Managing Your Money Unit Multiple Choice Test Bank 2.2.0.M1

ManagingYourMoneyUnitMultipleChoiceTestBank

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Date

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Directions:Circlethecorrectanswerforeachquestion.(1pointeach)

IntroductiontoDepositoryInstitutionsQuestions

1.Akeydifferencebetweencommercialbanksandcreditunionsisthat:

a.Commercialbanksare‘for‐profit’andcreditunionsare‘not‐for‐profit’

b.Commercialbankstypicallypayhigherinterestratesthancreditunions.

c.Creditunionsaremorecommonlylocatedinruralareawhilecommercialbanksaremore

commonlylocatedinurbanareas.

d.Commercialbanksoffermoreservices,suchdebitcards,andonlinebanking,thancreditunions.

2.SinceTaylorwasayoungchildshehaskepthersavingsinapiggybank.Shelikesthismethodofsaving becauseshecanhaveimmediateaccesstothemoneyifsheneedsit.Recently,inaclassatschool,discussionfocusedonwhydepositoryinstitutionsaresaferthanherpiggybank.Somestudents’ commentswerebasedonfactwhileotherswerebasedonmyths.WhichaspectofsecurityatadepositoryinstitutionisNOTTRUE?

a.Depositoryinstitutionshaveinsuranceprotectionforupto$250,000perdepositorperaccounttypesoifsomethinghappenedtothemoneyinthebank,youwouldgetitbackaslongasthedepositedamountwasnomorethantheinsurancelimit.

b.Allmoneystoredatadepositoryinstitutioniskeptsafeatalltimesbynumeroussecuritymeasures.

c.Informationaboutdepositorsandtheiraccountsiskeptinsecuredatastorage.

d.Depositoryinstitutionshaveinsuranceprotection.Depositorscanhavemultipleaccountsinsuredatthesamedepositoryinstitutionaslongaseachaccounthasnomorethan

$100,000.

3.Sanjayisconcernedaboutthesafetyofthemoneyinhissavingsaccount.Whichtypeofdepositoryinstitutionshouldhechoose?

a.Acommercialbank,sincehisdepositswouldbeinsuredbytheFederalDepositInsuranceCorporation(FDIC)

b.Acreditunion,sincehisdepositswouldbeinsuredbytheNationalCreditUnionAssociation

(NCUA)

c.Hecouldsafelychooseeitheracommercialbankoracreditunion,aslongashissavingsaccountbalancemeetstheinsurancerequirements.

d.Neitheracommercialbanknoracreditunion.Moneyismostsafelykeptathomeinapersonalsafeorvault.

4.Arielissavingmoneytopurchaseanewcomputerbeforesheleavesforcollegeintwoyears.Shewantstoopenaspecialaccountatadepositoryinstitutiontokeephersavedmoneysafe.Shehasaskedyouforadviceonwhichtypeofaccountwouldbebestforher.WhatwouldbethebestadviceforAriel?

a.Checkseveraldepositoryinstitutionsandchooseonewithafree,no‐interestcheckingaccount.Thatway,whenArielhassavedenoughforhercomputershecansimplywriteachecktopayforit.

b.Shoparoundforthedepositoryinstitutionwiththehighestinterestratesfortheirsavings

accounts.Shewouldbeabletomakeregularsavingsdepositsandearninterestwhilesheissavingupforthecomputer.

c.LookforaCreditUnionthatofferssharedraftaccounts.Thesesecureaccountsaredesignedespeciallyforsavingforlong‐termfinancialgoals.

d.Shoparoundforadepositoryinstitutionthatofferssafedepositboxes.Theseaccounts

offerextrasecurityfordepositsandcanbesetuptoallowhertowithdrawhermoneywhensheneedsit.

5.Savingstoolsofferedbydepositoryinstitutionsmayearninterest.WhichofthefollowingstatementsisNOTTRUEaboutinterest?

a.Interestisthepricepaidforusingsomeoneelse’smoney.

b.Whenearninginterest,lookforlowrates.

c.Whenpayinginterest,lookforlowrates.

d.Theamountofinterestearnedorpaidisdeterminedbytheinterestrate.

6.Samanthawantstobeabletousefundsinhercheckingaccountbutfindsgoingtothebanktowithdrawcashtobeinconvenient.Shewouldlikeamoreeffectivewaytoaccesshercheckingaccountfunds.Whatwouldyousuggestshedo?

a.Applyformobilebanking.Thatwayshecanaccesshermoneywithhersmartphonetopay

forthethingssheneeds.Theamountshespendswouldautomaticallybedeductedfromhersavingsaccount.

b.Applyforadebitcard.Thatwayshecanusethecardinsteadofcashtopurchasethethingssheneedsandtheamountspentisimmediatelydeductedfromheraccount.

c.Applyforacreditcard.Thatwayshecanusethecardtopurchasethethingssheneedsand

payforitwhenthecreditcardstatementcomesfromhercheckingaccount.

d.Requestacashier’scheckfromherdepositoryinstitution.Thatwayshecanspendmoneyfromhercheckingaccountwithoutriskofanoverdraftfee.

