Gr 11 Math Lit: Ch 3.2 Sources of Income

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What is the primary goal of income diversification?

To create a budget that outlines spending

To set aside money for taxes

To increase income through investments

To reduce risk by having multiple sources of income (correct)

What is the first step in understanding and managing sources of income?

Calculate gross income

Determine deductions

Create a budget

Identify all sources of income (correct)

What is the purpose of calculating net income?

To create a budget

To determine the total amount of income

To identify all deductions

To know how much income is available for spending (correct)

Why is it important to set financial goals?

To save and invest a portion of income Signup and view all the answers

What is the purpose of monitoring and adjusting income and expenses?

To ensure the budget is being followed Signup and view all the answers

What is the relationship between gross income and net income?

Gross income is the total amount of income, and net income is the income available for spending Signup and view all the answers

What is the main difference between earned income and unearned income?

Earned income is received from employment, while unearned income is received from sources other than employment Signup and view all the answers

What is the purpose of creating a budget?

To allocate income to cover expenses, savings, and investments Signup and view all the answers

What is net income?

The income remaining after all deductions, such as taxes, pension contributions, and other mandatory deductions Signup and view all the answers

Why is saving important in personal finance?

To set aside a portion of income for future use or emergencies Signup and view all the answers

What is the role of income tax in personal finance?

To recognize the government's role in personal finance and how it is calculated based on income brackets and tax rates Signup and view all the answers

What is the main difference between short-term and long-term goals?

Short-term goals are focused on immediate needs, while long-term goals are focused on future needs Signup and view all the answers

What is gross income?

The total income earned before any deductions or taxes Signup and view all the answers

What is an example of government transfers?

Social security benefits Signup and view all the answers

Which of the following is NOT a step in understanding and managing sources of income?

Determine Net Worth Signup and view all the answers

What is the primary purpose of subtracting deductions from gross income?

To determine the net income Signup and view all the answers

Which of the following is an example of discretionary spending?

Entertainment Signup and view all the answers

What is the primary reason for setting aside money for taxes?

To ensure compliance with tax laws Signup and view all the answers

What is the purpose of regularly reviewing income and expenses?

To adjust the budget as necessary Signup and view all the answers

What is the primary benefit of establishing short-term and long-term financial goals?

To create a plan to achieve financial goals Signup and view all the answers

What is the primary source of earned income?

Salaries and wages Signup and view all the answers

Which of the following is an example of a deduction?

Medical aid contributions Signup and view all the answers

What is the primary purpose of budgeting?

To create a plan for allocating income Signup and view all the answers

What is the difference between short-term and long-term goals?

Short-term goals are for a shorter period, while long-term goals are for a longer period Signup and view all the answers

What is the purpose of filing taxes?

To declare income to the tax authorities Signup and view all the answers

What is the main purpose of financial planning?

To set and achieve financial goals Signup and view all the answers

What is the difference between gross income and net income?

Gross income is before deductions, while net income is after deductions Signup and view all the answers

What is the purpose of government transfers?

To provide financial assistance to individuals Signup and view all the answers

What is the primary purpose of identifying all sources of income in personal finance?

To understand the distribution of income among various sources Signup and view all the answers

Which of the following is a characteristic of a well-planned budget?

It includes a category for unexpected expenses Signup and view all the answers

What is the primary benefit of setting aside money for taxes in personal finance?

It ensures compliance with tax laws and avoids penalties Signup and view all the answers

Which of the following is a characteristic of short-term financial goals?

They are typically achieved within a period of 1-5 years Signup and view all the answers

What is the primary characteristic of unearned income?

It is received from sources other than employment Signup and view all the answers

What is the purpose of calculating gross income?

To find the total income earned before deductions Signup and view all the answers

What is the primary purpose of regularly reviewing income and expenses in personal finance?

To ensure that the budget is being followed Signup and view all the answers

Which of the following is a characteristic of a well-planned financial goal?

It is specific, measurable, achievable, relevant, and time-bound Signup and view all the answers