Financial Mgmt Test 1

Which type of audit is the least complicated for taxpayers?

correspondence audit

Liabilities are amounts representing

debts

Which of the following would qualify a person for a personal exemption when computing taxable income

dependent

The cost of living are

different in various geographic regions

Money received by an individual for personal effort is classified as ___________ income.

earned

The study of how wealth is created and distributed is

economics

Which of the following would result in a reduction of taxable income?

exclusions

An interest inventory measures a person's aptitude

false

Opportunity costs are only associated with money management decisions involving long-term financial security.

false

Planning to buy a house is an example of an intangible goal.

false

Present value is also referred to as compounding.

false

Risks associated with most financial decisions are fairly easy to measure.

false

When it comes to savings, most Americans

find saving difficult

Payments that do not vary from month to month are ____________ expenses.

fixed

Which one of the following should be budgeted first?

fixed $$

In 2018 and future years, which form would an individual use who has more than $100,000 in taxable income from wages, salaries, tips, unemployment compensation, interest, or dividends, and who is married and does not itemize deductions?

form 1040

The main purpose of taxes is to

generate revenue for funding government programs

Amanda has done some research and has discovered that the states with the largest population growth are Colorado and Arizona. Based on his findings, Jeremy believes these states will experience greater job growth as a result. This is an example of _______________ influencing jobs in the future.

geographic trends

Which one of the following is not an element of corporate culture?

government regulations

Increased consumer spending will usually cause

higher employment levels

The success of a financial plan will be determined by

how resources are used

Which one of the following is the best example of a long-term goal for a young couple?

income for retirement

Which of the following trends is most likely to increase domestic career opportunities in manufacturing organizations?

increased exports

Which of the following would cause prices to drop?

increased production by business

Which of the following is an example of an industrial trend that could affect the job market

increased use of computers in manufacturing

Meghan plans to buy a house for $250,000. If that real estate is expected to increase in value by 4% each year, what will its approximate value be six years from now?

316250

Each year, the IRS adjusts the value of an exemption based on inflation (and rounded to the nearest $50). In a recent year, if the exemption was worth $3450 and inflation was 3.8%, what would be the amount of the exemption for the upcoming tax year?

3600

Zane is earning $47,500 per year in a city located in central Texas. He is interviewing for a position in a city with a cost of living 8.5% higher than where he currently lives. What is the minimum salary Zane would need at his new job to maintain the same standard of living?

51537.5

What would be the yearly earnings for a person with $12,500 in savings at an annual interest rate of 4.25%?

531.25

Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in

Adjusted Gross Income

The stages that an individual goes through based on age, financial needs, and family situation is called the

Adult Life Cycle

A personal balance sheet reports your income and expenses.

False

Increased demand for a product or service will usually result in lower prices for the item.

False

Tax avoidance refers to illegal actions to reduce one's taxes.

False

Tommy (filing single) has the following financial information for 2018: Gross salary $48310 Interest earnings $240 Dividend income $30 Personal exemption $0 Itemized deduction $6950 or Standard Deduction of $12,000 What amount would Tommy report as taxable income?

$36,580

Given the following information, compute the net worth Liquid Assets $4210 Current Liabilities $6785 Investment Assets $12040 Long-term Liabilities $86125 Household Assets $85650

$8990

Jarrad's job allows him to use the company car with a taxable value of $6815. What is the after-tax value of this benefit, assuming a 22% tax rate?

----

Victoria is planning to go to graduate school in a program that will take three years. She wants to have $14,000 available each year for various school and living expenses. If she earns 5% on her money, how much must be deposited at the start of her studies to be able to withdraw $14,000 a year for three years?

----

If Meghan spends $12 a week on coffee (assume $600 a year), what would be the future value of that amount over 6 years if the funds were deposited in an account earning 4%?

-----

The purpose of a selection interview is to

-----

Kirk wants to establish a savings fund from which a community organization could draw $1000 a year for 15 years. If the account earns 4% annually, what amount would he have to deposit now to achieve this goal?

------

Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?

--------

Shelby created the following budget: Food $100 Housing $306 Clothing $50 Transportation $100 Personal $200 If in the past month she spent $112 on food, $325 on housing, $142 on personal expenses, $75 on transportation, and $85 on clothing, what was her variance for housing? Indicate a deficit with a minus sign in front of your answer.