7.CommonfeesthatmaybechargedbyadepositoryinstitutionincludeallEXCEPT:

a.Overdraftfee

b.Latefee

c.ATMfee

d.MinimumBalancefee

8.Davidmadeamistakeinhischeckingaccountrecordkeepingandspent$10morethanhehaddepositedinhisaccount.Asaresult,hecanexpecttobechargeda(n):

a.ATMFee

b.ContactFee

c.SafeDepositFee

d.OverdraftFee

TheBasicsofTaxesQuestions

9.WhichstatementisTRUEaboutPayrollTaxes?

a.Payrolltaxesarepaidarepaidonbothearnedandunearnedincome.

b.Payrolltaxesfunddifferentoperationsandprogramsofthefederalgovernment.

c.PayrolltaxesfundtheSocialSecurityandMedicareprograms.

d.Theamountoftaxpaiddependsonmanydifferentfactorsbutincreasesasincome

increases.

10.AsMariahwaslookingoverhersalesreceiptfortheshirtsheboughtataretailstore,shediscoveredthatshewascharged6%morethanthepricetagshowedfortheitem.Whatisthisextra6%chargemostlikelytobe?

a.Anexcisetaxontheshirtshepurchased.

b.Propertytaxontheshirtshepurchased.

c.Incometaxontheshirtshepurchased.

d.Salestaxontheshirtshepurchased.

11.WhoisMedicaredesignedtohelp?

a.Lowincomefamilies

b.Singleparents

c.SeniorCitizens

d.Childrenofunemployedparents

12.DaneisresearchingthetopicofpropertytaxesforapresentationheisdoinginhisPersonalFinanceclass.Hehascomeacrossthefollowingstatementsheisconsideringaddingtohispresentation.WhichshouldheEXCLUDEfromhispresentationbecauseitisnotcorrect?

a.Propertytaxesareassessedatthesamerateforalltypesofproperty,includinghomes,landandbuilding,regardlessoflocationorwhethertheyareusedforbusinessorpersonaluse.

b.Propertytaxesareusuallychargedbystateandlocalgovernmentstopayforlocalschoolsandotherservicesandexpensesincurredbythesegovernments.

c.Propertytaxesarecommonlypaidonautomobiles.Thistaxusuallypaidonceperyearwhentheautomobileislicensed.

d.Propertytaxonhomes,landandbuildingsareusuallyonlypaidonceortwiceeachyear.

13.WhichstatementisNOTTRUEaboutpropertytaxes?

a.Propertytaxisoftenchargedbystatesorlocalgovernmentstopayforlocalschools.

b.Thepropertytaxrateissetbythefederalgovernmenttobeequalineverystate.

c.Thefeepaidtolicenseavehicleisanexampleofpropertytax.

d.Propertytaxesaremostoftenpaidonlyonceortwiceeachyear.

14.Taxesthatarechargedonconsumptionitemssuchasgasoline,hotelrooms,andairlineticketsarecalled taxes.

a.Sales

b.Excise

c.Federaluse

d.property

15.Austinhasjustreceivedhisfirstpaycheck.Heworked22hoursathisnewjobandisbeingpaid

$8.00perhour.Hecalculatedthathispaycheckshouldbe$176.Hispaycheckamountisalmost1/3lessthanheexpected.WhatisthemostlikelyreasonthatAustin’spayislessthanheexpectedittobe?

a.Austincalculatedthehoursheworkedwithoutdeductingthehourshespentdoingon‐the‐jobtraining.

b.Austinneglectedtodeducttheexcisetaxpaidontheuniformshepurchasedtowearathisjob.

c.Austinneglectedtodeducttheamountrequiredtopayincomeandpayrolltaxes.

d. Austin’semployermadeamistakecalculatingthenumberofhoursAustinworkedduringhisfirstpayperiod.

StatementofFinancialPositionQuestions

16.BrettiscreatingaStatementofFinancialPositionandneedstolisthisassets.WhichofthefollowingshouldheNOTlistasanasset?

a.Moneyinhischeckingaccount

b.Moneyinthepaycheckhewillreceivenextweek

c.Hishockeyequipment

d.Themarketvalueofhiscar

17.TocalculatehernetworthJordynshouldusethefollowingformula:

a.Assets–liabilities=networth

b.Assetsxliabilities=networth

c.Assets+liabilities=networth

d.Assets/liabilities=networth

18.Maggieearns$62,000peryearandhasanetworthof$20,000.Samanthaearns$96,000andhasanetworthof$15,000.Whoiswealthier?

a.Maggie,becauseherincomeminushernetworthisasmalleramountthanSamantha’s.

b.Samantha,becauseherincomeminushernetworthisalargeramountthanMaggie’s.

c.Maggie,becausehernetworthishigherthanSamantha’s.

d.Samantha,becauseherannualincomeishigherthanMaggie’s.

