question

Being Financially secure involves balancing what you earn with a. your current level of debt b. your retirement plans c. your investments d. what you spend

answer

d

question

In order for your financial plan to be realistic and attainable it needs to be based upon your a. income level b. budget c. number of tax deductions, exemption,exclusions, and credits d. balance sheet e. none of the above

answer

a

question

Which of the following is NOT one of the five basic steps in personal financial planning? a. develop a plan of action b. define your financial goals c. implement your plan d. let an accountant review your plan e. evaluate your financial health

answer

d

question

Which of the following steps are considered to be part of the personal financial planning process as outlined in the text? a. implement your plan b. evaluate your financial health c. develop your plan of action d. define your financial goals e. all of the above

answer

e

question

Suppose that you just completed your first year of college with $11000 in loans and plan to borrow the maximum each year from now until graduation. You never accounted for the way you spend your money, do not have a budget, and want to insure that you will be able to repay your loans after college. What is the most important thing you can do right now? a. ask a friend who took the Personal Finance course for advice b. visit your career counselor at school c. talk to your parents about an allowance d. immediately begin to develop a personal finance plan

answer

d

question

The term that considers having money readily available when you need it is the concept of a. equity b. liquidity c. flexibility d. solvency e. none of the above

answer

b

question

An economic condition in which rising prices reduce the purchasing power of money is termed a. inflation b. cash erosion c. deflation d. stagnation e. none of the above

answer

a

question

Jacob has written down his short-term goals for the next year on his goals worksheet. So far he has prioritized his goals, he has determined a feasible due date by which he wants to have achieved his goals; according to the textbook, the final step Jacob needs to complete his goals process is to a. email himself a copy of the goals worksheet in case he loses the paper copy of the worksheet b. determine an appropriate cost of each of his listed goals c. post his goals worksheet on his refrigerator so he can see it everyday d. contact his financial advisor for approval of his goals

answer

b

question

What is the main factor in determining your potential income level? a. age and years of employment b. education and skills you have attained c. who you know in your company administration d. the size of the company you work for

answer

b

question

Which of the following statements applies to obtaining an undergraduate college degree? a. it may be the single best investment you will ever make b. all of the above c. They are expensive and rarely pay off in increased earnings d. there is no relationship between personal wealth and earning a college degree

answer

a

question

Which of the following statements applies to obtaining an undergraduate degree? a. all of the above b. It may be the single best investment you will ever make c. There is no relationship between personal wealth and earning a college degree d. they are expensive and rarely pay off in increased earnings

answer

b

question

According to the Rockefeller Foundation report, which of the following issues do Americans rank as number one in terms of causing the most concern? a. retirement b. medical expenses c. debt d. unemployment

answer

a

question

According to your text what percentage of Americans could only go 2 weeks without experiencing financial hardships? a. 40 percent b. 30 percent c. 20 percent d. 50 percent

answer

c

question

Which of the following is outlined in the text as reason(s) why many people do not have an adequate financial plan? a. There is never enough time for organizing and planning b. Many of us lack the proper knowledge c. For most people it is easier to spend than save. d. procrastination can affect everyone. e. all of the above are common excuses for not planning

answer

e

question

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers that one expects to earn additional return for increasing investment risk is the ______________ principle. a. mind games and your money b. risk and return go hand in hand c. nothing happens without a plan d. the best protection is knowledge

answer

b

question

The concept that emphasizes that people should not put all their eggs in one basket is a. the farmers analogy b. liquidity is first c. the curse if competitive business markets d. diversification reduces risk

answer

d

question

What piece of advice might you give to someone for whom the act of saving is an after thought? a. Money isn't everything b. don't put all your eggs in one basket c. pay yourself first d. None of the above

answer

c

question

Which of the following adheres to the financial principle "just do it?" a. pay yourself last b. it's much easier to save than to spend c. the amount you can spend is what's left after you put aside your savings d. all of the above

answer

c

question

Which of the following falls under the category of mind games and your money? a. mental accounting b. viewing your tax refund as "mad money" c. the sunk cost effect d. all of the above

answer

d

question

If liquid funds are not available, an unexpected need, such as a job loss or injury may force you to a. take on unexpected debt repayments b. cash in a longer-term investment c. borrow money fast d. all of the above

answer

d

question

Assets that you purchase for the purpose of accumulating wealth to satisfy your financial goals are called a. investment assets b. monetary assets c. intangible assets d. all of the above are correct

answer

a

question

Liabilities are best described as a. intangible obligations b. financial debts and obligations that you owe c. assets that depreciate over time d. monetary items that you own e. your net worth

