Entrepreneurship Final Review

Three of these statements best describe a checking account. Which statement best describes a savings account? 

• This account offers a convenient way to pay bills and access cash from an ATM

• This account pays you interest on money you have put away for later to help your money grow

• This account is automatically debited when you use a debit card

• This account typically allows an unlimited number of transactions per month

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• Your credit card company covers the cost

• It is deducted directly from your checking account

• Your credit card company provides you with a cash advance to cover the cost

• It is deducted directly from your savings account

Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

• Wait until her monthly statement arrives so she can check to see if those withdrawals are still there

• Wait a week as it is fairly common for the bank to catch mistakes like this

• Check her wallet to be sure her debit card has not been stolen.  If she still has it, then she should not worry.

• Contact her bank immediately as it appears that her account may have been hacked

Fill in the blanks: Direct deposit typically refers to your ______ sending your ______ electronically to your bank account.

• employer, bills

• employer, paycheck

• parents, allowance

• state government, taxes

Which of the following statements comparing credit and debit cards is TRUE?

• Far more businesses accept credit cards than debit cards 

• Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

• Credit card companies provide you with a monthly statement, while debit cards do not

• With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later 

What is an advantage of using a credit card?

• It will not affect your credit score or credit history

• Since it is tied directly to your checking account, it prevents you from spending money you do not have

• If you need to carry a balance, the interest rates are generally quite low (less than 5%)

• You can make an emergency purchase that you otherwise don’t have the money to pay for right now

An excellent credit score will help with which aspect of car financing? 

• Bargaining for a great sales price

• Receiving a large down payment

• Qualifying for a low interest rate

• Having a wide selection of term lengths

As a young adult, all of the following are good strategies for building credit, EXCEPT:

• Open a credit card, with your parent or guardian as a cosigner

• Take out a payday loan

• Become an authorized user on a credit card used by your parent or guardian

• Open and use a secured credit card

Trudy tells her mom that she wants to buy a house within two years of graduating from college. Her mom says Trudy will need a down payment first. What is a down payment? 

• A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller

• A specific type of tax advantaged bank account used for saving money to buy a house

• The first year’s worth of property taxes, held in reserve 

• A prepayment to a real estate agent so that they will start helping you house hunt 

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

• Cancel his credit cards

• Make on-time payments

• Get a car loan

• Check his credit score