Multiple Choice Answers

Question 1 of 20
Money management refers to:
A. preparing personal financial statements.
B. day-to-day financial activities.
C. storing financial records for easy access.
D. spending money on current living expenses.
Question 2 of 20
Opportunity costs refer to:
A. current spending habits.
B. changing economic conditions that affect a person’s cost of living.
C. storage facilities to make financial documents easily available.
D. trade-offs associated with financial decisions.
Question 3 of 20
A broker statement is an example of a(n) __________ record.
A. investment
B. insurance
C. estate planning
D. tax
Question 4 of 20
Which of the following are considered to be personal financial statements?
A. Budget and credit card statements
B. Balance sheet and cash flow statement
C. Checkbook and budget
D. Tax returns

Question 5 of 20
A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:
A. $45,000.
B. $23,000.
C. $22,000.
D. $67,000.
Question 6 of 20
Nick Rodr has a savings account with $550 in it. He knows that he can withdraw this money from his savings account whenever he wishes: This would be an example of:
A. money management.
B. an opportunity cost.
C. a balance sheet.
D. a liquid asset.
Question 7 of 20
Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
A. The budget variance
B. Investment assets
C. Long-term liabilities
D. Current liabilities
Question 8 of 20
Improvements in a person’s financial position are the result of:
A. increased liabilities.
B. reductions in earnings.
C. increased savings and investments.
D. increased purchases on credit.
Question 9 of 20
Ed Bostrom wants to reduce his fixed expenses. What action would be appropriate?
A. Get a part-time job
B. Eat more meals at home than in restaurants
C. Find a place to live with a lower rent
D. Save more money for the future

Question 10 of 20
If a family planned to spend $370 for food during March but only spent $348, this difference would be referred to as a:
A. surplus.
B. deficit.
C. budget reduction.
D. contribution to net worth.
Question 11 of 20
The main purpose of taxes is to:
A. generate revenue for funding government programs.
B. reduce the chances of inflation.
C. create jobs.
D. discourage use of certain goods and services.
Question 12 of 20
Which type of tax is imposed on specific goods and services at the time of purchase?
A. Estate
B. Excise
C. General sales
D. Value-added
Question 13 of 20
Tax-deferred retirement plans are a type of:
A. exemption.
B. itemized deduction.
C. passive income.
D. tax shelter.
Question 14 of 20
An expense that would be included in the itemized deductions of a taxpayer is:
A. travel to work.
B. life insurance premiums.
C. real estate property taxes.
D. a driver’s license fee.
Question 15 of 20
A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is:
A. the standard deduction.
B. a tax credit.
C. an itemized deduction.
D. an exemption.
Question 16 of 20
Parents can reduce their taxes by:
A. filing a joint return.
B. decreasing the number of exemptions claim.
C. using a child-care tax credit.
D. ignoring the standard deduction
Question 17 of 20
Most people pay federal income tax by:
A. paying the total amount owed by April 15.
B. filing quarterly tax payments.
C. having amounts withheld from income.
D. earning tax credits for various deductions.
Question 18 of 20
Which form would an individual use who has less than $50,000 in taxable income from wages, salaries, tips, unemployment compensation, interest, or dividends, and who is married and does not itemize deductions?
A. Form 1040
B. Form 1040EZ
C. Form 1040A
D. Schedule A
Question 19 of 20
Itemized deductions are recorded on:
A. Form 1040A.
B. Schedule A.
C. Schedule B.
D. Form 2106.
Question 20 of 20
The Roth IRA differs from the regular IRA in that:
A. earnings on the account are tax free after five years.
B. contributions may exceed $2,000.
C. deposits must be in federally-insured accounts.
D. funds are only to be used for education expenses.