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- 1. Multiple Choice
A key difference between commercial banks and credit unions is that:
Commercial banks offer more services, such as debit cards and online banking, than credit unions.
Commercial banks typically pay higher interest rates than credit unions
Commercial banks are ‘for‐profit’ and credit unions are ‘not‐for‐profit’
Credit unions are more commonly located in rural areas while commercial banks are more commonly located in urban areas.
- 2. Multiple Choice
David made a mistake in his checking account record keeping and spent $10 more than he had deposited in his account. As a result, he can expect to be charged a(n):
Contact Fee
Overdraft Fee
Safe Deposit Fee
ATM Fee
- 3. Multiple Choice
Since Taylor was a young child she has kept her savings in a piggy bank. She likes this method of saving because she can have immediate access to the money if she needs it. Recently, in a class at school, discussion focused on why depository institutions are safer than her piggy bank. Some students’ comments were based on fact while others were based on myths. Which aspect of security at a depository institution is NOT TRUE?
All money stored at a depository institution is kept safe at all times by numerous security measures.
Depository institutions have insurance protection. Depositors can have multiple accounts insured at the same depository institution as long as each account has no more than $100,000.
Information about depositors and their accounts is kept in secure data storage.
Depository institutions have insurance protection for up to $250,000 per depositor per account type.
- 4. Multiple Choice
Common fees that may be charged by a depository institution include all EXCEPT:
ATM fee
Overdraft fee
Minimum Balance fee
Late fee
- 5. Multiple Choice
Samantha wants to be able to use funds in her checking account but finds going to the bank to withdraw cash to be inconvenient. She would like a more effective way to access her checking account funds. What would you suggest she do?
Request a cashier’s check from her depository institution. That way she can spend money from her checking account without risk of an overdraft fee.
Apply for a credit card. That way she can use the card to purchase the things she needs and pay for it when the credit card statement comes from her checking account.
Apply for mobile banking. That way she can access her money with her smartphone to pay for the things she needs. The amount she spends would automatically be deducted from her savings account.
Apply for a debit card. That way she can use the card instead of cash to purchase the things she needs and the amount spent is immediately deducted from her account.
- 6. Multiple Choice
Sanjay is concerned about the safety of the money in his savings account. Which type of depository institution should he choose? (choose answer that is MOST correct)
A credit union, since his deposits would be insured by the National Credit Union Association (NCUA)
Neither a commercial bank nor a credit union. Money is most safely kept at home in a personal safe or vault.
He could safely choose either a commercial bank or a credit union, as long as his savings account balance meets the insurance requirements.
A commercial bank, since his deposits would be insured by the Federal Deposit Insurance Corporation (FDIC)
- 7. Multiple Choice
Savings tools offered by depository institutions may earn interest. Which of the following statements is NOT TRUE about interest?
When paying interest, look for low rates.
Interest is the price paid for using someone else’s money.
The amount of interest earned or paid is determined by the interest rate.
When earning interest, look for low rates.
- 8. Multiple Choice
Who is Medicare designed to help?
Senior Citizens
Children of unemployed parent
Low income families
Single parents
- 9. Multiple Choice
Which statement is NOT TRUE about property taxes?
Property tax is often charged by states or local governments to pay for local schools.
Property taxes are most often paid only once or twice each year.
The property tax rate is set by the federal government to be equal in every state.
The fee paid to license a vehicle is an example of property tax.
- 10. Multiple Choice
Taxes that are charged on consumption items such as gasoline, hotel rooms, and airline tickets are called _____________ taxes.
Excise
Property
Federal use
Sales
- 11. Multiple Choice
Austin has just received his first paycheck. He worked 22 hours at his new job and is being paid $8.00 per hour. He calculated that his paycheck should be $176. His paycheck amount is almost 1/3 less than he expected. What is the most likely reason that Austin’s pay is less than he expected it to be?
Austin neglected to deduct the amount required to pay income and payroll taxes.
Austin neglected to deduct the excise tax paid on the uniforms he purchased to wear at his job.
Austin’s employer made a mistake calculating the number of hours Austin worked during his first pay period.
Austin calculated the hours he worked without deducting the hours he spent doing on‐the‐job training.
- 12. Multiple Choice
Dane is researching the topic of property taxes for a presentation he is doing in his Personal Finance class. He has come across the following statements he is considering adding to his presentation. Which should he EXCLUDE from his presentation because it is not correct?
Property taxes are usually charged by state and local governments to pay for local schools and other services and expenses incurred by these governments.
