W08 Quiz1

Quiz 1
Question 1 1 / 1 point

Use the following numbers to calculate the net worth:
Bank Account $1,500
Canada Savings Bonds $5,000
Monthly income $6,000
House $125,000
Car $10,000
Mortgage $95,000
Car Loan $5,000
Monthly mortgage payments $1,200

a)
$40,300

b)
$41,500

c)
$46,300

d)
$47,500

e)
$141,500

(1,500 + 5,000 + 125,000 + 10,000) - (9,500 + 5,000)

Question 2 1 / 1 point

Don has prepared a budget for himself. His expenses are greater than his income. Which of the following expenses would you suggest would be easiest for him to reduce his spending on?

a)
Utilities

b)
Rent

c)
Entertainment

d)
Car operation expenses

Entertainment is a flexible expense. The rest are all fixed and are more difficult to reduce.

Question 3 1 / 1 point

Pam and John have the following assets and liabilities:
Assets:
Bank account $4,000
House $150,000
Canada Savings Bonds $5,000
Liabilities
Credit Cards $6,000
One year loan $7,000
Mortgage $85,000

Which statement about their current ratio is correct?

a)
The ratio is good because their assets are greater than their debts.

b)
The ratio is not good because they do not have enough liquid assets to cover their short-term debts.

c)
The ratio is good because they have enough liquid assets for emergencies.

d)
The ratio is not good because their long-term debts are higher than their short-term debts.

There should be enough liquid assets to pay their short-term debts for the next year in case something should happen to their income.

Question 4 1 / 1 point

The federal government wishes to introduce a new item that will reduce taxes to the income tax system. If they want it to be of equal benefit to all tax payers the benefit should be

a) a deduction from income

b) a tax credit

c) part of the GST rebate

d) a provincial credit

The benefit from a tax deduction depends on an individual's MTR. Tax payers all get equal benefit from tax credits because everyone multiplies it by 16%. Not