Business and Personal Finance © 2007

Chapter 3: Money Management Strategy

Practice Tests

1
What is the first step in effective money management?
A)Organizing your personal financial documents.
B)Determine how much money you will have now and in the future.
C)Plan and measure your financial progress.
D)Make effective decisions about how to save money.
2
What is one of the disadvantages of keeping financial documents in home files?
A)Cardboard boxes are expensive.
B)It is hard to remember where you keep the file.
C)Your documents may not be protected against fire, water, or theft.
D)It takes a lot of time to organize your files.
3
Any items of value that an individual or company owns, including cash, property, personal possessions, and investments, are called _____.
A)direct materials
B)deductions
C)exclusions
D)assets
4
What is the first step in creating a personal balance sheet?
A)Determining your assets.
B)Paying off your credit cards.
C)Cashing your paycheck.
D)Checking your bank statement.
5
An example of a long-term liability is a _____.
A)telephone bill
B)car repair bill
C)grocery bill
D)car loan
6
The calculation for determining your net worth is _____.
A)liabilities + equity
B)assets ? liabilities
C)assets × liabilities
D)liabilities ÷ assets
7
_____ is a financial state that occurs if liabilities are greater than assets.
A)bankruptcy
B)diversification
C)insolvency
D)fraudulence
8
An example of a fixed expense is _____.
A)utility bills
B)mortgage payments
C)medical costs
D)grocery costs
9
The _____ is a measure of the changes in prices for commonly purchased goods and services in the United States.
A)consumer price index
B)annual percentage yield
C)adjusted gross income
D)break-even point
10
Paying yourself first is an example of _____.
A)revising your goals
B)making sure you have money to spend on impulse purchases
C)creating a budget
D)ways to increase your savings
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