Deck 2: Planning and Budgeting

Question 1

Personal property assets,including your clothing,furniture,bicycles,and electronic equipment,should be valued at ________ on your balance sheet.

A)purchase price
B)resale prices
C)assets
D)cash value

Answer 1

resale prices

Question 2

Which of the following are reasons for keeping a spending journal?

A)To become more aware of what you are buying and how much it costs
B)To help you think about the value of what you are buying before you spend
C)To track where your money goes so you can stop the "little leaks" by making changes in your spending habits
D)All of the options are correct.

Answer 2

All of the options are correct.

Question 3

The main opportunity cost of going to college is

A)money you would have earned working instead,in addition to the cost of attending college.
B)the cost to attend college.
C)loss of time with friends.
D)cost of trips,classes,and things that come up that wouldn't have if you hadn't gone to school.

Answer 3

money you would have earned working instead,in addition to the cost of attending college.

Question 4

For those who feel saving ANY money is next to impossible,if you bring lunch to school (at a cost of $1.00/day)just 2 days per week rather than spending $5.00 on average each day eating fast food,how much will you save monthly,assuming 25 class days each month?

A)$7,280
B)$120
C)$35
D)$40

Question 5

How quickly an asset can be turned into cash is known as

A)liquidity.
B)liability.
C)net worth.
D)asset to Cash Ratio (ATC).

Question 6

What is opportunity cost?

A)The cost of purchasing items on credit and having to pay it off in the future
B)The cost of an alternative that must be forgone in order to pursue another option
C)Spending money today without considering other alternatives
D)Failing to stop the "little leaks" in your budget,which results in failing to meet your financial goals

Question 7

Which financial statement allows you to find your net cash flow for a specific period?

A)Personal Cash Flow Statement
B)Balance Sheet
C)Expense Statement
D)Net Worth Statement

Question 8

Which of the following does not belong in the Personal Financial Statement?

A)Assets
B)Expenses
C)Liabilities
D)Mortgages

Question 9

What is the second logical step in gaining perspective into your financial situation?

A)Understand the elements of personal financial statements
B)Keep a spending journal
C)Create a personal cash flow statement
D)All choices are incorrect.

Question 10

What is a good way to keep track of spending?

A)Keep a spending journal
B)Don't think; just spend
C)Have your parents pay for everything
D)Trust someone else keep track of it for you

Question 11

A personal cash flow statement measures

A)cash inflows only.
B)cash inflows and outflows.
C)cash outflows only.
D)how much cash you have on hand.

Question 12

Calculate the opportunity cost of one extra year of college if tuition,room and board fees,and spending money are $25,000,and the estimated salary upon graduation is $50,000.

A)$75,000
B)$19,000
C)$38,000
D)$29,000

Question 13

Which of the following is not a liability?

A)Mortgage
B)Retirement funds
C)Car payment
D)Credit card debt

Question 14

An alternative that must be forgone in order to pursue another option is an

A)opportunity.
B)alternative cost.
C)annuity option.
D)opportunity cost.

Question 15

Which is an example of an asset?

A)Student loans
B)Car payments
C)Laptop
D)Electricity bill

Question 16

Calculate the cost to you,per month in interest,if your income last month was $2,000,expenses were $2,500,and your shortage was covered on a credit card charging 24% per year simple interest for cash advances?

A)$5
B)$7
C)$9
D)$10

Question 17

If you buy a bag of pretzels ($0.75 per bag)and a Pepsi ($1.25)every weekday at work from a vending machine,how much do you spend on the vending machine products over the course of a year (52 weeks)?

A)$520.00
B)$525.00
C)$728.00
D)$455.00

Question 18

On a balance sheet,you calculate how much your personal property is worth based on what?

A)How much you bought it for
B)What it would sell for at a garage sale
C)How much it would be to replace it
D)How much you want it to be worth

Question 19

Which is an example of opportunity cost?

A)The money you would have earned if you had not attended college
B)Dining out on a daily basis of $10 a day,which could have been invested and earned interest instead
C)Using money to buy a TV,rather than paying for a trip and textbooks
D)All of the options are correct.

Question 20

If your total liabilities are $600.00 and total assets are $750.00,what is your net worth?

A)$1,350
B)$150
C)-$150
D)$750

Question 21

What is not an example of sustainable consumption?

A)Having a night light on all the time
B)Unplugging appliances that aren't being used
C)Turning off lights when you leave
D)Adjusting the thermostat

Question 22

Sustainable consumption is defined as what?

A)Living within your means
B)Spending all your money
C)Setting a specific spending limit
D)Consuming more goods,but cheaply

Question 23

According to the Bureau of Labor Statistics in 2009,the unemployment rate and the median dollars earned

A)may or may not be correlated by degree.
B)have an inverse relationship: the higher the education level attained,the lower the unemployment rate.
C)have a dependent relationship: the higher the education,the higher the unemployment rate.
D)have no relationship.

Question 24

Which is NOT a step in building your own personal budget?

A)List all of your fixed payments
B)List all of your variable expenses
C)Record the amount of income and when you receive it
D)Omit expenses you only have once a year

Question 25

Which of the following is NOT an example of sustainable consumption?

A)Growing your own vegetables and herbs
B)Adjusting your thermostat to use less energy while you are gone during the day and when you are sleeping at night
C)Unplugging lamps that rarely get used
D)Keeping the lights on while you are not home or when you leave the room to show that someone is home

Question 26

If you wanted to have $1,800 saved up by the end of the year,what amount would you need to save on a daily basis?

A)$4.93
B)$5.00
C)$10.00
D)$3.50

Question 27

What is the opportunity cost of going to college?

