Career Prep Exam

Use this formula to help solve the problem. *gross income = total of all incomes added together* Given the following information, what does the gross income for the month equal? Cash = $500, Checks = $300, Credit Card Charges = $200 -$500 -$700 -$800 -$1,000

$1,000

Select each source of income. -a gift check from your great aunt -a check from your roommate for rent -interest deposited into your checking account -a few dollars your friend loaned you -the tip your client left you

A gift check from your great aunt A check from your roommate for rent Interest deposited into your checking accountthe Tip your client left you

simple interest:

A quick method of calculating the interest charge on a loan.

Which of the following is an example of a cash flow budget item? -A farmer wants to buy a new combine. -A rancher wants to buy a herd of stockers. -A food distributor wants to buy a new truck. -A restaurant wants to buy a second location.

A rancher wants to buy a herd of stockers

One of the least expensive considerations is food and beverage. -True -False

False

Which of the following summarizes estimated revenues and expenses for a period of time, usually a year? -capital budget -personal budget -cash flow budget -operating budget

Operating budget

The difference between a chosen investment and one that is passed up is _____. -liquidity -risk -rate or return -opportunity cost

Opportunity Cost

compound interest:

The addition of interest to the principal sum of a loan or deposit

An online savings account _____. -offers lower interest rates because it costs more money to maintain the online site -offers higher interest rates because they don't have the overhead that standard banks have -works nothing like a basic bank savings account -has more restrictions on how often withdrawals can be made and typically requires a minimum balance

Offers higher interest rates because they don't have the overhead that standard banks have

The main types of financial institutions are _____. -savings and loans -banks -stock firms -financial advisors -credit unions

Savings and Loans Banks Credit Unions

A budget should reflect the objectives of the event. -True -False

True

Which of the following data are not included in an income statement? -revenues -expenses -profits -assets

Assets

Which of the following is not a type of savings account? -passbook account -statement account -club account -automatic account

Automatic Account

The point where income equals expenses is called _____. -gross income -net income -break-even point -none of the above

Break-Even point

Which of the following are part of a budget? Select all that apply. -Planned purchases -Unplanned purchases -Savings -Charity

Planned Purchases Savings Charity

Which of the following identifies the starting point for an operating budget? -revenue -fixed expenses -projected sales -variable expenses

Projected Sales

Jen heard that the bank where she kept her money was going to close for good. Jen said she wasn't worried. *Select the most likely reason that Jen wasn't worried.* -She knew that laws prevented banks from closing for good. -She knew that her bank would open a new account for her at a different bank. -She knew that her money was insured by the FDIC. -She knew that banking rules required banks to give customers their money.

She knew that her money was insured by the FDIC.

Being financially prepared for retirement requires planning. -True -False

True

The near-term needs of raising a family can affect one's ability to save for retirement. -True -False

True

With a savings account, you cannot _____. -deposit money -write checks -withdraw money -accumulate interest

Write checks

Why must you know your income before creating a budget? -Your income tells you how much money you can divide into your budget. -Your income is a way of keeping track of your expenses. -Your income is a changing number that does not mean much.

Your income tells you how much money you can divide into your budget

Tips are considered _____. -dividends -taxable income -gains -a bonus

Taxable Income

Tim worker went to his bank. He deposited $72.15 and the teller credited $5.79 to his account for interest. If Tim's initial balance was $1,226.14, what will his new balance be? -$1,148.20 -$1,159.78 -$1,292.50 -$1,304.08

$1,304.08

Rick works off commission. He earns 10 percent of all manufacturing equipment he sells. If he made a sale of $9,000, how much was his commission? -$90 -$900 -$9,000 -$100

$900

For how long is a budget usually constructed? -6 months -12 months -24 months -36 months

12 months

A dinner theater has fixed costs of $3,000 per day. It costs the dinner theater $10 per person for food, and a ticket to the dinner theater costs $30. How many tickets does the dinner theater have to sell in order to break even? -100 tickets -120 tickets -150 tickets -300 tickets

150 tickets

You need _____ piece/pieces of ID to open a bank account. -1 -2 -3 -4

2

demand deposit:

A deposit of money that can be withdrawn without prior notice.