answer

b

question

Fair market value refers to a. what you paid when you purchased an asset b. what an asset could be sold for today c. how the price of an asset has changed since its original purchase d. what an asset will be worth at some point in the future

answer

b

question

Your net worth, or your general level of financial worth, is found by a. dividing monthly debt (less mortgage payment) by monthly income b. subtracting your liabilities from your assets c. dividing your monetary assets by your current liabilities d. subtracting your expenses from your income e. subtracting current liabilities from monetary assets

answer

b

question

An expenditure over which you have no control and are obligated to make is a a. fixed expenditure b. contractual expenditure c. long-term expenditure d. repeating expenditure e. constant expenditure

answer

a

question

An expenditure that you can control over time and that you can manage is a(n) a. adjustable expenditure b. variable expenditure c. fixed expenditure d. short-term expenditure e. constant expenditure

answer

b

question

How would an income statement benefit one in creating a financial plan? a. Know where one's money is going b. spot problem areas of over spending c. determine whether one is earning more than one spends d. determine if money is available for saving or investment e. all of the above

answer

e

question

If your liabilities are greater than the value of your assets you are considered a. bankrupt b. unbalanced c. insolvent d. unstable

answer

c

question

Which questions do financial ratios help you answer? a. Do I have the ability to meet my debt obligations? b. Am I saving as much as I think I am? c. Do I have adequate liquidity to meet emergencies? d. all of the above e. only a and b above

answer

d

question

Leroy went shopping today and used his Visa card to buy a new sweater. He wrote a personal check to pay for a new video game. He bought some snack food using cash. Which of these purchases are difficult to track and monitor on his budget? a. The video games because he did not add a budget category for electronics b. the snacks because cash transactions don't leave a paper trail. c. The sweater because it costs more than what he budgeted for clothing this month. d. all of the above

answer

b

question

Which of the following will be the best type of record keeping system to use in maintaining financial records? a. Any record system out there will do b. the CPA's system c. the one you will actually use d. manual method with pencil and notebook

answer

c

question

You have learned that a budget a. is a plan for controlling cash inflows and cash outflows b. is a process of setting spending goals for the upcoming year or month c. can be pretty simple or pretty sophisticated d. includes both actual and estimated expenses e. all of the above are true about budgets

answer

e

question

Which of the following financial documents would you use to create a financial plan? a. income statement b. budget c. cash budget d. balance sheet e. all of the above

answer

e

question

Suppose that you have been operating a marketing business out of your home. It has recently expanded beyond belief. Since you have neglected your personal finances for some time, what would you do as a first step? a. Rent a separate office for your business activities. b. separate your personal finances from the business finances c. include your personal finances with the business finances to save time d. Purchase a software program to handle both your business and personal finance at the same time

answer

b

question

A plan for controlling and forecasting your cash inflows and outflows is called a(n) a. balance statement b. statement of changes in financial position c. cash budget d. income statement e. none of the above

answer

c

question

Which of the following is a relevant question to ask a financial planner? a. Will you provide us with a written estimate of your services and their costs? b. Would you show us a similar financial plan you have done for someone else? c. Would you provide us with references? d.What are your credentials and professional designations? e. All of the above

answer

e

question

By allowing the interest tat you earn on an investment to stay in the investment and to earn interest you have already earned is called what? a. the power of simple interest b.the power of present value c. the power of compound interest d. the power of future value e. the power of time

answer

c

question

A one-time investment of $200 at a 10% Annual Rate of Return yields $242 in two years. The $242 is known as the a. present value b. compound value c. principal plus value d. annuity value e. future value

answer

e

question

John Madrid put 1,000 into a mutual fund yielding an 18% Annual Rate of Return. Using the Rule of 72 calculate approximately how long it will take to double in value. a. three years, four months b. three years, seven months c. four years d. four years, four months e. five years

answer

c

question

Which financial planning concepts should be helpful to a couple planning for how much money to start saving for their retirement? a. future value b. reinvesting c. present value d. compound interest e. all of the above

answer

e

question

Your money will grow or compound _____ as the number of compounding periods per year becomes___. a. slower;larger b. faster;smaller c. faster;larger d. slower;compounded e. none of the above are correct

answer

c

question

Is it possible to create a retirement estate of $585,000 instead of $310,000 without requiring much more to be invested every month? a. probably not with inflation working against you b. absolutely not c. depends upon the interest rte or return you earn on the investment as well as the number of years until retirement. d. there is not enough information available to answer this question

answer

c

question

The discount rate is the interest rate used to bring ____ back to ___. a. current dollars; present dollars b. current interest rate; present present interest rate c. future dollars; present dollars d. future interest rate; present interest rate