A)The cost of attending college minus the money you would have earned
B)The money you would have earned if you had worked instead plus the cost of attending college
C)The money spent on shopping and partying
D)The money you would have earned if you had worked minus the cost of attending college

Question 28

All of the following are methods of saving money except

A)paying yourself first.
B)stopping 'little leaks' and making big adjustments.
C)maintaining a mode of sustainable consumption.
D)all of the options are correct.

Question 29

The median annual earnings for full-time workers age 25 and older in 2009 was $8,805 higher for someone with an associate's degree than for someone with

A)a bachelor's degree.
B)a high school degree.
C)a graduate degree.
D)a PH.D.

Question 30

Which is an example of a budget?

A)Making a plan around your income,savings,and spending
B)Spending your money at will
C)Balancing your checkbook
D)Assuming someone will give you money every month

Question 31

If the median income for someone with an associate's degree is $9,100 higher annually than for someone with a high school degree,and the cost of schooling for the two years is $10,000 each year,at what point does the investment into the education break even?

A)1.9 years
B)2 years
C)2.2 years
D)3.1 years

Question 32

Sustainable consumption is

A)consuming more than you can afford.
B)making thoughtful choices about what you can afford,and sticking to it.
C)living in poverty.
D)taking out a loan to sustain yourself.

Question 33

Sustainable consumption means

A)spending generously.
B)keeping track of the things you need and distinguishing needs from wants.
C)consuming as much as possible.
D)all of the options are correct.

Question 34

To create an accurate budget,you should

A)keep a spending journal.
B)use budget templates.
C)discuss budget goals with spouse or housemates.
D)all of the options are correct.

Question 35

Which is not a way to save money?

A)Pay yourself first
B)Use credit cards and debit cards exclusively
C)Automatically transfer money to savings and investments
D)Sit down and create a budget each week or month and follow it

Question 36

Dave has decided to budget his money and never spend more than he makes.What is Dave's budgeting strategy called?

A)Net cash flow
B)Saving and spending plan
C)Consumption adjustment
D)Sustainable consumption

Question 37

Is it worth it,from a financial perspective,to go to college and pursue a degree?

A)Yes - your future earnings will more than make up for the opportunity costs involved
B)No - college can cost too much to make it a good investment
C)If you plan to study hard and get good grades
D)If you do not have to borrow money to pay for it

Question 38

Which one of these is not a way to achieve sustainable consumption?

A)Aligning spending with priorities
B)Simplification
C)Using credit when needed
D)Understanding differences between needs and wants

Question 39

Which is NOT an example of sustainable consumption?

A)Running up credit card debt
B)Eating leftovers instead of eating out
C)Only spending what you make
D)Turning off lights when you leave a room

Question 40

If you want to save money,what is the most important lesson you need to learn?

A)Do not change anything
B)Pay yourself first
C)Spend more money
D)Get a credit card

Question 41

A good way to save money is to create a budget and then save whatever amount is left over at the end of each month.

Question 42

You spend $10 each weekday for lunch and snacks while attending classes.How much should a realistic budget account for you spending on this over the course of an 8-week semester?

A)$50
B)$500
C)$375
D)$400

Question 43

Creating a personal cash flow statement is the first step to gaining a perspective of your financial situation.

Question 44

Where do most variances happen in building and sticking to a budget?

A)Amount of monthly income
B)Amount of variable monthly expenses,like entertainment
C)Amount of cash in the bank
D)Amount of fixed monthly expenses,like rent

Question 45

When constructing a budget,you should take all the following into account except for

A)spending habits.
B)extraordinary expenses.
C)value of assets.
D)income.

Question 46

An itemized summary of estimated income and expected expenditures in a given period is known as a

A)budget.
B)budget variance.
C)budget reconciliation.
D)all of the options are incorrect.

Question 47

An opportunity cost recognizes the trade-offs you face when choosing between different options.

Question 48

What is the last section on a standard budget worksheet?

A)End of Year Balance
B)Extraordinary Expenses
C)Variable Monthly Expenses
D)Fixed Payments

Question 49

At least how many minutes weekly do the authors suggest a budget review take place?

A)10 Min.
B)20 Min.
C)30 Min.
D)60 Min.

Question 50

Each of your spending and savings decisions should be considered in light of

A)goals and debt.
B)opportunity cost and goals.
C)debt and cash flow.
D)cash flow and goals.

Question 51

What is the first step of building your own budget?

A)List all of your fixed payments
B)Record your income and when you receive it
C)List all of your extraordinary expenses
D)List all of your variable monthly expenses

Question 52

What should not be listed in your budget?

A)Fixed monthly expenses
B)Variable monthly expenses
C)Income
D)Extraordinary income

Question 53

What is a budget?

A)A checkbook
B)The balance you have at the end of every month
C)Estimated income and expenditures in a given period
D)Something you don't need

Question 54

Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action.

Question 55

An easy form of sticking to a budget is to have envelopes for every category in your budget and to place cash in each envelope to match your budgeted amount.

Question 56

What is a budget variance?

A)When your budgeted spending equals your actual spending for the month
B)Expenses that vary from month to month,like groceries,dining out,and entertainment
C)The difference between a planned expenditure and the actual amount spent
D)The difference between how much you spend on fixed expenses and variable expenses

Question 57

A possible first step to gaining perspective into your financial situation is to keep a spending journal.

Question 58

Net worth is calculated by adding all of one's assets together.

Question 59

Little changes can make a big difference in spending without forcing major changes in lifestyle.

Question 60

An example of opportunity cost would be that of eating out vs.packing your lunch,saving $5.00 each day.

Question 61

Extraordinary expenses are not to be folded into the monthly budget.

Question 62

When building a budget,the first step is record your income when you receive it.

Question 63

Budget variances are where your income and spending differ from your budget.