FINANCIAL PLANNING EXAMINATION QUESTIONS AND
CORRECT ANSWER WITH EXPLANATION GRADED
A+STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Financial planning is the process of:
A. Managing money to achieve financial goals
B. Printing money
C. Only paying taxes
D. Only saving cash
Answer: A
Rationale: It focuses on organizing finances to meet objectives.
2. The main goal of financial planning is to:
A. Achieve financial stability and goals
B. Increase debt
C. Reduce income
D. Eliminate savings
Answer: A
Rationale: Planning ensures financial security.
3. Personal financial planning involves:
A. Managing individual income and expenses
B. Only business finance
C. Government budgeting only
D. Stock trading only
Answer: A
Rationale: Focus on personal finances.
4. Budgeting is:
A. Planning income and expenses
B. Random spending
C. Borrowing money only
D. Tax filing
Answer: A
Rationale: Financial control tool.
,5. Income is:
A. Money received
B. Money spent
C. Debt only
D. Investment loss
Answer: A
Rationale: Cash inflow.
6. Expenses are:
A. Money spent
B. Money received
C. Investments
D. Savings
Answer: A
Rationale: Cash outflow.
7. Savings is:
A. Income not spent
B. Borrowed money
C. Taxes paid
D. Expenses only
Answer: A
Rationale: Retained income.
8. Investment is:
A. Using money to generate returns
B. Spending all income
C. Paying taxes
D. Borrowing money
Answer: A
Rationale: Wealth creation activity.
9. Financial goal can be:
A. Short-term or long-term objective
B. Only debt
C. Only income
D. Only expenses
Answer: A
Rationale: Planning targets.
, 10. Short-term financial goals are usually:
A. Less than 1 year
B. More than 10 years
C. Lifetime
D. Undefined
Answer: A
Rationale: Immediate objectives.
11. Long-term financial goals are:
A. More than 5 years
B. One month
C. One day
D. One year
Answer: A
Rationale: Future planning.
12. Emergency fund is:
A. Savings for unexpected expenses
B. Investment fund
C. Loan account
D. Tax account
Answer: A
Rationale: Financial safety cushion.
13. Inflation affects financial planning by:
A. Reducing purchasing power
B. Increasing savings value
C. Eliminating expenses
D. Stopping income
Answer: A
Rationale: Prices rise over time.
14. Net worth is:
A. Assets minus liabilities
B. Income minus tax
C. Savings only
D. Expenses only
Answer: A
Rationale: Financial position measure.
CORRECT ANSWER WITH EXPLANATION GRADED
A+STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Financial planning is the process of:
A. Managing money to achieve financial goals
B. Printing money
C. Only paying taxes
D. Only saving cash
Answer: A
Rationale: It focuses on organizing finances to meet objectives.
2. The main goal of financial planning is to:
A. Achieve financial stability and goals
B. Increase debt
C. Reduce income
D. Eliminate savings
Answer: A
Rationale: Planning ensures financial security.
3. Personal financial planning involves:
A. Managing individual income and expenses
B. Only business finance
C. Government budgeting only
D. Stock trading only
Answer: A
Rationale: Focus on personal finances.
4. Budgeting is:
A. Planning income and expenses
B. Random spending
C. Borrowing money only
D. Tax filing
Answer: A
Rationale: Financial control tool.
,5. Income is:
A. Money received
B. Money spent
C. Debt only
D. Investment loss
Answer: A
Rationale: Cash inflow.
6. Expenses are:
A. Money spent
B. Money received
C. Investments
D. Savings
Answer: A
Rationale: Cash outflow.
7. Savings is:
A. Income not spent
B. Borrowed money
C. Taxes paid
D. Expenses only
Answer: A
Rationale: Retained income.
8. Investment is:
A. Using money to generate returns
B. Spending all income
C. Paying taxes
D. Borrowing money
Answer: A
Rationale: Wealth creation activity.
9. Financial goal can be:
A. Short-term or long-term objective
B. Only debt
C. Only income
D. Only expenses
Answer: A
Rationale: Planning targets.
, 10. Short-term financial goals are usually:
A. Less than 1 year
B. More than 10 years
C. Lifetime
D. Undefined
Answer: A
Rationale: Immediate objectives.
11. Long-term financial goals are:
A. More than 5 years
B. One month
C. One day
D. One year
Answer: A
Rationale: Future planning.
12. Emergency fund is:
A. Savings for unexpected expenses
B. Investment fund
C. Loan account
D. Tax account
Answer: A
Rationale: Financial safety cushion.
13. Inflation affects financial planning by:
A. Reducing purchasing power
B. Increasing savings value
C. Eliminating expenses
D. Stopping income
Answer: A
Rationale: Prices rise over time.
14. Net worth is:
A. Assets minus liabilities
B. Income minus tax
C. Savings only
D. Expenses only
Answer: A
Rationale: Financial position measure.