Diversification means that you invest in _____. -a variety of types of investments in order to minimize risk -a variety of stocks to minimize risk -the types of investments that are easy to get your money out -the riskiest types of investments

A variety of types of investments in order to minimize risk

The annual percentage yield (APY) is the _____. -interest rate on a checking account -amount of interest you're charged on a loan -amount of interest you'll earn in one year from a savings account -a certain type of savings account that yields the most interest

Amount of interest you'll earn in one year from a savings account

Susan bought some land. She sold it for $3,000 more than she paid for it. The $3,000 is an example of _____. -dividends -interest -rent -capital gains

Capital Gains

There are several steps to opening a savings account. Select all of these steps. -Collect all the required information. -Order checks. -Go to the bank and sign the necessary bank forms. -Choose a director for the account. -Complete a W-2 form. -Fill out a deposit slip and deposit at least the minimum amount of money.

Collect all the required information. Go to the bank and sign the necessary bank forms. Choose a director for the account. Fill out a deposit slip and deposit at least the minimum amount of money.

A variable expense is a _____. -cost that stays the same from month to month -cost for completing a budget -cost listed in a budget -cost that changes

Cost that changes

A financial institution formed by a large corporation for their employees or members is a _____. -bank -savings and loan -FDIC -credit union

Credit Union

When a company makes earnings or a profit, and they share this profit with the stockholders, it's called _____. -interest -gains -dividends -tips

Dividends

Which of the following is an example of an unplanned purchase that may need to use saved money? -Weekly groceries -Gas -Emergency doctor visit -Rent

Emergency doctor visit

What items do you include in a budget? -everything -what you want to -things you might need -gifts you want to give presenters

Everything

A budget is the accounting of all money spent. -True -False

False

A cushion of 2% is usually enough to account for unplanned expenses. -True -False

False

A financial institution always keeps all of your money in the vault. -True -False

False

Compound interest is the interest that is divided into different accounts. -True -False

False

Mutual funds are the riskiest type of investment. -True -False

False

Savings accounts are never guaranteed by a government agency. -True -False

False

There are two types of expenditures that most people incur in their daily lives: fixed and stagnant. -True -False

False

Variable costs are harder to change than fixed costs. -True -False

False

Wages from an employer are the only source of income. -True -False

False

The total amount a business earns before any deductions, like taxes, are taken out is called _____. -gross income -net income -break-even point -none of the above

Gross Income

Which of the following choices is NOT an example of a fixed cost? -salaries for the tour operations team -hotel deposits -advertising (brochures, direct mail, promotional events, etc.) -charters (airplane, motor coach, boat, etc.)

Hotel deposites

Which of the following choices show the correct order of steps in creating a budget? -identify objectives, prioritize objectives, put numbers into the budget -identify objectives, put numbers into the budget, prioritize objectives -put numbers into the budget, identify objectives, prioritize objectives -prioritize objectives, identify objectives, put numbers into the budget

Identify objectives, prioritize objectives, put numbers into the budget

An amount charged for borrowing money is called _____. -non-interest -interest -interest rate -term

Interest

A rate that is charged for using money is called _____. -non-interest -interest -interest rate -term

Interest Rate

Which of the following is an example of a variable expense? -insurance -materials -rent -taxes

Materials

When selecting a financial institution that is the best for you, you should consider _____. -minimum balance -services offered -other people who bank there -locations of banks and ATMs -fees

Minimum Balance Services Offered Locations of Banks and ATMs Fees

interest:

Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

A budget is a _____. -net worth statement -plan for saving and spending your money -table that lists your goals for saving and investing -list of what you spent last month

Plan for saving and spending money

What is involved in the process of reconciliation? -The checkbook register should be compared to the bank statement and if there is a mistake in the register, correct it. -Make a list of deposits and credits, if any, that were made after the closing date on the statement or which have not cleared as of the statement date. -If the bank has paid interest to the account or taken out fees, record them in the register and check them off. -List outstanding withdrawals including checks, debits, and ATM transactions that have not cleared.

The checkbook register should be compared to the bank statement and if there is a mistake in the register, correct it.

Which of the following choices is NOT an example of a variable cost? -hotel rooms -tips and gratuities -entrance fees and tickets -tour operator license fees

Tour operator license fees

A saving and investing plan is part of a good financial plan. -True -False

True

Before you select a savings account, you want to think about how long you'll keep your money in the account. -True -False

True

Expenses are the bills you have to pay. -True -False

True

For those who want to move into management, the ability to manage money and understand different types of budgets is a valuable job skill. -True -False

True

Information you will need in planning for retirement includes your personal goals and the costs for things you might need or want. -True -False

True

Savings accounts pay interest on the funds deposited. -True -False

True