busg-125 test 1 {ch.1- 3}

Which of the following is most correct? Multiple Choice Tax records belong in a home file Adoption papers belong in a home file A birth certificate should be kept in a personal computer system Past budgets belong in a safe deposit box A warranty belongs in a safe deposit box

Tax records belong in a home file

You may be required to make estimated tax payments if: Multiple Choice You are married You own your own business You do not have interest income None of these are correct You receive a paycheck with taxes withheld

You own your own business

If your taxes due are greater than the amount you had withheld for the year, then you should expect a refund after you complete your federal income taxes.

false

Short-term goals are those that must be achieved within two months.

false

The focus of an organized system of financial records is to reduce credit card usage.

false

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

false

Which of the following financial documents would most likely be stored in a safe deposit box? Multiple Choice warranties checking account statements personal financial statements W-2 forms marriage certificates

marriage certificates

Money management refers to day-to-day financial activities necessary to manage personal economic resources.

true

Opportunity costs refer to money already spent.

true

When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years.

true

When Paul completes his taxes, he can include all of the following as exemptions except Multiple Choice His 20 year old son who is working full-time and living in an apartment His 12 year old son Himself His wife His 22 year old daughter who is a full-time student

His 20 year old son who is working full-time and living in an apartment

The major function of a financial plan is to Multiple Choice Increase savings. Obtain adequate insurance protection. Improve your credit rating. Achieve financial goals. Reduce taxes.

Achieve financial goals

When calculating federal income taxes, what increases "income"? Multiple Choice Tax-exempt income Tax deductions Alimony Exclusions Tax-deferred income

Alimony

Which of the following will increase the net worth of a household? Multiple Choice Invest in possessions whose values do not increase Increase the amount borrowed for major purchases Decrease saving by $50 per month Decrease spending by $5 per day Keep an extra $100 in a checking account instead of a savings account

Decrease spending by $5 per day

Fred has been completing his own tax returns for years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation? Multiple Choice Until he files his return this year. Because he filed past tax returns on time, the IRS will provide the documentation. 15 years 6 years

6 years

Which of the following are considered to be the primary personal financial statements? Multiple Choice Balance sheet and cash flow statement Budget and credit card statements Bank statement and savings passbook Tax returns Checkbook and budget

Balance sheet and cash flow statement

Which of the following short-term goals is stated most clearly? Multiple Choice Set up an emergency fund Retire at age 65 with $2,000,000 in my 401(k) account Invest $50 per month for the next 18 years for my nephew's college fund Purchase a house with a mortgage no greater than $150,000 within 5 years Buy a car for less than $17,000 within 6 months

Buy a car for less than $17,000 within 6 months

To develop a financial plan, one should Multiple Choice Identify specific, realistic goals along with the time frame and an action plan Not worry about whether or not the goals can be achieved based on one's income and life situation Focus on intermediate goals first Set several general goals for the short-term Only set long-term goals after short-term goals have been accomplished

Identify specific, realistic goals along with the time frame and an action plan

Which of the following long-term goals is stated most clearly? Multiple Choice Purchase a house with a mortgage no greater than $150,000 within 3 years Buy a car for less than $17,000 within 6 months Set up an emergency fund Retire at age 65 Invest $50 per month for the next 18 years for my nephew's college fund

Invest $50 per month for the next 18 years for my nephew's college fund

A personal balance sheet presents Multiple Choice Items owned and amounts owed. Earnings on savings and investments. Income and expenses for a period of time. Amounts budgeted for spending. Family financial goals.

Items owned and amounts owed.

Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper deduction? Multiple Choice Medical and dental expenses in excess of 7.5% of AGI State income taxes Contributions to charitable organizations Mortgage interest Miscellaneous expenses less than 2% of AGI

Miscellaneous expenses less than 2% of AGI

The number of personal financial records a household has to organize may seem overwhelming. How long should you keep copies of your tax returns? Multiple Choice Permanently Until you receive your refund Until the end of the current year None of these answers are correct.

None of these answers are correct.

Which of the following would increase the interest rate for a loan? Multiple Choice Lower consumer prices Constant interest rates Short time to maturity Higher down payment Poor credit rating

Poor credit rating

Income that is taxed at a later date is Multiple Choice Earned income Exclusions from income Tax-deferred income Adjusted gross income Tax-exempt income

Tax-deferred income

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels. Multiple Choice Sales tax Excise tax Income tax Real estate tax Estate tax

income tax

The amount you would have if everything of value would be sold and all debts would be paid in full. Multiple Choice Net assets. Net worth. Total liabilities. Total income. Budgeted expenses.

net worth.

The main purpose of personal financial statements is to: Multiple Choice Measure your progress toward financial goals These are all correct Maintain information about your financial activities Provide data for preparing tax forms or applying for credit Report your current financial position

these are all correct