answer

c

question

A series of equal dollar payments at the end of each period for "x" number of time periods is a. an annuity b. a complex annuity c. an annuity due d. a deferred annuity e. an equal installment annuity

answer

a

question

A compound annuity uses the principles of a. reinvesting and present value b. compound interest and future value c. compound interest and present value d. amortization and reinvesting e. reinvesting and compound interest

answer

e

question

When a loan is paid off in equal installments, this is called a(n)____ loan. a. discounted b. amortized c. reverse annuity d. balloon e. none of the above

answer

b

question

Shawna is a single person with no dependents. She normally receives over $1800 every year for an income tax refund. She is having difficulty paying her monthly bills every month. What tax advice would you give her? a. she should pay her estimated taxes every quarter b. she needs to file as head of household c. she should increase her exemptions on her W-4 form at work d. she needs to find some more tax deductions

answer

c

question

The movement into a higher tax bracket as a result of inflation increasing wages is called ___. a. bracket migration b. bracket climbing c. bracket creep d. bracket shifting e. none of the above

answer

c

question

If you are an unmarried tax payer, with at least one child or dependent living with you, your filing status should be a. single b. surviving spouse c. head of household d. married filing separately e. none of the above

answer

c

question

Assets you own, including such items as stocks, bonds, or real estate, are commonly termed___. a. capital assets b.current assets c. monetary assets d. intangible assets e. none of the above

answer

a

question

Income on which the payment of taxes is postponed until some further date is called ___. a. tax-postponed b. tax-delayed c. tax-tardy d. tax-deferred e. none of the above

answer

d

question

Deduction calculated using the federal tax form "Schedule A" which are totaled and then subtracted from the taxable income are called ___. a. personal exemptions b. standard deductions c. personal expenditures d. itemized deductions e. none of the above

answer

d

question

An IRS-allowed reduction in your income for yourself, your spouse, and any dependents that s subtracted before you compute your taxes is called a (n) ___. a. Personal and dependency exemptions b. itemized exemptions c. dependency deduction d. personal deductions e. none of the above

answer

a

question

A tax system in which tax rates increase as income increases is called a(n)____ system. a. prorated tax b. regressive tax c. universal tax d. progressive tax e. none of the above

answer

d

question

Three years ago you purchased a share of CompUTech stock for $4, which you could sell today at the current market price of $150. What would be your capital gain on the sale, ignoring commissions? a. $154 b. $4 c. $146 d.$150 e. Cannot determine from the information provided.

answer

c

question

Which of the following is not an income tax filing status? a. married filing jointly and surviving spouses b. head of household c. married filing separately d. single e. all of the above are income tax filing statuses

answer

e

question

The amount of income taxes that you actually pay in based upon your a. taxable income b. adjusted gross income c. taxable income minus exemptions and deductions d. gross income

answer

a

question

FICA deductions from your paycheck are for which mandatory federal insurance programs? a. unemployment benefits b. Social security c.Medicare d. Medicaid e. both B and C

answer

e

question

Who must file a federal income tax return? a. individuals whose income meets federal guidelines b. all American citizens c. everyone with an earned income during the year d. only those who have to file a state income tax return e. all heads of household

answer

a

question

The deadline to file your income tax return is ___ although an automatic extension may be filed. a. March 15 b. April 30 c. April 15 d. March 30

answer

c

question

If you are unable to file your tax returns by the deadline you may file form 4868, Application for Automatic Extension of Time, and receive an extension of up to four months a. Automatically b. If you meet the IRS requirement c. Upon approval d. None of the above

answer

a

question

Which indicates the correct order for completing your tax returns? a. determine gross income, subtract adjustments, subtract deductions, claim exemptions, calculate total tax b. subtract deductions, calculate total tax, claim exemptions, determine gross income, subtract adjustments c. claim exemptions, calculate total tax, subtract deductions, subtract adjustments, determine gross income d. none of the above

answer

a

question

For the Taylors, in chapter 4, they are allowed to take a tax credit of $1,000 per dependent child off of their__ a. Adjustments retained b. exemptions counted c.total tax owed d. net income

answer

c

question

Which of the following is a source of tax-free income? a. child support payments b. earnings on your IRA c. federal income tax refunds d. welfare benefits e. all of the above

answer

e

question

Gross income is another name for____ income. a. net b. total c. value added d. expected

answer

b

question

Which of the following is a reason for the IRS to audit your tax return? a. you earn a lot of money b. you were randomly selected as a matter of routine audits c. there is something suspicious on your return d. you were audited in the past e. and or all of the above

answer

e

Personal Finance Test one (turner) – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards