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Answers to Concept Checks.

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ANSWERS TO CONCEPT CHECKS, FINANCIAL PLANNING PROBLEMS | |
|AND QUESTIONS, AND CASES |

CONCEPT CHECK ANSWERS

Concept Check 2-1 (p. 38)

1. What are the three major money management activities?

The three major money management activities are (1) storing and maintaining financial records and documents, (2) creating personal financial statements, and (3) creating and implementing a budget. (p. 36)

2. What are the benefits of an organized system of financial records and documents?

An organized system of financial records provides a basis for: (1) handling daily business activities, such as bill paying; (2) planning and measuring financial progress; (3) completing required tax reports; (4) making effective investment decisions; and (5) determining available resources for current and future spending. (pp. 36-37)

3. For each of the following records, check the column to indicate the length of time the item should be kept. “Short-time period refers” to less than five years.

|Document |Short time period |Longer-time period |
|Credit card statements |X | |
|Mortgage documents | |X |
|Receipts for furniture, clothing |X | |
|Retirement account information | |X |
|Will | |X |

Concept Check 2-2 (p. 44)

1. What are the main purposes of personal financial statements?

(1) Report your

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