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Questions and Answers
Which of the following is NOT one of the five key areas of personal finance?
Which of the following is NOT one of the five key areas of personal finance?
Setting specific financial goals is considered a top personal financial habit.
Setting specific financial goals is considered a top personal financial habit.
True
Name one common money mistake to avoid.
Name one common money mistake to avoid.
Failing to plan
The _____-based budget ensures that income minus expenses equals zero.
The _____-based budget ensures that income minus expenses equals zero.
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Match the budgeting methods with their descriptions:
Match the budgeting methods with their descriptions:
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Which statement best describes the concept of personal protection in personal finance?
Which statement best describes the concept of personal protection in personal finance?
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Using credit cards with caution is not an important aspect of personal finance.
Using credit cards with caution is not an important aspect of personal finance.
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What is one benefit of having a solid budget?
What is one benefit of having a solid budget?
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Which of the following is considered a liquid asset?
Which of the following is considered a liquid asset?
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Retained earnings are part of shareholders' equity.
Retained earnings are part of shareholders' equity.
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What are accounts payable?
What are accounts payable?
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The value of paid expenses that benefit the company in future periods is recorded under __________.
The value of paid expenses that benefit the company in future periods is recorded under __________.
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Which type of revenue is generated from core business activities?
Which type of revenue is generated from core business activities?
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Match the following financial terms with their definitions:
Match the following financial terms with their definitions:
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Long-term debt obligations are due within one year.
Long-term debt obligations are due within one year.
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The main components of the Statement of Financial Position are assets, __________, and shareholders' equity.
The main components of the Statement of Financial Position are assets, __________, and shareholders' equity.
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Which of the following is classified as a primary expense?
Which of the following is classified as a primary expense?
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Other comprehensive income includes only realized gains and losses.
Other comprehensive income includes only realized gains and losses.
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What are the components of the statement of changes in equity?
What are the components of the statement of changes in equity?
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Cash flows from long-term investments are categorized under ______ activities in the statement of cash flows.
Cash flows from long-term investments are categorized under ______ activities in the statement of cash flows.
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Match the following financial analysis tools with their descriptions:
Match the following financial analysis tools with their descriptions:
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Which of the following best describes operating activities in the statement of cash flows?
Which of the following best describes operating activities in the statement of cash flows?
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The statement of changes in equity reflects only the dividends paid to shareholders during the period.
The statement of changes in equity reflects only the dividends paid to shareholders during the period.
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What do notes to financial statements provide?
What do notes to financial statements provide?
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Which of the following methods represents legally reducing tax liability through alternative assessments?
Which of the following methods represents legally reducing tax liability through alternative assessments?
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Non-resident Aliens are individuals who engage in business in the Philippines.
Non-resident Aliens are individuals who engage in business in the Philippines.
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What are monetary assets?
What are monetary assets?
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The act of transferring the tax burden to another party is known as ______.
The act of transferring the tax burden to another party is known as ______.
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What is a key advantage of time deposits?
What is a key advantage of time deposits?
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Which of the following types of income is subject to final withholding tax?
Which of the following types of income is subject to final withholding tax?
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Penalties are imposed on early withdrawals from time deposits.
Penalties are imposed on early withdrawals from time deposits.
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Match the individual taxpayer type with its description:
Match the individual taxpayer type with its description:
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Capital Gains are taxed at a fixed rate regardless of the asset type.
Capital Gains are taxed at a fixed rate regardless of the asset type.
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Name one type of consumer credit.
Name one type of consumer credit.
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What is the characteristic of monetary assets in terms of depreciation?
What is the characteristic of monetary assets in terms of depreciation?
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_____ are illegal lenders who charge excessive interest rates.
_____ are illegal lenders who charge excessive interest rates.
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Match the following sources of consumer credit with their descriptions:
Match the following sources of consumer credit with their descriptions:
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Which of the following is a disadvantage of time deposits?
Which of the following is a disadvantage of time deposits?
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Consumer finance companies provide lower interest rates due to lower risk of default.
Consumer finance companies provide lower interest rates due to lower risk of default.
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What should borrowers do to build a good credit reputation?
What should borrowers do to build a good credit reputation?
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Study Notes
Personal Finance Overview
- Personal finance is the management of an individual’s financial activities, including planning, spending, saving, and investing.
