Study Guide Fin

George Berk had earnings from his salary of $32,000, interest on savings of $200, a contribution to a traditional individual retirement account of $1,200, and dividends from mutual funds of $125. George's adjusted gross income (AGI) would be

A. $31,125. 32,000+ 200 + 125 - 1,200 = 31, 125

What's the first thing you should do with any extra income?

A. Build up your emergency fund

Which of the following describe a tip for paying yourself first?

A. Put unexpected income into savings.

A(n) __________ is a specific plan for spending.

A. budget

This month, Kenneth Goldberg has cash inflows of $2,950 and cash outflows of $2,800, resulting in a:

A.surplus of $150.

A family with $50,000 in assets and $22,000 of liabilities would have a net worth of:

B. $28,000.

What is the recommended minimum number of months of living expenses to set aside in an emergency fund

B. At least three

A personal cash flow statement presents

B. Income and payments

Your take-home pay is:

B. The income you have left after taxes and deductions

The principal purpose of taxes is to:

B. finance government activities.

The most important difference between a need and a want is:

C. A need is something you must have now and a want is optional

In budgeting, what's the biggest difference between fixed and flexible expenses?

C. You can reduce flexible expenses more easily

What type of tax is imposed on the value of an individual's property at the time of his or her death?

D. Estate

_________ represent amounts owed to others.

D. Liabilities

What is gross pay?

D. The full amount of income you are paid

What time period covers savings goals for your longterm future?

More than three years

The final step in the financial planning process is to

review and revise your actions.

Opportunity cost refers to

trade-offs when a decision is made

The annual price increase for most goods and services measured by the Bureau of Labor Statistics is called

B. the consumer price index

This month, David Lee has cash inflows of $2,800 and cash outflows of $2,950, resulting in a:

C. deficit of $150