Question: Define money management. How does it differ

> Why should you review your credit card statement before paying the bill? What steps should you take if you discover an error?

> Explain why getting a cash advance on your credit card is a costly source of funds.

> Explain how the Credit CARD Act changed the way credit card issuers assess late fees.

> What is overlimit protection? Explain why consumers should use this feature sparingly.

> How does a secured credit card differ from a standard credit card? Under what circumstances would you need a secured credit card?

> Describe the role of the Consumer Financial Protection Bureau.

> Describe some of the key provisions of the Credit CARD Act.

> Explain how you can impose your own limits on credit card spending.

> What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.

> Why is paying your credit card balance in full so important? What should you do if you can’t avoid credit card debt? Explain.

> List five tips for using credit cards wisely.

> What should you consider when comparing credit cards?

> List some items that appear on the credit card statement. What accounts for the difference between your previous balance and your new balance?

> How does the interest rate affect your credit payments? What is meant by simple interest? What is the annual percentage rate (APR), and when is it used?

> What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.

> What is a grace period? How can you use it to your advantage?

> Discuss how credit cards offer incentives to use the cards. How else might credit card companies reward cardholders with excellent credit ratings?

> Describe the differences between a credit card like MasterCard or Visa and a retail (or proprietary) card. How do credit and retail cards generate revenue? What is the biggest disadvantage of a proprietary card?

> What information will you need to supply when applying for credit? What kinds of attributes are creditors looking for? Do you need to have all these attributes to get credit?

> What are three advantages of using a credit card? Can you think of any disadvantages?

> The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from the credit card company offering to increase their cre

> The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from the credit card company offering to increase their cre

> How will the new EMV technology help reduce identify theft?

> Can identity theft occur through legitimate access to your personal information? Explain.

> Aside from the financial losses, what other negative impacts might a victim of identity theft encounter?

> Is identity theft only perpetrated to acquire money, goods, or services?

> What constitutes identity theft?

> How can you improve your credit score, and how long can it take to erase a poor credit history

> How does a Vantage Score differ from a FICO score?

> What factors determine your credit score, and how are these factors weighted by FICO?

> What are the six major areas of information that may be included on your credit report?

> Name the three major credit bureaus. How do they score your credit rating? Will all three major credit bureaus always produce the same credit score?

> How do utilities extend credit, and how can this credit help you establish a credit history?

> The Equal Credit Opportunity Act prohibits creditors from denying credit for what reasons? If you are denied credit, do you have the right to know the reason for the denial?

> What are some factors to consider when using social media with respect to identity theft?

> Explain the advantages and disadvantages of using a credit counseling organization.

> Explain how closing a credit card account can negatively impact your credit score.

> What is your credit history? How does it impact your ability to borrow money?

> How did the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 change credit card access to students under the age of 21? Why was this change deemed necessary?

> Theft. What steps should you take if you become a victim of identity theft?

> Discuss steps you can take to safeguard your personal information.

> Name and explain at least three tactics used by identity thieves to obtain information.

> How often should you review your credit report from each of the three major credit bureaus? Why is this review beneficial?

> Explain how a weak credit report can affect you.

> What are the advantages and disadvantages of using credit?

> Explain the three types of credit. Under what conditions might a consumer find each type useful?

> Rita is the office manager of a three-doctor practice. Her brother, Juan, a recent college graduate, recently started working for a large insurance company that specializes in health insurance. In attempting to build a client base, Juan asks Rita if she

> Recall from Chapter 2 that the Sampsons currently have about $300 in cash and $1,700 in their checking account. This amount should be enough to cover upcoming bills. The Sampsons have just started saving $800 per month. This money will be placed in CDs e

> Recall from Chapter 2 that the Sampsons currently have about $300 in cash and $1,700 in their checking account. This amount should be enough to cover upcoming bills. The Sampsons have just started saving $800 per month. This money will be placed in CDs e

> Explain why maintaining more liquidity during a weak economy is costly.

> Assume that your monthly expenses will not change over the next three years, but you expect that the economy will be much weaker in about a year. Explain why you may need more liquidity even if your expenses do not change.

> What is a disadvantage of maintaining a very high level of liquidity?

> Compare the interest rates offered on T-bills and CDs. Which type of investment is more liquid? Why?

> What is an automatic transfer? How can this tool help you save money?

> What is an asset management account? Discuss the advantages of such an account as well as its requirements.

> What are money market funds (MMFs)? What types of securities do they invest in? What is commercial paper? Are MMFs risky investments? Are MMFs liquid?

> Explain the risks of using a credit card for your liquidity needs.

> Explain why you should not invest in the stock market if you expect to need the funds in the near future. Are stocks liquid?

> How does your individual tolerance for risk impact money management?

> What are Treasury securities? What is a T-bill? How is it denominated? How do you earn a return on a T-bill? How is the return calculated?

> How will overdraft protection affect bounced checks? Should you take advantage of this feature if your bank offers overdraft protection?

> How does a debit card transaction differ from writing a check?

> Why do individuals use checking accounts? What is the disadvantage of having funds in a checking account? Explain overdraft protection and stop payment orders. Are all bank fee structures the same?

> What two factors affect the return on short-term investments? What investments should you consider to achieve liquidity and an adequate return?

> Name some ways an individual might handle a cash flow deficiency. Which way would be preferable? Why?

> Why is it important to have sufficient liquidity during a weak economy?