- Key areas include income, spending, saving, investing, and personal protection through various financial products.
Key Areas of Personal Finance
- Income: The source of cash inflow supporting daily living needs.
- Spending: Expenses related to purchasing goods and services, excluding investments.
- Saving: Retaining excess cash for future investment or spending.
- Investing: Buying assets anticipated to generate future returns.
- Personal Protection: Financial products that shield against unexpected financial events.
Personal Financial Habits
- Set specific financial goals and create a budget.
- Establish an emergency fund and work on reducing debt.
- Invest intelligently and use credit cards cautiously.
- Always consider family needs and take breaks when necessary.
Common Money Mistakes
- Failing to plan leads to overspending and reliance on credit.
- Procrastinating retirement savings and succumbing to emotional financial decisions.
- Focusing excessively on money rather than overall financial wellness.
Importance of Budgeting
- A well-structured budget enhances financial independence through responsible spending and savings.
- Helps allocate funds for retirement, emergency reserves, and vacations.
Budgeting Methods
- Zero-Based Budget: Income minus expenses equals zero, suitable for stable incomes.
- Pay-Yourself-First Budget: Prioritizes savings and debt repayment first.
- Envelope System: Cash allocated into specified envelopes for different spending categories.
Statement of Financial Position
- Comprises assets, liabilities, and shareholders’ equity.
Assets Breakdown
- Liquid Assets: Cash, cash equivalents, and receivables that can be easily accessed or converted to cash.
- Property, Plant, and Equipment (PPE): Long-term capital assets such as buildings and machinery.
- Intangible Assets: Non-physical assets like trademarks and patents.
Liabilities Overview
- Current Liabilities: Bills and payments owed for business operations (Accounts Payable, Wages Payable).
- Long-Term Liabilities: Obligations due beyond one year, such as mortgages and bonds.
Shareholders’ Equity
- Represents total assets minus total liabilities, indicating stakeholders' claim after all debts have been settled.
Statement of Comprehensive Income
- Covers profitability details such as revenues, expenses, and earnings over a specific period.
Revenue Types
- Operating Revenue: Income from primary business operations.
- Non-operating Revenue: Income from secondary activities.
Expenses Categories
- Primary Expenses: Direct costs linked to revenue generation (COGS, SG&A).
- Secondary Expenses: Costs related to non-core activities (interest payments).
Statement of Cash Flows
- Operating Activities: Cash movements from core business operations.
- Investing Activities: Cash flows associated with asset acquisition and sales.
- Financing Activities: Cash transactions related to borrowing and equity.
Financial Statement Analysis
- Involves evaluating a company’s performance through various comparisons, including past performance (intracompany), industry standards, and competition.
Individual Taxpayers Classification
- Resident Citizens: Filipino citizens living in the Philippines.
- Non-resident Citizens: Filipinos living abroad.
- Resident Aliens: Foreigners staying in the Philippines without plans to leave.
- Non-resident Aliens: Foreigners without business engagements.
Types of Income
- Ordinary Income: Earnings from jobs or businesses.
- Passive Income: Subject to final withholding tax (e.g., dividends, interest).
- Capital Gains: Profits from selling stocks or property.
Monetary Assets
- Short-term assets easily liquidated, including cash and receivables, affected by inflation.
Time Deposits
- Advantages: Fixed interest rates, savings discipline, PDIC insurance.
- Disadvantages: Penalties for early withdrawal, no added deposits during the term.
Understanding Consumer Credit
- Credit enables immediate acquisition of goods/services with future payment obligations.
- Types: Closed-end (specific amount and purpose) vs. Open-end (revolving credit like credit cards).
Sources of Consumer Credit
- Commercial Banks: Variety of loans, including consumer and housing loans.
- Consumer Finance Companies: Higher-risk loans for consumers with poor credit histories.
- Family and Friends: Personal loans requiring professional handling for clarity.
Building Good Credit Reputation
- Creditworthiness assessed through past debt management, crucial for securing loans and credit offerings.
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Description
Dive into the fundamentals of personal finance with this quiz. Explore essential concepts such as income, budgeting, saving, and investing. This quiz is designed to help you understand the key areas vital for managing your finances effectively.
