UNIT 3 – Test Review Budgeting and Managing a Checking Account MONEY MANAGEMENT UNIT 3 – Test Review Budgeting and Managing a Checking Account

CHAPTER EIGHT QUESTION: ANSWER: Budget A plan for spending and saving money ANSWER: Budget

CHAPTER EIGHT QUESTION: ANSWER: Name the three major categories included in most budgets? ANSWER: Income, Savings, and Expenses

CHAPTER EIGHT QUESTION: ANSWER: Amount of money earned before taxes is known as? ANSWER: Gross Income

CHAPTER EIGHT QUESTION: ANSWER: Amount of money earned after taxes is known as? ANSWER: Net Income

CHAPTER EIGHT QUESTION: ANSWER: Assuming a Gross Salary of $100,000 and a tax rate of 25%: What is your Gross Income? What is your total income tax bill? What is your Net Income? ANSWER: Gross Income = $100,000 Income Taxes = $25,000 Net Income = $75,000

CHAPTER EIGHT QUESTION: Unspent income is known as? ANSWER: Savings

CHAPTER EIGHT QUESTION: ANSWER: What are three types of savings? Short-term (new shoes), Long-Term (house), Retirement, Emergencies

CHAPTER EIGHT QUESTION: ANSWER: A cost to meet a need or pay a debt. Expense

CHAPTER EIGHT QUESTION: ANSWER: There are three types of expenses? What are they? ANSWER: Fixed, Variable and Discretionary

CHAPTER EIGHT QUESTION: ANSWER: Fixed Expense Rent, Car Payment etc… A cost that occurs regularly and doesn’t vary in amount is known as a: Give two examples: ANSWER: Fixed Expense Rent, Car Payment etc…

CHAPTER EIGHT QUESTION: ANSWER: Variable Expense A cost that occurs regularly but varies in amount is known as a: Give two examples: ANSWER: Variable Expense Phone, Electricity, Groceries etc…

CHAPTER EIGHT QUESTION: ANSWER: Discretionary Expense A cost that is determined by personal wants and needs: Give two examples: ANSWER: Discretionary Expense Vacations, Entertainment, Clothes

CHAPTER EIGHT QUESTION: The condition of not being able to have ALL of the good and services one wants. ANSWER: Scarcity

CHAPTER EIGHT QUESTION: The value of what you had to give up to pursue another option is known as? ANSWER: Opportunity Cost

CHAPTER EIGHT QUESTION: Giving up some of one thing to have more of another is known as: ANSWER: A tradeoff

CHAPTER NINE A checking account QUESTION: ANSWER: Banking service where you deposit money into it, and can then write drafts to people or businesses to pay off money owed? ANSWER: A checking account

CHAPTER NINE QUESTION: There are a lot of questions you should ask before opening up a checking account? Name one? ANSWER: Minimum balance? ATM card? Debit Card? Direct deposit? Free Checks? Etc…

CHAPTER NINE QUESTION: A check that the bank has already processed and paid out? ANSWER: Cancelled check (or cleared check)

CHAPTER NINE QUESTION: When you don’t have enough money in your account to cover a check? ANSWER: Overdraft (or bounced check)

CHAPTER NINE Floating a check QUESTION: ANSWER: When you know you don’t have enough money to cover a check but you send it anyway, hoping to make a deposit before the check clears. ANSWER: Floating a check

CHAPTER NINE Signature Card QUESTION: ANSWER: A form that you fill out when you open your checking account. Provides the bank with a record of how you sign your name. ANSWER: Signature Card

Parts of a check NAME ADDRESS

CHAPTER NINE Deposit Slip QUESTION: ANSWER: A form you fill out when you are depositing money into your checking account. ANSWER: Deposit Slip

CHAPTER NINE QUESTION: A personal record of all your deposits and withdrawals should be kept in your: ANSWER: Checkbook Register

CHAPTER NINE Reconciling your account (or balancing your account) QUESTION: Process of comparing your bank statement to your checkbook register to insure that the numbers match. ANSWER: Reconciling your account (or balancing your account)

CHAPTER NINE QUESTION: What are examples of logical reasons your checkbook balance doesn’t match your bank statement balance? ANSWER: Outstanding checks (you wrote them but they haven’t been cashed yet) Outstanding deposits (you deposited them after the bank statement was mailed) ATM withdrawals or service fees that you forget to record in your checkbook register

CHAPTER NINE ANSWER: QUESTION: You cannot cash a check unless it has been ______________________. ANSWER: Endorsed

CHAPTER NINE ANSWER: QUESTION: What type of endorsement is this? Blank Endorsement

CHAPTER NINE ANSWER: QUESTION: What type of endorsement is this? Restrictive Endorsement

CHAPTER NINE QUESTION: Debit Card ANSWER: Special ATM Card that allows you to pay for transactions right out of your checking account by simply swiping the card ANSWER: Debit Card

STUDY, STUDY, STUDY Ok…. These were the easy ones! You have two chapters of notes to review! Don’t forget to study!