Reference no: EM133166243

1. Why is gathering information the first step in managing personal finances? Why is it important to have accurate information about your personal finances? How might this impact processes like applying for a loan?

2. Imagine that you are going off to college and need to open a bank account. What kind would you use and why? Then imagine yourself several decades later, after you have worked for years and saved some money. What kind of accounts will you need then and why? What are the disadvantages of some of the choices?

3. You have just received your bank statement, which shows that you have a balance of $562.73. However, you wrote your cousin a check for $150, and she has not cashed it yet. Your paycheck, which was direct deposited in your account after the statement, was $893.86. You also wrote a check for your rent that was $400 and spent $73.26 on groceries this morning. What do you need to do to reconcile your account and what total will you get when you do?

4. How does earned income, like wages, differ from unearned income, like interest or rental income? How would you pay taxes on these different types of income?

5. Why is it important for individuals to correctly calculate their tax liability? Explain what a tax liability is and how it is calculated in your answer.