Question

If your essential expenses plus your non-essential expenses are greater than your income, then your financial reserves are growing larger. Please select the best answer from the choices provided T F

Answer 1

The answer is False because the test says so.

Answer 2

The correct answer is False

Explanation.

Expenses refer to the cost of products or services. This includes essential expenses such as food and non-essential expenses such as entertainment. On the other hand, income refers to the amount of money an individual or business receives, and the financial reserves refer to the money from the income that is saved to be used for debts or unexpected expenses.

In this context, an increase in expenses reduces your financial reserves because it is likely you spend all your income in the essential and non-essential expenses, and there is nothing left to reserve. Similarly, if your expenses are greater than your income your financial reserver will decrease because, in this case, you cannot reserve or save money. Thus, it is false that your financial reserves grow larger if expenses are greater than your income.