-19

Based on the following data, would Lindsey (married, filing joint return) receive a refund or owe additional taxes in 2018? Indicate a refund with a minus sign in front of your answer. Adjusted gross income $47320 Child care tax credit $90 Personal exemptions $ Standard deduction $24000 Federal income tax withheld $5132 Tax rate on taxable income 10%

-2890

For an entry-level position, a person's resume is likely to be

1

Brad estimates that as a result of completing his master's degree, he will earn $8500 a year more for the next 40 years. What would be the future value of these additional earnings based on an annual interest rate of 7%?

1696940

_______________ goals relate to personal relationships, health, and education.

intangible-purchase

Greg has purchased a suit and has interviewed with three companies through the career placement center at his university. He was surprised by some of the questions asked and does not feel he answered them well. He has developed some answers that he feels are better answers and better reflect his abilities and aptitudes. Which step in the career planning process has Greg completed?

interview for specific positions and assess the interview performance

A tax on the value of automobiles, boats, or furniture is referred to as a personal property tax.

TRUE

A possible opportunity cost associated with career advancement is a need to relocate your household.

True

Capital gains refer to profits from the sale of investments.

True

Liquid assets refer to

cash and other items that are easily converted to cash

A ________________ resume presents a person's education, work experience, and other information in a reverse time-sequence.

chronological

An individual retirement account is an example of a(n) ______________ asset.

investment

_______________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.

itemized deductions

A personal balance sheet presents

items owed and amounts owed

Troy Mason is considering two job offers. Job 1 pays a salary of $37,500 with $5100 of nontaxable employee benefits. Job 2 pays a salary of $34,750 and $6700 of nontaxable benefits. What is the monetary value of the position with the higher value? Use a 28% tax rate

job 1: 44583.33

The ability to convert financial resources into usable cash with ease is referred to as

liquidity

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to

liquidity risk

Which of the following would be considered a long-term liability on a balance sheet?

mortgage

The value of items owned (assets) minus the amounts owed to others (liabilities) equals

net worth

Jessie recently coordinated a fundraising project for an organization that assists homeless youth. This would most likely be an example of experience in

obtaining financial planning and budgeting skills

The final step of the career planning process is to

plan for career development

For a dependent to qualify as an exemption, he or she must

receive more than 1/2 of support from taxpayer

A person's net worth would increase as a result of

reduced amounts owed to others.

Which of the following is an example of an opportunity cost?

saving money instead of taking a vacation

The education section of a resume should include

schools attended

Which of the following items is a set amount of income on which no taxes are paid?

standard deduction

The main economic influence that determines prices is

supply & demand

On which of the following would you pay taxes at some future date

tax-deferred benefit

Brad Johnson has a goal of "saving $50 a month for vacation". Brad's goal lacks

time frame

A tax credit is an amount subtracted directly from the amount of taxes owed.

true

A tax-exempt employee benefit is usually more advantageous than a tax-deferred benefit.

true

Current businesses and economic news can be an indication of future job demands

true

Increased technology can result in a reduction of employment in one industry while creating new jobs in other industries.

true

Insolvency is a result of having more liabilities than assets

true

Savings and investment programs are the main method for achieving financial goals.

true

Take-home pay is a person's earnings after deductions for taxes and other items.

true

Which one of the following is most apt to qualify as an itemized deduction?

un-reimbursed job-related travel expenses

The "head of household" filing status is for people who are

unmarried and have dependent children

Opportunity cost refers to

what a person gives up by making a choice

Natural abilities that people possess are called:

aptitudes

What would be the average tax rate (in percent) for a person who paid taxes of $5134.82 on a taxable income of $42,115? Submit your answer in percent form with one decimal place.

12.2%

If a person with a 25% tax bracket makes a deposit of $4000 to a tax deferred retirement account, what amount would be saved on current taxes?

1000

Based on the following data, compute the total assets. Liquid Assets $6200 Current Liabilities $3425 Investment Assets $17115 Long-term Liabilities $84320 Household Assets $78750

102065

If you earn 6% on your investments, how many years will it take for your money to double? (Hint: use the rule of 72)

12

With completion of a bachelor's degree one can expect to earn ________ in income over a 40-year period.

2.5 million

Hanna plans to reduce her spending by $40 a month. Calculate the future value of this increase in savings over the next 10 years. (Assume an annual deposit to her savings account, and an annual interest rate of 6%)

6326.88

The amount of interest earned is determined by multiplying the amount in savings by the

annual interest rate and time period

Which of the following are considered to be personal financial statements?

balance sheet and cash flow