Personal Finance Ch. 4
The competence or legal ability of a person to enter a contract is called consideration.
false
You should always create a monthly budget--weekly or biweekly budgets tend to be inaccurate.
false
___ expenses are costs that do not change from month to month.
fixed
Which of the following is a variable expense?
grocery bill
Money or debts you owe to others are called
liabilities
A person who creates and signs the promissory note and agrees to pay it on a certain date is called the
maker
When one person makes an offer and another person changes it, the second person is
making a counteroffer
The word ___ means legally collectible.
negotiable
Assets minus liabilities equals
net worth
A computer program that organizes data in columns and rows and can perform calculations using the data is called a
spreadsheet
A court will not require a person to perform an agreed-upon act if it is illegal.
true
A net worth statement will be useful when you apply for a loan or credit.
true
Before you prepare a budget, it is a good idea to keep track of your income and expenses for a month or two.
true
If a person signs a contract because he or she felt threatened to do so, a genuine agreement does not exist.
true
One big advantage of computerized record keeping is that information can be updated pretty quickly and easily.
true
The two elements to consider in budgeting and planning are your income and your expenses.
true
When assets are greater than liabilities, you are said to be solvent.
true
You should never sign a contract until you read and understand all of its terms.
true
___ expenses are costs that vary in amount and type depending on the choice you make.
variable
A ___ or guarantee is a statement assuring quality and performance of a product or service.
warranty
Use the following information to calculate Diana's net worth: Savings account: $2,500 Checking account: $400 Car value: $5,000 Personal property value: $5,500 Loan for vacation: $2,000 Loan from grandparents: $250
$11,150
Use the following information to calculate Diana's liabilities: Savings account: $2,500 Checking account: $400 Car value: $5,000 Personal property value: $5,500 Loan for vacation: $2,000 Loan from grandparents: $250
$2,250
Use the following figures to find Barney's expenses for June: Part-time job salary (after taxes): $300 Allowance for household chores: $25 Birthday check from parents: $25 Savings: $100 Cost of new shirt and pants: $80 Cost of two movies: $20 Cost of daily lunches: $100
$200
Use the following figures to find Barney's income for June: Part-time job salary (after taxes): $300 Allowance for household chores: $25 Birthday check from parents: $25 Savings: $100 Cost of new shirt and pants: $80 Cost of two movies: $20 Cost of daily lunches: $100
$350
The Girard family decides to save 10 percent of their income each month. If their monthly income is $4,000, how much will they save over the course of one year?
$4,800
The IRS has the legal right to audit your tax returns and supporting records for ____ years from the date of filing.
3
Most financial experts recommend that a family have fixed expenses of no more than
50 to 60 percent of net pay
Which of the following would be considered an asset?
a checking account
Which of the following contracts must be signed to be legally binding?
a contract involving the sale of a farmhouse
A spending and saving plan based on your expected income and expenses is called a
budget
Something of value exchanged for something else of value is called
consideration
A legally enforceable agreement between two or more people is called a
contract
Your ___ income is the money you have left to spend or save after taxes and other required deductions are taken.
disposable
When preparing a budget, you need to focus mostly on your
disposable income
In a balanced budget,
expenses+savings=earnings+borrowing
A payee is a person who promises to pay the debt of another person.
false
A set of goals for spending, saving, and investing the money you receive is called a budget.
false
An express contract is legally binding, but an implied contract is not.
false
In the short-run, fixed costs are easier to change than variable costs.
false
Only people with considerable wealth need to create a personal record keeping system.
false