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MM Chap4 Study Guide
Study Guide for Chapter 4 Money Matters
| Term | Definition |
|---|---|
| False | Savings should be included in your list of cash inflows when creating the personal cash flow statement. |
| False | Savings should be added to income when balancing the budget. |
| True | Because most people do not have enough resources to meet all their needs and wants, they must make choices. |
| False | If you spend less money on an item than you planned to spend, this is an unfavorable variance in your budget analysis. |
| True | When preparing a personal budget, you should plan to put money into savings before you consider other expenses. |
| True | A goal you expect to achieve by next year would be classified as a short-term goal. |
| False | Financial goals should be set before personal goals, because your personal goals will be dependent on them. |
| False | A personal net worth statement shows a person’s cash inflows and cash outflows for a period of time. |
| True | Although people’s financial resources are limited, their wants and needs are unlimited and growing. |
| False | Your wealth can be measured using the personal cash flow statement. |
| True | The amount owed on your credit card is an example of a liability. |
| True | Benchmarks may consist of steps or specific actions to take. |
| False | One advantage of manual records of financial information is that they do not require protection from unauthorized uses and users. |
| True | With every buying decision, there is a trade-off and an opportunity cost. |
| False | A financial planner who profits from the investments a client chooses is more likely to recommend investment products that best meet the needs of the client. |
| discretionary income | The amount of money a person has to spend after needs are met |
| $13,000 car loan | This would not be included in a person’s listing of assets |
| a variable expense | A utility bill is an example of |
| adjust savings , increase income or lower expenses | What should you do if your budget does not balance? |
| benchmarks | Standards against which progress is measured in reaching goals |
| phishing | A common Internet scam in which an email is sent from someone posing as your bank or other legitimate business asking for personal information |
| net cash flow | A personal net worth statement does not show |
| assets minus liabilities | Your net worth can be computed as |
| rent | This would be considered a fixed expense |
| intermediate goals | Goals you wish to achieve in the next two to five years are |
| Identity theft | occurs when someone uses your personal information without permission to commit fraud or other crimes. |
| Assets | money and items of value that you own. |
| financial plan | contains personal and financial goals you want to accomplish along with steps and a timeline for reaching these goals. |
| delayed gratification | Doing without an item you would like to buy now in order to save money to fulfill an intermediate or long-term goal is an example of |
| Financial resources | include money or other items of value that people can use to acquire goods and services |
| appreciating | Assets that are growing in value over time are said to be |
| financial planner | a professional consultant who provides advice to help people develop plans to meet their financial goals. |
| timeline | a visual display of how long it will take to achieve each phase of your financial plan. |
| budget | a spending and saving plan based on expected income and expenses. |
| encryption | the process of converting data to a coded form, will help protect your electronic information. |
Created by:
mrstephens
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