CYAF 222 Final

Which of the following would be considered smart financial planning?

Contribute to your employer-sponsored 401(k) retirement plan at least up to the amount of the employer's matching contribution.

Financial objectives are rarely achieved without restraining

Current consumption

These calculations are a great example of how time impacts return on savings! By starting earlier Samantha was able to earn over $60,000 more than Adam ! This is amazing if you consider that, over time, Adam actually invested $40,000 more than Samantha ! This means that Samantha not only earned over $60,000 more than Adam , but she also had an additional $40,000 that she could use for something else. Taken together, Samantha came out over $60,000 ahead of Adam simply because she started 10 years earlier! Lesson to be Learned: Start Investing Early!

Samantha Answer 2:Adam Answer 3:Adam Answer 4:Samantha Answer 5:Samantha Answer 6:Adam Answer 7:Samantha Answer 8:Adam

____ is the current value of an asset that will be received in the future

Present Value

____ taxes are based on one's ability to pay.

Progressive

During expansion, which of the following is high?

Retail sales

Which of the following job-related apparel is most likely to qualify as a deductible expense?

Safety goggles for a welder

Matthew is concerned about his ability to save money regularly and has prepared a budget. Which of the following budget classifications would be most appropriate for Matthew's budget?

Savings withheld from income and deposited directly to savings

A flexible spending account (FSA) is

a vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars.

Given your answer when calculating Maria's basic liquidity ratio, how long will Maria's monetary assets last if she uses them to pay her monthly expenses with no income?

about 3 weeks

Qualifying contributions to personal retirement accounts are subtracted as

adjustments to income.

A net surplus at the end of the month could be

all of these

Financial goals

all of these

The advantages of having organized financial records include

all of these

To construct a balance sheet, you need to compile dollar values for your assets and liabilities. Good sources from which to begin are

all of these

Wise money managers should select the savings option that

all of these

Which type of bank agreement will result in the lowest fees?

an automatic funds transfer agreement.

A balance sheet includes ____, ____, and ____.

assets; liabilities; net worth

There should be enough money in a revolving savings fund to

avoid running out of money

A rising inflation rate is good news for

borrowers

Financial success is defined as the achievement of

financial aspirations that are desired, planned, or attempted.

Pre-established plans of action to be implemented in specific circumstances are called

financial strategies

A long-term goal is one that is projected to be achieved beyond how much time?

five year

The statistic that measures the value of all goods and services produced in the United States is the

gross domestic product

Child support received, Social Security benefits, and public assistance are all examples of

income

Which of the following is (are) characteristic of a safe-deposit box?

it requires two keys to open

Tax which applies to income of a minor child earned off the assets is known as the

kiddie tax

The speed and ease by which an asset can be converted into cash is referred to as its

liquidity.

A surplus on your cash-flow statement indicates that you are

managing your financial resources successfully

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

matching contributions

A short-term goal is one that is projected to be achieved within how much time?

one year

All income other than capital gains is referred to as

ordinary income

Interest rates and inflation climb at what phase of the economic cycle?

peak

Seeking legal ways to reduce, eliminate or defer income taxes is called

tax planning

Mike and Patty are saving monthly so they can buy a home, but they are currently renting an apartment. The apartment is part of

their level of living

A method by which one can compare cash flows across time, either as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value) is called

time-value of money

The strictest method of controlling budgets is

using the envelope system

Food, clothing, and entertainment are examples of

variable expenses

The most recognized professional designation held by financial planners is the

Certified Financial Planner

Which form of compensation is not considered an employee benefit?

Commissions

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's expenses for one month are:

$1,560.00

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's income for one month is.

$1,750.00

Step 6: Apply Tax Table 4-3 or Tax-Rate Schedule 4-2 to determine tax liability. What is their Preliminary Tax Liability?

$10,199

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 7: What is their Final Tax Liability (Subtract Tax Credits for which you qualify): Part A: What is the TOTAL of their Tax Credits?

$10,269

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 3: Subtract Adjustment to Income (Adjusted Gross Income):

$111,050

Rule of 72 Assume you make a single deposit of $500 to an account and wish for it to grow to a future value of $1,000 in six years. What annual interest rate compounded annually will the account have to pay?

12%

A debt-payments-to-disposable-income ratio of ____ percent or more is considered to be problematic.

15

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 2: Determine and report their Gross Income after Subtracting Exclusions

$121,800

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 1: Determine their Total Income.

$126,800

A tax credit of up to ____ is available for qualifying costs of an adoption.

$13,190

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's net income for one month is:

$190.00

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's current net worth is:

$2,270.00

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's liabilities are:

$2,380.00

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 3: At age 36, Adam begins to invest $2,000 annually at 8% and continues for 30 years. When Adam reaches age 66, his investment has grown to:

$226,566.40

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 2: After Samantha stopped contributing to her investment she left the total she had accumulated in the account to continue earning 8% annually. When Samantha reaches age 66, her investment has grown to:

$291,548.61

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's current assets are:

$4,650.00

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 4: Adam contributed $60,000 to his investment ($2,000 annually for 30 years) whereas Samantha only contributed $20,000 to her investment ($2,000 annually for 10 years). Time makes a huge difference, though Samantha only invested 1/3 as much money as Adam did, her investment was able to outpace Adam's by:

$64,982.21

Emma, 23, just graduated from college in Child, Youth and Family Studies and has been working in outreach for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $50.00 each month and at the end of her first year of working, she has accumulated $600.00. She has decided to invest her $600.00 in a Certificate of Deposit that will pay an annual interest rate of 3% if she leaves the money on deposit (in the account) for 4 years. Now calculate the Future Value (FV) using the FORMULA: FV = PV * (i+1.0)n

$675.30

Emma, 23, just graduated from college in Child, Youth and Family Studies and has been working in outreach for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $50.00 each month and at the end of her first year of working, she has accumulated $600.00. She has decided to invest her $600.00 in a Certificate of Deposit that will pay annual interest rate of 3% if she leaves the money on deposit (in the account) for 4 years. The Future Value (using the table in the Appendix) of Emma's savings will be: FV = PV * 'Factor' from the Appendix The 'Factor' from the Appendix is used in lieu of (i+1.0)n

$675.30

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 5: Subtract the value of exemptions. What is their Taxable Income?

