Unit 6 review (Personal Finance)

Question 1

What is a budget?

Answer 1

Spending plan based on income and expenses

Question 2

Why is it important to create a budget?

Answer 2

It keeps your spending in check within making sure that your saving are on track for the future

Question 3

What determines how your budget looks (where your plan to spend your money and how much you plan to spend)?

Answer 3

Take-home income

Question 4

Will your budget ever change? Why or why not?

Answer 4

Yes because you can’t always use the same old information to plain

Question 5

What is income?

Answer 5

Funds that are regularly raised for work or through investments

Question 6

What are some sources of income?

Answer 6

Wages, salary, tips and commission

Question 7

What is an expense?

Answer 7

The amount of money we need to pay for or buy something

Question 8

What is a fixed expense?

Answer 8

Money spent on things that stay roughly the same each month

Question 9

What is an example of fixed expense?

Answer 9

Rent payments, car payments, mortgage

Question 10

What is a variable expense?

Answer 10

Expenses that change from month to month

Question 11

What is an examples of variable expense?

Answer 11

Dining out, groceries, medical expenses

Question 12

What is a periodic expense?

Answer 12

Items like insurance or vehicle registration that can be paid annually

Question 13

What is an examples of periodic expense?

Answer 13

Insurance or vehicle registration

Question 14

What is gross pay?

Answer 14

Amount money you earn before payroll deductions

Question 15

What is net pay?

Answer 15

Take home pay or the amount that employees after all payroll deductions are taken from their gross pay

Question 16

How do you calculate net pay?

Answer 16

The amount the employee actually takes home after all payroll deductions

Question 17

Does a budget use gross pay or net pay? Why?

Answer 17

New pay because this gives you and idea of how much you should pay and how much tax can be deducted

Question 18

What does pay yourself first mean?

Answer 18

The concept of paying into your sawing first, and then living on the remainder of your take-home pay

Question 19

Why should you add savings as an expense item in your budget?

Answer 19

Because sometimes in life you may have an emergency expenses

Question 20

What is discretionary income and would it be used to pay for needs or wants?

Answer 20

Remaining income after deducting taxes, other moderators, fees, and the cost of essentials.

Used for needs

Question 21

What is a budget deficit?

Answer 21

It arise when the expenses are higher than the income

Question 22

What is a budget surplus?

Answer 22

When a corporation spends less money than it earns in an accounting period

Question 23

What is a budget variance?

Answer 23

The difference between your budgeted amount and the actual amount of that you received as income and spen on expense

Question 24

How do you calculate a variance?

Answer 24

Subtract the actual amount spent from the amount provided for each line

Question 25

What is cash flow?

Answer 25

The total amount of money that moves in and out of a company, especially in terms of liquidity

Question 26

How do you calculate net cash flow?

Answer 26

Subtract from your monthly income

Question 27

What is an asset?

Answer 27

Something you own that adds financial value

Question 28

An example of an asset you have

Answer 28

Vehicles, furniture

Question 29

What is a liability?

Answer 29

Any debt a person may have

Question 30

An example of a liability you have

Answer 30

Bank debt, mortgage debt

Question 31

What is net worth?

Answer 31

The sum of what you own and what you owe

Question 32

How can you increase your net worth?

Answer 32

Save for emergencies, increase your salary, trim your expenses, etc

Question 33

How can you decrease your net worth?

Answer 33

Saving money, increasing the amount you own, set aside into an account increase, etc