Question 1

The value of education is often exaggerated when searching for a good job.

Accepted Answer

False

Question 2

A major source of revenue on your personal income statement is your salary or wages from your job.

Accepted Answer

Salary or wages from a job are a common source of revenue on a personal income statement.

Question 3

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Accepted Answer

The first step in personal financial planning should be to pay off any high-interest debt, as the interest on such debt can often exceed what you would earn through savings or investments.

Question 4

If your personal liabilities exceed your assets,your are on the road to financial security.

Accepted Answer

If your personal liabilities exceed your assets, it means you have more debt than assets, which is not a road to financial security. Financial security is achieved when you have more assets than liabilities.

Question 5

On your personal balance sheet,your assets should include anything of value that you own.

Accepted Answer

Yes, assets on a personal balance sheet refer to anything of value that you own, such as a house, car, savings account, and investments.

Question 6

If you find yourself regularly running out of cash,your only real option is to focus your attention on finding ways to increase your income.

Accepted Answer

While increasing income is one option, managing expenses, budgeting, and saving are also crucial strategies for improving financial health.

Question 7

Once you have evaluated your current financial situation and know your sources of income and expenses,you have reached the point where you can establish a personal budget.

Accepted Answer

Once you have evaluated your current financial situation and identified your sources of income and expenses, you can use that information to create a personal budget that reflects your financial goals and priorities.

Question 8

Your computer and car should both be listed on the asset side of your personal balance sheet.

Accepted Answer

Both a computer and car can be considered assets because they have value and can be sold or used to generate income. Therefore, they should be listed on the asset side of your personal balance sheet.

Question 9

Over 35% of U.S.households do not have a retirement account.

Accepted Answer

According to a report by the National Institute on Retirement Security, over 35% of U.S. households do not have a retirement account such as a 401(k) or IRA.

Question 10

The average lifetime income of someone with an undergraduate degree is about $1.6 million higher than for someone with only a high school diploma.

Accepted Answer

This is a commonly cited statistic and has been supported by various studies and reports, including those by the US Census Bureau and the Bureau of Labor Statistics.

Question 11

The U.S.government provides several types of financial incentives to encourage people to attend college.

Accepted Answer

The U.S. government provides financial incentives such as grants, loans, and tax benefits to encourage individuals to attend college.

Question 12

One step toward the goal of taking control of your finances is to keep track of all your expenses.

Accepted Answer

Keeping track of expenses is an important step in understanding and managing your finances. It helps identify areas where you can cut back and create a budget to reach your financial goals.

Question 13

One way to motivate yourself to start saving is to visualize your goals and think about how much money it will take to achieve them.

Accepted Answer

Visualizing goals and thinking about the cost can be a motivating factor to start saving towards them.

Question 14

In order to get in the habit of saving,personal financial advisors suggest that you save first and wait to pay off any debts until you've accumulated at least $10,000 in cash,savings accounts,CDs and other liquid assets.

Accepted Answer

Personal financial advisors recommend paying off debts first and creating an emergency fund with 3-6 months' worth of living expenses before focusing on accumulating $10,000 in liquid assets.

Question 15

About half of the U.S.population accumulates enough money to afford a comfortable retirement.

Accepted Answer

According to a recent study by the Employee Benefit Research Institute, only 42% of Americans have saved enough money to afford a comfortable retirement. This means that slightly less than half of the U.S. population is adequately prepared for retirement.

Question 16

Managing the finances of a household is similar to managing the finances of a small business.

Accepted Answer

Both households and small businesses have income, expenses, and a budget to manage. They require careful planning and monitoring to ensure financial stability and growth.

Question 17

It is usually better to use any money left after paying monthly bills to pay off debts that carry high interest rates rather than putting that money into a savings account.

Accepted Answer

This is because the interest charged on debts with high interest rates may accumulate faster than the interest earned in a savings account, making it more beneficial to pay off the debt first. Once the high-interest debt is paid off, it may be more appropriate to save money in a savings account.

Question 18

The first step in getting control of your finances is to prepare a budget.

Accepted Answer

The answer of The first step in getting control of...

Question 19

Your personal balance sheet will reflect the same fundamental accounting equation as the balance sheet for a business: assets = liabilities + owners' equity.

Accepted Answer

This is true, as the accounting equation applies to both personal and business balance sheets.

Question 20

Credit-card debt represents an asset on a consumer's balance sheet.

Accepted Answer

Credit-card debt represents a liability, not an asset, on a consumer's balance sheet.

Quiz 22: Appendix B: Managing Risk