19.JonahiswritingdownhisliabilitiestocompletehisStatementofFinancialPosition.Theitemheshouldincludewouldbe:

a.Themarketvalueofhiscar

b.Thevalueofhisretirementaccount

c.Thecombinedtotalofhissavingsandcheckingaccounts

d.Thebalanceonhiscreditcard

20.Toincreasehisnetworth,Jacksoncould:

a.Increasehisliabilities

b.Decreasehisassets

c.Increasehismarketvalue

d.Increasehisassets

IncomeandExpenseStatementQuestions

21.ErinandhermotherareputtingtogetheranIncomeandExpenseStatementforErintouseassheappliesforacollegescholarship.WhichincomesourcedoessheNOTneedtoincludeforthisstatement?

a.Interestearnedonhersavingsaccount.

b.Moneyshereceivedfromhergrandparentsforherbirthday.

c.SocialSecurityincomehermotherisreceivingforhersinceherfatherdiedofcancerlastyear.

d.Taxesshepaidbasedonherincomelastyear.

22.Whichofthefollowingwouldmostlikelybeconsideredacontractualexpense?

a.CellPhone

b.Food

c.Entertainment

d.Clothing

23.AndyisdevelopinganIncomeandExpenseStatement.Hehasgatheredallhisreceipts,bankstatements,paycheckstubs,andspendingrecords.Heneedstocategorizethemintoincomeandexpenses.Heisunsurewhichofthefollowingitemsshouldberecordedasexpenses.Whichshouldberecordedasexpenses?

a.Taxesdeductedfromhispaycheck,moneysavedfromhispaycheckforemergencies,andhis carinsurance

b.Moneysavedfromhispaycheckforemergencies,interestpaidonhiscarloan,histaxrefundfromfilinglastyear’staxreturn

c.ThescholarshiphereceivesforstudyingChineseatthelocalcommunitycollege,hiscar

insurancepayment,andstockdividendshereceivedfromhisgrandmother

d.Clothinghepurchasedforajobinterview,tuitionforaclassheistakingatthelocalcommunitycollege,andinterestfromhissavingsaccount

24.AmandaandMarcusjustfinishedtheirIncomeandExpenseStatementforlastmonth.Theydiscoveredthattheyhaveanetgain.Whatdoesthismeanandwhatshouldtheydo?

a.AmandaandMarcusarespendingmoremoneythantheyareearning.Theyneedfindaway tobalancetheirincomeandexpensesbyspendinglessonnon‐contractualexpenses.

b.AmandaandMarchareearningmoremoneythantheyarespending.Theycouldplaceadditionalmoneyinsavingsand/orspenditonotherexpenses.

c.AmandaandMarcusarespendingmoremoneythantheyareearning.Oneofthemshouldconsidergettingasecondjobforatimetohelpboosttheirincome.

d.AmandaandMarcusareearningmoremoneythantheyarespending.Theyshouldincreasespendingfornon‐contractualitemstobringtheirincomeintobalancewiththeexpenses.

SpendingPlanQuestions

25.Ifexpensesweretoexceedincomeonaspendingplan,whatwouldbeafinanciallysmartsolution?

a.Decreaseexpenses

b.Useacreditcardmoreoften

c.Earnlessincome

d.Increasepurchases

26.DianaandAaronhavedecidedtodevelopaspendingplantohelpthemgaincontrolovertheirfinances.WhichofthefollowingstatementsisNOTTRUEaboutspendingplans?

a.Spendingplansareusedtorecordplannedincome.

b.Spendingplansareusedtorecordplannedexpenses.

c.AspendingplanincludesitemsNOTusuallyincludedwhencreatingabudget.

d.Whencreatingapendingplan,itisrecommendedthatyouexamineyourtrade‐offsandopportunitycosts.

27.Whenisyourspendingplancomplete?

a.Whenyouhaveallocatedallyourincomeintocategoriesforthemonth.

b.Whenyouhaveallofyourcurrentincomeandexpensesrecorded.

c.Spendingplansarealwaysunderrevisionsotheyarenevercomplete.

d.SpendingplansarecompleteeachDecember31stasoneyearendsandanotheryear

begins.

28.Chasehasdecidedtoworkwithaspendingplansohecanbuildupanemergencyfundforwhenheisin college.Helearnedinclassthathecouldprobablyreducehisspendingthemostbylookingathis non‐contractualexpenses.Whichofhisexpensesbestfitthatcategory?

a.Cellphonebill,gasoline,andcarpayment

b.Internetbill,entertainment,andclothing

c.motorcyclepayment,food,andcellphonebill

d.Gasoline,food,andentertainment

29.Michaelwantstodevelopaspendingplanforhimselftouseduringhisfinalyearofhighschool.

WhatwillheneedtodoashisFIRSTstep?

a.Decidewhatincomeandspendingcategorieswouldreflecthisvalues,needs,andwants.

b.Decidehowmuchmoneyhecanspendforeachofthebillshepayseachmonth.

c.Trackhiscurrentincomeandexpenses.IfhehasalreadycreatedanIncomeandExpense

Statementthenhehascompletedthisstep.

d.Developacontrolsystemthatwillworkwithhislifestyle.