$74,150

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. The Present Value (using the table in the Appendix) needed to meet their savings goal is: PV = FV * Factor (the number from the table in the Appendix)

$9,118.80

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 4: Subtract either the IRS's Standard Deduction amount for your tax status OR Itemized Deductions. What is the Subtotal?

$98,450

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 7: What is their Final Tax Liability (Subtract Tax Credits for which you qualify): Part B: What is their Final Tax Liability (SUBTRACT Tax Credits for which they qualify):

-$70

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed According to the Basic Liquidity Ratio, if Maria lost her income, she could maintain her current spending for _____ months.

.74

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000.00 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. The 'Factor' (the number from the table in the Appendix) to calculate the Present Value of their saving's goal:

0.7599

Emma, 23, just graduated from college in Child, Youth and Family Studies and has been working in outreach for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $50.00 each month and at the end of her first year of working, she has accumulated $600.00. She has decided to invest her $600.00 in a Certificate of Deposit that will pay annual interest rate of 3% if she leaves the money on deposit (in the account) for 4 years. The 'Factor' (the number from the table in the Appendix) to calculate the Future Value of Emma's savings is:

1.1255

Jason and Larissa would like to accumulate three times their monthly expenses in monetary assets. They currently have $2,800 in their money market account, and their monthly expenses are $4,500. How much more do they need in their money market account to reach their goal?

10,700

Which tax form do you use to file an amended tax return for previous year?

1040X

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 1: Samantha starts investing $2000 annually for 10 years and then stops. When Samantha reaches age 36 she has accumulated:

28,973.20

Which of the following deductible expenses can be prepaid for tax purposes?

All of these

Which of the following is a characteristic of a cash-flow statement?

All of these

Rita and Jose Hernandez want to assess their financial progress over the next few years. They have decided to take a reading of their status every New Year's Day. Which financial statement would they prepare each year?

Balance sheet

What statement is not accurate regarding participation in an HSA?

Employers are prohibited from making contributions to their employees' HSA.

Which of the following taxes is progressive?

Federal income taxes

Which of the following is not a deductible medical expense?

Funeral expenses

Which of the following is not defined as part of gross income?

Gifts and inheritances

The Affordable Care Act provides that individuals and families may take a tax credit called the______ to help them purchase health insurance through a health insurance exchange

Health Insurance Premium Tax Credit

Which of the following is primarily intended for those workers who select the high-deductible health plan (HDHP) offered by their employer?

Health Savings Account

Which of the following statements is correct?

Long-term interest rates are generally higher than short-term interest rates.

Bill and Alma are shopping for their first home. They have found two houses that are nearly identical except for their locations. One house costs $250,000 and is 15 miles from their places of employment. The second house costs $275,000, but it is within 5 miles of where they both work. Now Bill and Alma are trying to decide if living 10 miles closer to their workplaces is worth the extra $25,000 in the cost of the house. Which decision-making concept are they using?

Marginal Analysis

Brice is going to purchase a hi-def, flat-screen TV. He has decided on everything except the screen size. The unit with the 42-inch screen costs $600 while the unit with the 47-inch screen costs $750. In making this decision, which concept should Brice use?

Marginal Utility

Which of the following would be included in the category of assets known as monetary assets?

Money Market Accounts

Which of the following is classified as a tangible asset?

Motorcycle

Which of the following is an example of earned income?

Self-employment income

Which of the following types of subtractions cannot be taken by a taxpayer if he or she itemizes deductions?

Standard deduction

Which of the following is a way to receive free money to deposit into a tax-sheltered retirement plan?

Take advantage of your employer's "match."

Adjusted gross income is not a factor in calculating which of the following itemized deductions?

Taxes

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions"Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)."pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to CharityRefer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600Refer to page 126. Personal Exemptions are $4,050 eachRefer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC)EIC; Maximum credit $6,269 with three or more childrenCTC; Nonrefundable credit of up to $1,000 per child under age 17Refer to page 131 Step 8: Calculate the balance due the IRS or the amount of your refund.

They would receive a REFUND of $70

Mack and Amy are making regular contributions of $200 a month from their salaries to a money market savings account. These transactions will

both increase their net worth on their balance sheet and decrease the surplus on their income and expense statement.

The U.S. government measures inflation using

consumer price index

Which of the following economic indicators tends to move in the opposite direction of where the economy is headed?

counter cyclical indicators

A(n) ____ is an IRS-approved retirement plan sponsored by an employer to which employees may make pretax contributions that lower their tax liability.

defined-contribution retirement plan

Having your pay sent directly to your bank rather than receiving a written check is a type of

direct deposit

Occasionally, the economy will dip into a trough before it has reached a new peak after a previous trough. This phenomenon is called a

double dip recession

The economic phase with conditions making it easy for consumers to buy homes, cars, and other goods is called

expansion

The preferred phase of the economic cycle is

expansion

Checking account statements provide a source of information for the value of

expenditures.

The advantages of having organized financial records include

fair market value

A financial planner who makes recommendations solely based on the best interest of the client regardless of the impact on the planner is said to adhere to a

fiduicary standard