Property taxes are commonly paid on automobiles. This tax usually paid once per year when the automobile is licensed.
Property tax on homes, land and buildings are usually only paid once or twice each year.
Property taxes are assessed at the same rate for all types of property, including homes, land and building, regardless of location or whether they are used for business or personal use.
- 13. Multiple Choice
As Mariah was looking over her sales receipt for the shirt she bought at a retail store, she discovered that she was charged 6% more than the price tag showed for the item. What is this extra 6% charge most likely to be?
Income tax on the shirt she purchased.
Property tax on the shirt she purchased.
An excise tax on the shirt she purchased.
Sales tax on the shirt she purchased.
- 14. Multiple Choice
Jonah is writing down his liabilities to complete his Statement of Financial Position. The item he should include would be:
The balance on his credit card
The market value of his car
The value of his retirement account
The combined total of his savings and checking accounts
- 15. Multiple Choice
To increase his net worth, Jackson could:
Decrease his assets
Increase his market value
Increase his liabilities
Increase his assets
- 16. Multiple Choice
Maggie earns $62,000 per year and has a net worth of $20,000. Samantha earns $96,000 and has a net worth of $15,000. Who is wealthier?
Maggie, because her net worth is higher than Samantha’s.
Samantha, because her income minus her net worth is a larger amount than Maggie’s.
Samantha, because her annual income is higher than Maggie’s.
Maggie, because her income minus her net worth is a smaller amount than Samantha’s.
- 17. Multiple Choice
To calculate her net worth Jordyn should use the following formula:
Assets + liabilities = net worth
Assets – liabilities = net worth
Assets x liabilities = net worth
Assets / liabilities = net worth
- 18. Multiple Choice
Which of the following would most likely be considered a contractual expense?
Clothing
Food
Entertainment
Cell Phone
- 19. Multiple Choice
Andy is developing an Income and Expense Statement. He has gathered all his receipts, bank statements, paycheck stubs, and spending records. He needs to categorize them into income and expenses. Which should be recorded as expenses?
The scholarship he receives for studying Chinese at the local community college, his car insurance payment, and stock dividends he received from his grandmother
Clothing he purchased for a job interview, tuition for a class he is taking at the local community college, and interest from his savings account
Money saved from his paycheck for emergencies, interest paid on his car loan, his tax refund from filing last year’s tax return
Taxes deducted from his paycheck, money saved from his paycheck for emergencies, and his car insurance
- 20. Multiple Choice
Amanda and Marcus just finished their Income and Expense Statement for last month. They discovered that they have a net gain. What does this mean and what should they do?
Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time to help boost their income.
Amanda and Marcus are earning more money than they are spending. They should increase spending for non‐contractual items to bring their income into balance with the expenses.
Amanda and Marcus are spending more money than they are earning. They need to find a way to balance their income and expenses by spending less on non‐contractual expenses.
Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it on other expenses.
- 21. Multiple Choice
Erin and her mother are putting together an Income and Expense Statement for Erin to use as she applies for a college scholarship (using FAFSA). Which income source does she NOT need to include for this statement?
Money she received from her grandparents for her birthday.
Interest earned on her savings account.
Taxes she paid based on her income last year.
Social Security income her mother is receiving for her since her father died of cancer last year.
- 22. Multiple Choice
When is your spending plan (budget) complete?
When you have all of your current income and expenses recorded
Spending plans are always under revision so they are never complete.
Spending plans are complete each December 31st as one year ends and another year begins.
When you have allocated all your income into categories for the month.
- 23. Multiple Choice
If expenses were to exceed income on a spending plan, what would be a financially smart solution?
Decrease expenses
Earn less income
Increase purchases
Use a credit card more often
- 24. Multiple Choice
Chase has decided to work with a spending plan so he can build up an emergency fund for college. He learned in class that he could probably reduce his spending the most by looking at his non‐contractual expenses. Which of his expenses best fit that category?
Motorcycle payment, food, and cell phone bill
Internet bill, entertainment, and clothing
Gasoline, food, and entertainment
Cell phone bill, gasoline, and car payment
- 25. Multiple Choice
Diana and Aaron have decided to develop a spending plan to help them gain control over their finances. Which of the following statements is NOT TRUE about spending plans?
Spending plans are used to record planned expenses.
When creating a spending plan, it is recommended that you examine your trade‐offs and opportunity costs.
Spending plans are used to record planned income.
A spending plan includes items NOT usually included when creating a budget.
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