. They can always figure out how to pay for it later. � 2. Financial resources are money or other items of value that people can use to acquire goods and services.

True/False � 3. A personal balance sheet lists your income and expenses for a period of time. � 4. Luxury items fill physical needs and not emotional wants. � 5. A person’s actual income, saving, and spending may not be exactly as planned on their budget.

True/False � 6. Our needs and wants tend to be unlimited, while our financial resources tend to be limited. � 7. Keeping good records is not important to good budgeting or computing of variances. � 8. All assets increase in value over time.

True/False � 9. A budget is not a critical part of managing your money. � 10. When your estimated expenses are less than your actual expenses, the result is an unfavorable variance. � 11. Basic needs include items that make life more enjoyable, such as a television.

True/ False � 12. The term wants refers to items people desire for reasons beyond survival and basic comfort. � 13. A financial planner is trained to help people with advice about how to invest earnings, plan for retirement, and manage other financial matters.

14. A person budget $40 for entertainment but spent $60. What is the percent of variance? � 50% favorable � 50% unfavorable � 33% unfavorable

15. A person budgeted $75 for entertainment but spent $50. What is the percent of variance? � 50% favorable � 50% unfavorable � 33% unfavorable

16. The amount of income your planned for March was $2, 500. The amount you actually received was $2, 800 resulting in a �$250 favorable variance �$300 favorable variance �$250 unfavorable variance �$300 unfavorable variance

17. A financial plan should include �Personal Goals �Financial Goals �A timeline for reaching goals �All of the above

18. Which of these is the correct sequence for the five-step financial planning process? �Gather information, set goals, analyze information, develop a timeline, implement and evaluate the plan �Gather information, analyze information; set goals; develop a timeline; implement and evaluate the plan

19. The amount you budgeted to spend on food for June was $250. The amount you actually spent was $235, resulting in a �$10 �$15 �$20 favorable variance unfavorable variance

20. What is the first step in creating a personal budget? �Balance the budget �Estimate your expenses �Estimate your income �Plan the amount you will save

21. The amount of money a person has to spend after needs are met is called �Net income �Profit �Disposable income �Discretionary income �None of the above

22. Expenses that do not change every month, such as rent

23. A spending or savings plan based on expected income and expenses

24. A benefit or an item you give up when you choose to buy another benefit or item

25. The choice to give up a particular benefit or item to get another that you think is more desirable

26. Any debt owed that must be repaid

27. Money and items of value that you own