Kathy Exam 2

Which of the following is an example of a cash flow budget item?

A rancher wants to buy a herd of stockers. (rest are capital expenditures)

An amount charged for borrowing money is called _____.

Interest

Which of the following summarizes estimated revenues and expenses for a period of time, usually a year?

Operating Budget

The difference between a chosen investment and one that is passed up is _____.

Opportunity cost

A budget should reflect the objectives of the event. T or F

True

Choose all that apply. The main types of financial institutions are _____.

-Savings and loans -Banks -Credit Unions

Choose all that apply. 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 -the tip your client left you

The annual percentage yield (APY) is the _____.

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

Which of the following data are not included in an income statement?

Assets

Choose the best answer. Which of the following is not a type of savings account?

Automatic account

A budget is a _____.

Plan for saving and spending your money.

Which of the following identifies the starting point for an operating budget?

Projected sales

Tips are considered _____.

Taxable income

Before you select a savings account, you want to think about how long you'll keep your money in the account. T or F

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. T or F

True

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

True

Savings accounts pay interest on the funds deposited. T or F

True

The near-term needs of raising a family can affect one's ability to save for retirement. T or F

True

With a savings account, you cannot _____.

Write checks

For how long is a budget usually constructed?

12 months

Interest:

Money paid at regular intervals at a certain rate

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

$1,000

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?

$1,304.08

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?

$900

There are several steps to opening a savings account. Select all of these steps.

-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.

Which of the following choices show the correct order of steps in creating a budget?

-Identify objectives -Prioritize objectives -Put numbers into the budget

Choose all that apply. When selecting a financial institution that is the best for you, you should consider _____.

-Minimum balance -Services offered -Locations of banks and ATMs -Fees

Which of the following are part of a budget? Select all that apply.

-Planned purchases -Savings -Charity

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?

150

You need _____ piece/pieces of ID to open a bank account.

2

Demand deposit:

A deposit of money that can be withdrawn without prior notice (Checking account)

Diversification means that you invest in _____.

A variety of types of investments. ^minimizes risk

The point where income equals expenses is called _____.

Break-even point

Susan bought some land. She sold it for $3,000 more than she paid for it. The $3,000 is an example of _____.

Capital gains

A variable expense is a _____.

Cost that changes.

A financial institution formed by a large corporation for their employees or members is a _____.

Credit union

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

Dividends

Which of the following is an example of an unplanned purchase that may need to use saved money?

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

A cushion of 2% is usually enough to account for unplanned expenses. T or F

False

A financial institution always keeps all of your money in the vault. T or F

False

Compound interest is the interest that is divided into different accounts. T or F

False

Mutual funds are the riskiest type of investment. T or F

False

One of the least expensive considerations is food and beverage. T or F

False

Savings accounts are never guaranteed by a government agency. T or F

False

Variable costs are harder to change than fixed costs. T or F

False

Wages from an employer are the only source of income. T or F

False

A budget is the accounting of all money spent. T or F

False (how you *plan* to spend it)

There are two types of expenditures that most people incur in their daily lives: fixed and stagnant. T or F

False (not stagnant)

The total amount a business earns before any deductions, like taxes, are taken out is called _____.

Gross income

Which of the following choices is NOT an example of a fixed cost?

Hotel deposits

Simple interest:

Interest calculated *only* on the original amount of money

Compound interest:

Interest calculated on both: -original amount of money and -any interest already earned

A rate that is charged for using money is called _____.

Interest rate

Which of the following is an example of a variable expense?

Materials

An online savings account _____.

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

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 her money was insured by the FDIC.

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.

Which of the following choices is NOT an example of a variable cost?

Tour operator license fees

A saving and investing plan is part of a good financial plan. T or F

True

Being financially prepared for retirement requires planning. T or F

True

Expenses are the bills you have to pay. T or F

True

Why must you know your income before creating a budget?

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