Subject
Accounting & Finance study guides
Assets, ledgers, interest, and investing — with worked numbers and comparison tables.
26 explained questions, each with the answer, a worked explanation, and something interactive to help it stick.
- Which statement best describes how an investor makes money off debt?An investor makes money off debt by lending money, most often by buying a bond or note, and earning interest (the coupon) on that loan, plus the return of the original principal when the debt matures. The correct option is: earns interest by lending.Read the guide
- What type of credit are people most likely to use for small purchases during their lifetime?A credit card is the type of credit people are most likely to use for small, everyday purchases. It is revolving credit you can reuse up to a limit, unlike installment loans (personal, auto, or mortgage) that fund single large expenses.Read the guide
- What is equal billing, and how can it help you when creating your monthly budget?Equal billing (also called budget billing) averages your estimated annual utility cost into fixed, equal monthly payments. It smooths out seasonal spikes so every bill is the same and predictable, making it much easier to plan a monthly budget.Read the guide
- Which of the following is not a common feature of a financial institution?The direct production and sale of physical consumer goods (manufacturing) is not a feature of a financial institution. Financial institutions are intermediaries: they accept deposits, extend loans, transfer funds, and manage risk — they do not make or sell tangible products.Read the guide
- What is a major difference between retail banks and credit unions?The major difference is ownership and profit model: retail banks are for-profit companies owned by shareholders, while credit unions are not-for-profit cooperatives owned by their members. That is why credit unions often offer lower fees and better rates.Read the guide
- Which of the following financial institutions typically have the highest fees?Payday lenders — along with check-cashing outlets and pawn shops — typically charge the highest fees, often equivalent to triple-digit annual percentage rates. Among mainstream options, large commercial banks charge more than credit unions or online banks.Read the guide
- Which of the Following Accounts Cannot Be Linked to Most P2P Apps or Services?A Certificate of Deposit (CD) cannot be linked to most P2P apps or services. Peer-to-peer apps like Venmo, Cash App, and Zelle connect to checking accounts, debit cards, and sometimes credit cards -- accounts built for everyday spending. CDs, along with other locked savings and investment accounts, are not designed for frequent transfers.Read the guide
- Why should you log into your online or mobile app account with the travel charge card vendor?You should log in so you can easily access your statements, make payments, set up mobile alerts, and review transactions to catch and dispute unauthorized or fraudulent charges. Regular monitoring is a core cardholder responsibility that keeps the account in good standing.Read the guide
- What percentage of your gross salary does the Consumer Financial Protection Bureau suggest for student loan payments?8%. The Consumer Financial Protection Bureau suggests keeping your total student loan payments at no more than 8% of your gross (pre-tax) salary. Staying under this threshold keeps payments affordable and lowers the risk of delinquency and default.Read the guide
- Which Reason to Invest Resonates the Most With You, and Why?This is a personal reflection prompt with no single correct answer. The strongest, most defensible reasons to invest are building long-term wealth through compound growth, outpacing inflation, funding retirement, and reaching goals such as a home or education. Explain your choice by tying it to your own goals and time horizon.Read the guide
- Dave mentions that insurance is the defense for managing your money. Why is this true?Insurance is defense because it transfers risk. For a small, predictable premium it shields your assets from catastrophic loss, so a disaster does not wipe out savings or force you into debt—protecting the wealth your financial offense has built.Read the guide
- Why Is It Worth the Time and Effort to Create and Fine-Tune Your Budget and Make Budgeting a Habit?Budgeting is worth the effort because making it a habit gives you control over your spending, helps you reach financial goals, keeps you out of debt while building savings, and lowers money-related stress. Once routine, it takes little time and pays off continuously.Read the guide
- To whom would you forward a request for an advance decision when faced with a questionable payment?Forward the request to the Defense Office of Hearings and Appeals (DOHA). Under 32 CFR Part 282, DOHA issues advance decisions and settles questionable DoD travel-payment claims. Routine DTS travel policy questions route through PDTATAC first.Read the guide
- A life insurance policy would be considered a wagering contract without what?Without insurable interest. Insurable interest means the policyowner would suffer a genuine financial or emotional loss if the insured dies. Lacking it, the policy is not true insurance but a bet, or wagering contract, on someone's life.Read the guide
- How Can an Insurance Company Make a Profit by Taking In Premiums and Making Payouts?An insurer profits because the premiums collected from many policyholders exceed the claims paid to the few who file losses (underwriting profit through risk pooling), and because it invests the premium reserves it holds before claims come due, earning investment income on that money.Read the guide
- What are two reasons someone might purposely choose a higher monthly payment?Two reasons: (1) to pay off the loan faster by shortening the term, and (2) to reduce the total interest paid over the life of the loan. A larger payment attacks the principal sooner, so less interest accrues.Read the guide
- Credit Cards That Offer Flashy Rewards Like Airline Miles Often . . . ?Credit cards that offer flashy rewards like airline miles often charge a high annual fee and frequently carry higher interest rates, so the value of the miles must be weighed against those costs. They may also lock you into a single airline's program.Read the guide
- What Is the Correct Definition of a Cosigner for a Loan?A cosigner is a person who signs a loan alongside the borrower and agrees to take equal legal responsibility for repaying it if the primary borrower defaults — but who does not gain ownership of whatever the loan is used to buy.Read the guide
- When Should Fixed and Variable Monthly Budgeted Expenses First Be Planned?At the start of each month, before the month begins. Planning fixed and variable expenses ahead of time lets you allocate your expected income, set spending goals, and prioritize obligations so every dollar has a job before you spend it.Read the guide
- Which are common types of bonds that are currently issued? (Check all that apply.)The common types of bonds currently issued are corporate bonds, municipal bonds, and Treasury (U.S. government) securities such as bills, notes, and bonds. "Equity bonds" is not a real instrument, and "war bonds" are no longer issued, so both are incorrect distractors.Read the guide
- When creating a budget, you must track both your budgeted expenses and your ______ expenses?The missing word is "actual." When creating a budget you track both budgeted (planned) expenses and actual (real) expenses, then compare the two to find the variance and adjust your future spending accordingly.Read the guide
- How Do Lenders Evaluate If a Borrower or Cosigner Will Pay Them Back?Lenders use the three C's of credit: capacity (income and ability to repay), collateral (assets that can be seized if you default), and character (credit history of paying on time). The correct option is capacity, collateral, and character.Read the guide
- Which of These Is an Advantage of Checking Accounts?The main advantage of a checking account is easy, convenient access to your money — through a debit card, checks, ATMs, and online transfers — plus FDIC insurance, direct deposit, and an automatic record of your spending. It lets you easily access and manage your money.Read the guide
- Why Might Variable Expenses Change a Great Deal at Different Times of Year?Because variable expenses depend on usage and season. Heating and cooling costs, for example, vary considerably with the weather, so utility bills and other seasonal spending spike in summer and winter and drop in milder months, unlike fixed costs.Read the guide
- What is the correct definition of 'character' for potential cosigners?For a cosigner, 'character' means their track record of repaying debt responsibly — their credit history and demonstrated reliability in paying obligations on time. It is not their assets, income, or current bank balance; those fall under other credit factors like capital and capacity.Read the guide
- True or false: If you have an irregular income, budgeting won't work for you.False. Budgeting works with irregular income—and matters more, not less. Plan around your lowest expected monthly income, build a fresh budget each month, and rank expenses by priority so essentials are covered first when earnings are unpredictable.Read the guide