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Introduction to Business - 2nd Semester Test Review (Chapters 22-44)


Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 
A savings plan with a low or zero minimum balance is
a.
a regular savings account.
c.
a money market account.
b.
an EFT account.
d.
a retirement account.
 

 2. 
A savings account statement presents
a.
the names of new depositors.
b.
a customer’s record of recnet deposits.
c.
a summary of deposits, withdrawals, and interest earned.
d.
a list of current interest rates paid on various savings accounts.
 

 3. 
To take money out of a savings account, a depositor must prepare a
a.
savings account register.
c.
signature card.
b.
savings account statement.
d.
withdrawal slip.
 

 4. 
A long-term deposit that pays a higher interest rate than other types of accounts is
a.
a regular savings account.
b.
a money market account.
c.
a certificate of deposit (CD).
d.
an interest-earning checking account.
 

 5. 
An individual retirement account (IRA) is designed to
a.
provide money for workrs who are on strike.
b.
earn higher interest based on current government bonds.
c.
encourage workers to save for future financial needs.
d.
increase tax revenues received by the federal government.
 

 6. 
The risk of damage to or loss of property due to theft, wind, fire, flood, or some other hazard is
a.
accidents.
c.
property risk.
b.
liability risk.
d.
personal risk.
 

 7. 
The risk of potential losses to others as a result of injury or damage you may have caused is
a.
insurance.
c.
property risk.
b.
liability risk.
d.
personal risk.
 

 8. 
The planned protection provided by sharing economic losses is
a.
insurance.
c.
property risk.
b.
liability risk.
d.
economic risk.
 

 9. 
The money a policy holder must pay for insurance coverage is
a.
a premium.
c.
self-insurance.
b.
a claim.
d.
a deductible.
 

 10. 
An amount you must pay before the insurance company pays a claim is
a.
a premium.
c.
self-insurance.
b.
a claim.
d.
a deductible.
 

 11. 
When an individual or business assumes the total risk of economic loss, the type of insurance is
a.
liability insurance.
c.
self insurance.
b.
property insurance.
d.
coinsurance.
 

 12. 
An insurance agent that sells insurance policies from a variety of different companies is
a.
an insurance broker.
b.
a self-insured insurance agent.
c.
a single company insurance agent.
d.
an independent insurance agent.
 

 13. 
Insurance is important because
a.
it provides economic security.
b.
it helps our economy.
c.
premiums collected are used to make loans that help our economy grow.
d.
all of the above.
 

 14. 
The general term used to describe insurance that you buy to protect yourself against financial loss if you injure someone else or damage someone else’s property in an automobile accident is
a.
personal injury and property damage coverage.
b.
medical payments and collision insurance coverage.
c.
no-fault and assigned-risk insurance.
d.
automobile liability insurance.
 

 15. 
The two major categories of automobile insurance are
a.
personal injury and property damage coverage.
b.
medical payments and collision insurance coverage.
c.
no-fault and assigned-risk insurance.
d.
automobile liability insurance.
 

 16. 
Insurance coverage that protects you from claims resulting from injuries or deaths for which you are found to be at fault is
a.
personal injury and property damage coverage.
b.
medical payments and collision insurance coverage.
c.
bodily injury liability insurance.
d.
automobile liability insurance.
 

 17. 
Medical payments protection provides medical coverage for
a.
policyholders while riding in their own car.
b.
policyholders while riding in someone else’s car.
c.
guests riding in the insured’s car.
d.
all of the above.
 

 18. 
Automobile coverage that protects you against claims if your car damages someone else’s property and you are at fault is
a.
collision insurance coverage.
b.
property damage liability coverage.
c.
medical payments protection coverage.
d.
comprehensive physical damage coverage.
 

 19. 
Collision coverage provides for payment of damages up to
a.
the current value of the car.
b.
the purchase price of the car when you bought it.
c.
the price of a new car similar to the car damaged.
d.
All the above are true; the method chosen depends on the insurance company.
 

