Principles of Finance Exam Questions
and Answers (Latest 2026).
balance sheet - CORRECT ANSWERS A statement that reflects an individual's or business's
financial position. It shows what is owned (assets) and what is owed (liabilities).
budget - CORRECT ANSWERS A detailed plan to manage the spending and saving of money.
deficit - CORRECT ANSWERS A financial shortage that occurs when liabilities exceed assets or
when cash inflows are less than cash outflows.
discretionary expenses - CORRECT ANSWERS Any expenses that are not considered essential
to the household or business. Examples include movie tickets, eating out, expensive clothes, and video
games.
discretionary income - CORRECT ANSWERS Income that is available after all of the essential
financial commitments have been paid
financial health - CORRECT ANSWERS A description of a person's or an organization's
finances.
financial planner - CORRECT ANSWERS A professional who examines the assets of his or her
clients and suggests steps to reach the client's financial goals.
fixed expenses - CORRECT ANSWERS Expenses that remain the same regardless of the
circumstances.
, income - CORRECT ANSWERS Money that is received from any source, including the money
one earns through labor, for services, from the sale of goods, allowance, disability, inheritance, and
investments.
inflows - CORRECT ANSWERS Any incoming money; your income, tips, overtime pay, and any
other sources of income that you may have.
insolvency - CORRECT ANSWERS A condition when someone's liabilities are greater than his
or her assets; the inability to pay debts when they are due.
outflows - CORRECT ANSWERS Outgoing expenses; anything that you spend money on.
SMART goal - CORRECT ANSWERS Goals that are specific, measurable, attainable, realistic,
and time-bound.
SMART strategy - CORRECT ANSWERS A method used by individuals and even companies to
help provide a framework for how a goal should be created.
surplus - CORRECT ANSWERS The money left over when income exceeds expenditure.
take-home pay - CORRECT ANSWERS Also called net pay; the amount that is left of your pay
after deductions are made.
variable expense - CORRECT ANSWERS An expense that changes from period to period, such
as food or gasoline costs
credit - CORRECT ANSWERS The act of buying something or borrowing money with the
promise to repay the lender at a future date
and Answers (Latest 2026).
balance sheet - CORRECT ANSWERS A statement that reflects an individual's or business's
financial position. It shows what is owned (assets) and what is owed (liabilities).
budget - CORRECT ANSWERS A detailed plan to manage the spending and saving of money.
deficit - CORRECT ANSWERS A financial shortage that occurs when liabilities exceed assets or
when cash inflows are less than cash outflows.
discretionary expenses - CORRECT ANSWERS Any expenses that are not considered essential
to the household or business. Examples include movie tickets, eating out, expensive clothes, and video
games.
discretionary income - CORRECT ANSWERS Income that is available after all of the essential
financial commitments have been paid
financial health - CORRECT ANSWERS A description of a person's or an organization's
finances.
financial planner - CORRECT ANSWERS A professional who examines the assets of his or her
clients and suggests steps to reach the client's financial goals.
fixed expenses - CORRECT ANSWERS Expenses that remain the same regardless of the
circumstances.
, income - CORRECT ANSWERS Money that is received from any source, including the money
one earns through labor, for services, from the sale of goods, allowance, disability, inheritance, and
investments.
inflows - CORRECT ANSWERS Any incoming money; your income, tips, overtime pay, and any
other sources of income that you may have.
insolvency - CORRECT ANSWERS A condition when someone's liabilities are greater than his
or her assets; the inability to pay debts when they are due.
outflows - CORRECT ANSWERS Outgoing expenses; anything that you spend money on.
SMART goal - CORRECT ANSWERS Goals that are specific, measurable, attainable, realistic,
and time-bound.
SMART strategy - CORRECT ANSWERS A method used by individuals and even companies to
help provide a framework for how a goal should be created.
surplus - CORRECT ANSWERS The money left over when income exceeds expenditure.
take-home pay - CORRECT ANSWERS Also called net pay; the amount that is left of your pay
after deductions are made.
variable expense - CORRECT ANSWERS An expense that changes from period to period, such
as food or gasoline costs
credit - CORRECT ANSWERS The act of buying something or borrowing money with the
promise to repay the lender at a future date
