FIN EXAM 2
Maxine Marshall received $24,000 in disability payments from an insurance policy she paid for. How much of the $24,000 is included in Maxine's gross income?
$0
Vicki Chadwell made a $1,000 capital gain on an investment she owned for 15 months. Assuming Vicki is in the 35 percent marginal tax bracket, how much federal income tax would she pay on this capital gain?
$150
Zelda was approved for $3,000, two year, 11 percent loan with the finance charges figured using the discount method. How much cash will Zelda recieve from this loan?
$2,340
The Federal Deposit Insurance Corporation (FDIC) currently insures against loss of up to ____ per person in an indiviudal account at any one institution
$250,000
The Fishers did very well on their investment choice. They earned $280 in dividend income from their stock investment this year. Later in the same year when they sold the stock, they realized a long-term capital gain of $2,984. How much of this dividend and capital gain income will they have to pay taxes on? a. $2,704 b. $2,984 c. $3,264 d. $280
$3,264
Marc is a university student seeking a degree in international business. He has received a scholarship for $6,000. This income was used as follows: Tuition and fees $2,400 and Room and board $3,600 How much of the $6,000 is included in gross income?
$3,600
Sally McKrachen is a single professional with a gross income of $51,000. Sally has no adjustments to gross income, but she does have itemized deductions totaling $4,275. If personal exemptions for the year are $3,700 each and the standard deduction is $5,800, what is Sally's taxable income?
$41,500
Jeff is trying to decide whether to sell his baseball card collection. He has been offered a price that would give him a profit of $2,500 by a dealer who has agreed to pay Jeff this price now or in January of next year. This year Jeff is in the 28 percent marginal tax bracket, but next year Jeff expects to be in the 15 percent marginal tax bracket. Therefore, the estimated income tax liability on this $2,500 income would be ___ this year and ___ next year
(28/100) x 2500 = 700 (15/100) x 2500 = 375
Which of the following forms is used to notify you of the taxable interest you have earned in a given year from a checking or savings account?
1099 Form
Judy Hays wants to give $3,200 to the building fund at her local church. Assuming Judy can itemize her deductions, how much will this contribution save her on her federal income taxes if she is in the 28 percent marginal tax bracket?
3,200 x 28% = $896
You are legally required to include which of the following in gross income? a. Alimony received b. Lottery winnings c. Illegal Income d. All of these
All of these
The sum of outstanding balances owed each day during the billing period divided by the number of days in the period is the
Average daily balance
All of a taxpayer's income is subject to federal income taxes
False
One can increase the amount of money covered by FDIC insurance by dividing his or her money among different branch offices of the same depository institution
False
Stock brokerage firms are federally insured institutions
False
The Truth in Lending Act limits a cardholder's credit card liability for lost or stolen credit cards.
False
Molly went to her bank, gave the teller $200 plus a small fee, and received a check drawn on the financial institution itself. What kind of checks were these?
Money orders
Which of the following is an example of earned income? a. Welfare payments b. Interest c. Capital gains d. Self-employment income
Self-employment income
Which of the following is an example of unsecured debt? a. Auto loan b. First Mortgage c. Signature loan d. Second Mortage
Signature Loan
A payable-on-death designation can be used to set up an individual account that automatically goes to another person when you die
True
A progressive tax is one that demands a higher percentage of a person's income as income increases
True
Consumer credit is a non-bushiness debt used by consumers for expenditures including home mortgages
True
Credit cards with a grace period allow the credit cardholder to pay no finance charges if they pay the balance in full every month
True
Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance Fund (NCUSIF)
True
If your tax is #3,728 on a taxable income of $27,825 and your tax is $3,743 on a taxable income of $27,925 you are in the 15 percent tax bracket
True
Liquidity is the speed and ease with which an asset can be converted to cash.
True
Personal income taxes are paid only on your taxable income.
True
Tax planning includes eliminating, reducing or deferring income taxes to be paid.
True
The credit limit on a credit cad restricts the total cumulative amount of charges that can be made by the borrower over the borrower's lifetime
True
The goal of monetary asset is to maximize interest earnings and minimizing fees while keeping funds safe and readily available
True
The key to reducing one's tax liability is to reduce taxable income rather than gross income.
True
When you sign up for electronic banking services, the depository institution must inform you of your rights and responsibilities in a written disclosure statement.
True
When you use a debit card, fines are instantaneously removed from your account
True
A mutual fund is an investment company that raises money by selling shares to the public and then invests that money in a diversified portfolio or investments
Truee
Earned income is reported to the recipient on a a. W-4 form b. Form 1099 c. W-2 form d. Form 1040
W-2 Form
Which of the following is not a benefit of a savings account? a. Account holders must give 30 to 60 days' notice for withdrawls b. The account provides principle security and a modest interest rate c. Depository instituions are required to disclose a uniform, standardized rate of interest so that depositors can easily compare their options. d. A grace period is given for withdrawals so that interest can still be earned on the money as though it were still in the account
a
Which of the following is the least expensive way of protecting yourself from fees should you overdraft your checking account a. Automatic funds transfer agreement b. Automatic overdraft loan agreement c. Opt-in overdraft/bounce protection d. Paying the overdraft/bounced check fee
a
The method of paying off a loan through which a portion of each payment goes to the principal and a portion to interest with the interest portion declining and the principal portion increasing each month as the debt is paid down is called
amortization
Which of the following investments normally produce(s) tax-exempt income? a. Stocks b. Municipal bonds c. Corporate bonds d. All of These
b
Which of the following is most valuable to a taxpayer for the tax savings it provdes? a. $200 charitable contribution b. $200 dependent care credit c. $200 unreimbursed medical expense d. $200 employee buisness expense
b
Diana and Kim are roommates in college and Diana owes Kim for lats month's rent. When Diana receives a check from her mother for the rent, what type of endorsement should Diana use to sign this check over to Kim? a. Blank endorsement b. Restrictive endorsement c. Special endorsement d. Trailing endorsement
c
The strategy of shifting the payment dates of deductible items is called a. postponing income b. tax deferral c. accelerated deductions d. income splitting
c
Which if of the following expenses on a home is not tax deductible annually? a. Interest paid on a first mortgage b. Property Taxes c. Homeowners insurance premium b. Interest paid on a second mortgage
c
Which of the following persons is (are) practicing tax avoidance? a. Bartender who does not report all his tips b. Plumber who does not report a barter transaction c. Employee who deducts qualifying job-related expenses d. All of these
c
A tax credit of up to ____ is available for qualifying costs of an adoptio. a. $0 b. $1,000 c. $10,000 d. $13,190
d
How can a person transfer money out of his or her checking account? a. Write a check b. Use a debit card c. Make electronic funds transfer d. All of these
d
Which of the following would be considered smart financial planning? a. Turn all your income tax planning over to someone else b. Withhold too much income in order to receive a refund next year c. Ignore the impact of income taxes in your personal financial planning d. Contribute to your employer-sponsored 401(k) retirement plan at least up to the amount of the employer's matching contribution
d
A method not recommended for getting out of excessive credit card debt is to
pay the minimum amount due on your high interest-rate cards, and pay as much as possible on the lowest interest-rate cards
A bank credit card account is an open-end account at a financial institution that allows the holder to make purchases almost anywhere
true
The more frequent the compounding, the greater the effective return for the saver
true