 20. 
Laws that require you to carry certain types of automobile insurance before your car can be licensed are
a.
compulsory insurance laws.
c.
insurance laws.
b.
financial responsibility laws.
d.
assigned-risk plans.
 

 21. 
Auto insurance that provides coverage to high risk drivers who are unable to purchase insurance in the normal fashion is
a.
compulsory insurance laws.
c.
insurance laws.
b.
financial responsibility laws.
d.
assigned-risk plan.
 

 22. 
Property insurance is designed to protect you from financial loss if your property is lost or destroyed as a result of
a.
theft.
c.
windstorm.
b.
floods.
d.
all of the above.
 

 23. 
Causes of loss are
a.
claims.
c.
economic risk.
b.
perils.
d.
coverage.
 

 24. 
Property permanently attached to land, such as a house or garage, is
a.
insured property.
c.
real property.
b.
personal property.
d.
attached property.
 

 25. 
A basic type of property insurance that protects against losses caused by fire or lightning is
a.
personal liability coverage.
c.
homeowners policy.
b.
standard fire policy.
d.
extended coverage.
 

 26. 
Additional protection of property that covers damage caused by perils such as wind, hail, smoke, and falling aircraft, among other things, is
a.
personal liability coverage.
c.
homeowner’s policy.
b.
standard fire policy.
d.
extended coverage.
 

 27. 
The decrease in value of property is
a.
appreciation.
c.
valuation.
b.
recession.
d.
depreciation.
 

 28. 
The person who acts as the insurance company’s representative and looks at your damaged property to determine the extent of loss is
a.
an insurer.
c.
an adjuster.
b.
a policyholder.
d.
a sales representative.
 

 29. 
The widest range of financial services is offered by
a.
a mutual savings bank.
c.
a commercial bank.
b.
a check-cashing outlet.
d.
an investment company.
 

 30. 
A credit union differs from other financial institutions in that it is
a.
chartered by the federal government.
b.
owned by foreign investors.
c.
taxed at a different rate.
d.
organized as not-for-profit organization.
 

 31. 
A check-cashing outlet is commonly used by
a.
people who do not have a bank account.
b.
consumers who want to buy homes.
c.
people who have life insurance.
d.
investors who desire a high rate of return.
 

 32. 
Automatic teller machines (ATMs)
a.
provide automatic teller services quickly and easily.
b.
provide automobile loans.
c.
accept applications for credit cards.
d.
report the current value of investments.
 

 33. 
The items most likely to be stored in a safe-deposit box are
a.
cash
b.
checkbooks
c.
bond & stock certificates
d.
deposit slips for a savings account
 

 34. 
A common advantage of a checking account is that
a.
every checking account earns interest
b.
lost checks are insured by the federal government
c.
banks automatically tell you when payments are due
d.
canceled checks can serve as proof of payment.
 

 35. 
The fee a bank charges for handling a checking account is a
a.
credit transaction.
c.
service charge.
b.
deposit.
d.
minimum balance.
 

 36. 
The purpose of a signature card is to
a.
serve as identification when cashing a check
b.
allow a bank customer to obtain cash by just signing a special form.
c.
allow customers to make deposits quickly.
d.
serve as the bank’s official record of a depositor’s signature.
 

 37. 
Which account is an account opened by two or more people together?
a.
a joint account
c.
a business account
b.
an EFT account
d.
an interest-earning account
 

 38. 
When adding money to a checking account, a bank customer prepares a
a.
bank statement
c.
deposit slip
b.
signature card
d.
sharedraft
 

 39. 
The purpose of an endorsement is to
a.
open a checking account with direct deposit.
b.
provide written evidence that payment has been received.
c.
convert US currency to the currency of another country.
d.
instruct the bank to automatically put an amount each month in your savings account.
 

