6. Annual irregular expenses should be managed by:

Ignoring them until due

Calculating annual total ÷ 12, setting aside monthly

Paying with credit card

Hoping for the best

7. James contractor earning $120k struggled because:

Income was too low

Irregular income + regular expenses + no buffer = cashflow crisis

He spent too much

He needed more work

8. Income smoothing account works by:

Averaging your debt

Good months build buffer, lean months draw on buffer, steady transfer out

Reducing expenses

Increasing income

9. Warning sign of cashflow problems:

Having a budget

Regularly using credit card/overdraft to cover gaps despite adequate income

Paying bills on time

Saving money

10. "You pay bills with cash, not profit" means:

Profit doesn't matter at all

Need actual money in account to pay bills, accounting profit isn't enough

Should only deal in physical cash

Credit cards don't work

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6. Income smoothing account works by:

Reducing total income

Good months build buffer, lean months draw on it, main account gets steady amount

Investing the money

Hiding income from tax

7. Annual irregular expenses should be:

Paid whenever they arrive

Calculated annually, divided by 12, set aside monthly

Put on credit card

Ignored in budgeting

8. James earned $120k but struggled monthly because:

Income was too low

Irregular contracting income didn't match regular expenses - timing mismatch

He spent too much

His partner didn't work enough

9. A warning sign of cashflow problems is:

Having savings

Regularly using overdraft to cover gaps despite adequate annual income

Paying bills on time

Having a budget

10. You pay bills with:

Profit

Cash - actual money in account

Revenue

Budget projections

Calculate.co.nz is partnered with Interest.co.nz for New Zealand's highest quality calculators and financial analysis.