> What steps should you take to determine the best allocation of your money market investments? What factors should you consider in determining your allocation?

> Generally compare the money market investments described in this chapter in terms of their vulnerability to credit risk, interest rate risk, and liquidity risk. Provide some examples of specific securities. What is the risk-return trade-off for these inv

> What are the three types of risk that affect money market investments?

> Compare the return and liquidity of the various money market investments. Give specific examples.

> Jason is in his mid-50s and was raised by parents of the Depression era. As a result, he is very risk adverse. He recently came into a very large amount of money, and he wants to put it where it will be safe, but where it will earn him some return. His b

> Jill placed $10,000 in a 90-day CD that offered an annualized return of 4%. How much interest will she earn on this CD?

> What is liquidity? How is your personal cash flow statement used to help manage your liquidity? How does money management relate to the cash flow statement?

> On June 1, Mia deposited $4,000 in an MMDA that pays 5% interest. On October 31, Mia invested $2,000 in a three-month CD that pays 6%. At the end of the year, how much interest will Mia have earned, assuming she hasn’t taken anything out of the money mar

> How does a money market deposit account (MMDA) differ from a NOW account? When might a depositor use an MMDA?

> What terms does a financial institution specify for certificates of deposit? Why are rates on CDs higher than those on savings accounts? What factor would most affect your choice of maturity date on a CD?

> What is a NOW account? How is it different from a regular checking account? How does a savings account compare with a NOW account?

> Bart is a college student who has never invested his funds. He has saved $1,000 and has decided to invest it in a money market fund with an expected return of 2.0%. Bart will need the money in one year. The MMF imposes fees that will cost Bart $20 at the

> Troy paid $9,600 for a T-bill with a face value of $10,000. What is Troy’s return if he holds the T-bill to maturity?

> Thomas can invest $10,000 by purchasing a 1-year T-bill for $9,275, or he can place the $10,000 in a 12-month CD paying 8%. Which investment will provide a higher return? In addition to return, what else should Thomas consider when making his investment

> What are the differences between an operating lease and a capital lease?

> On March 31, 2016, Titan Trucking purchased a used Kenworth truck at a cost of $52,000. Titan Trucking expects to drive the truck for 5 years and to have a residual value of $10,000. Compute Titan Trucking’s depreciation expense on the truck for the year

> Depletion is calculated in a manner similar to which depreciation method? a. Double-declining-balance method b. Units-of-production method c. Straight-line method d. Accelerated method

> If a machine that cost $10,000 was estimated to have a salvage value of zero after a useful life of 10 years and was sold for $4,500 after it had been owned for 6 complete years, what would be the amount of gain or loss recognized on the sale?

> Wilson’s Auto Repair ended 2015 with Accounts Receivable of $85,000 and a credit balance in Allowance for Uncollectible Accounts balance of $11,000. During 2016, Wilson’s Auto Repair had the following activity: a. Service revenue earned on account, $545

> Which of the following is true regarding the direct write-off method of accounting for uncollectibles? a. The direct write-off method does not adhere to GAAP. b. The direct write-off method does not use an allowance for uncollectible accounts and thus o

> If a company with a 12/31 year end lends money in the form of a six-month note on 11/1, which accounts will be credited when the note is paid off on 4/30?

> The following situations suggest a strength or a weakness in internal control. Identify each as a strength or weakness, and give the reason for your answer. a. All employees must take at least five consecutive days off each year. b. The accounting depar

> Internal auditors focus on _______; external auditors are more concerned with _______. a. financial statements; laws and regulations b. company policies and procedures; financial statements c. e-commerce; fraud d. financial statements; risk assessment

> What effect does the Sarbanes-Oxley Act of 2002 have on the role and influence of the CEO in a corporation?

> Which item(s) appears as a reconciling item(s) to the bank balance in a bank reconciliation? a. Outstanding checks b. Deposits in transit c. Both a and b d. None of the above

> Match the terms with the definitions. a. Full-disclosure b. Materiality c. Consistency d. Conservatism ______ 1. A company must perform strictly proper accounting only for items significant to the business’s financial statements. ______ 2. Reporting th

> Bonds issued at a premium always have a. interest expense equal to the interest payments. b. interest expense less than the interest payments. c. interest expense greater than the interest payments. d. none of the above.

> What happens to the difference between the carrying amount of bonds and the principal amount of the bonds over time?

> Refer to the data for S8-7. Compute second-year depreciation expense on the truck using the following methods: First-year depreciation: Straight-line: ($48,000 - $8,000) / 4 years = $10,000 Units-of-production: [($48,000- $8,000) / 800,000 miles] × 160

> Using information from the preceding question, suppose Sun Graphics and Designs Center sold the machine for $6,000. What is the result of this disposal transaction? a. Loss of $4,000 b. Gain of $4,000 c. Gain of $6,000 d. Gain of $2,000

> What is the book value of an asset? How is gain or loss on disposal of assets calculated?

> During its first year of operations, World Wide Travel earned revenue of $620,000 on account. Industry experience suggests that World Wide Travel’s uncollectible accounts will amount to 3 percent of revenues. On December 31, 2016, accounts receivable tot

> Your business uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Uncollectible Accounts had a credit balance of $1,800. During the year, you wrote off bad receivables of $2,000 and recorded Bad

> How would the net realizable value of Accounts Receivable change when an account is written off under the allowance method?