 40. 
A restrictive endorsement commonly uses which of the following words?
a.
“Pay to the order of.”
b.
“For deposit only.”
c.
“Void if not cashed within 60 days.”
d.
“No words are necessary.”
 

 41. 
The primary purpose of life insurance is
a.
to provide income if the insured is disabled.
b.
a means of investing.
c.
a means of saving.
d.
protection against financial loss associated with dying.
 

 42. 
A life insurance policy that provides financial protection from losses resulting from loss of life during a definite period of time is
a.
term life insurance
c.
level term insurance
b.
decreasing term insurance
d.
renewable insurance
 

 43. 
Insurance which allows the policyholder to continue his or her insurance for one or more terms without taking a physical examination is
a.
permanent term insurance.
c.
level term insurance.
b.
decreasing term insurance.
d.
a renewable policy.
 

 44. 
Term life insurance on which the amount of protection gradually becomes smaller but the premiums remain the same during the term is
a.
permanent term insurance.
c.
level term insurance.
b.
decreasing term insurance.
d.
a renewable policy.
 

 45. 
Permanent insurance that extends over the lifetime of the insured is
a.
whole life insurance.
c.
level term insurance.
b.
decreasing term insurance.
d.
a renewable policy.
 

 46. 
Protection provided by regular medicine, hospital, and surgical coverages is
a.
surgical insurance.
c.
major medical insurance.
b.
hospital insurance.
d.
basic health insurance.
 

 47. 
Insurance which provides protection against the high costs of serious illnesses or injuries is
a.
surgical insurance.
c.
major medical insurance.
b.
hospital insurance.
d.
basic health insurance.
 

 48. 
State governments support a health insurance program designed to provide medical benefits to employees who are injured on the job.  This program is
a.
worker’s compensation.
c.
Medicaid.
b.
supplementary insurance.
d.
Medicare.
 

 49. 
The day-to-day financial activities associated with using limited income to satisfy your unlimited needs and wants is
a.
discretionary income.
c.
expenditures.
b.
net income.
d.
money management.
 

 50. 
The two common financial statements used in money management are
a.
the budget & income statement.
b.
the balance sheet & income statement.
c.
the balance sheet & cash flow statement.
d.
the budget & balance sheet.
 

 51. 
A type of financial statement which reports what a person or family owns as well as owes is
a.
a cash flow statement.
c.
a balance sheet.
b.
a capital statement.
d.
an income statement.
 

 52. 
Items of value are
a.
owner’s equity.
c.
assets.
b.
liabilities.
d.
net worth.
 

 53. 
A statement that reports net wages and other income along with spending for a given period of time, such as for a month, is
a.
a cash flow statement.
c.
a balance sheet.
b.
a capital statement.
d.
an income statement.
 

 54. 
The first component that should be planned for in a budget is
a.
variable expenses.
c.
savings.
b.
fixed expenses.
d.
living expenses.
 

 55. 
A good budget
a.
must be realistic.
c.
should have a simple format.
b.
should be flexible.
d.
all the above.
 

 56. 
A report that summarizes current financial condition, acknowledges financial needs, and sets a direction for future financial activities is
a.
an income statement.
c.
a balance sheet.
b.
a financial plan.
d.
an owner’s equity statement.
 

 57. 
Evaluating one’s financial position, setting financial goals, and guiding activities and resources toward reaching those goals is
a.
an income statement.
c.
financial planning.
b.
estate planning.
d.
an owner’s equity statement.
 

 58. 
The accumulation and management of property during one’s lifetime and the distribution of one’s property at death is
a.
an income statement.
c.
financial planning.
b.
estate planning.
d.
an owner’s equity statement.
 

 59. 
The part of the Social Security insurance system that provides pensions to retired workers and their families, death benefits to dependents of workers who die, and benefits to disabled workers and their families is
a.
retirement, survivors, and disability insurance.
b.
unemployment insurance.
c.
a pension.
d.
an annuity.
 



 
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