Quizzes Chapter 3 Personal Finance Kapoor 14E And Correct Answers.

QUIZ 3-1 - Answer What opportunity costs are associated with money management activities? - Answer Spending money on current living expenses reduces the amount that can be used for saving and investing toward long-term financial security. Saving and investing for the future reduce the amount that can be spent now. Buying on credit results in payments later and a reduction in the amount of future income available for spending. Using savings for purchases results in lost interest earnings and an inability to use savings for other purposes. Engaging in comparison shopping can save money and improve the quality of purchases but uses up something of value that cannot be replaced—your time. Nonmonetary opportunity costs associated with money management activities include time and effort for creating and maintaining a financial record keeping system; a personal decision to have an organized financial existence; possible disagreements among family members due to poor financial records; or weak budgeting techniques. What are the three major money management activities? - Answer The three major money management activities are storing and maintaining financial records and documents, creating personal financial statements, and creating and implementing a budget. What are the benefits of an organized system of financial records and documents? - Answer The benefits of an organized financial record system are: handling daily business affairs, including the payment of bills on time, planning and measuring financial progress, completing required tax reports, making effective investment decisions, determining available resources for current and future buying. What suggestions would you give for creating a system for organizing and storing financial records and documents? - Answer Financial documents will be kept in a home file, in a computer file, online, or in a safe-deposit box depending on the importance and need to access the record. Documents that are difficult to replace (birth certificates, contracts, stock certificates) should be kept in a safe-deposit box.