Finance 101 Exam 1 T/F
A liquid financial asset can be quickly converted into cash, but there is often a large loss of value as a result of the quick conversion to cash.
False
Capitalized cost on an auto lease is similar to the interest rate on a loan.
False
Fixed automobile costs increase as the number of miles driven increase.
False
Money I loaned to a friend is a liability on my balance sheet.
False
Only the current month's payment on your mortgage loans would be listed on the balance sheet as a liability
False
The rate of return on liquid assets is relatively high compared to other types of investments.
False
A cash budget has value only if you use it, review it regularly, and keep careful records of income and expenses.
True
A cash deficit decreases net worth.
True
A charge made on your credit card becomes a liability as soon as the charge is incurred.
True
A closed-end automobile lease is the most popular type of lease.
True
A husband and wife would be the only couple combination that could file a joint return
True
A taxpayer can write off a maximum of $3,000 of capital losses in one tax year.
True
Assets purchased on credit should be included on the asset side of the balance sheet.
True
Bank credit card cash advances will begin accruing interest charges immediately.
True
Gasoline is a variable cost of automobile ownership.
True
Home equity loans are one of the least expensive forms of consumer.
True
If you listed your gross salary in the income portion of the budget, the expenditures section must include income taxes and social security.
True
Low-balling is a sales technique where the salesperson quotes a low price for a car to get you to make an offer, and negotiates the price upward prior to signing the sales agreement.
True
Mortgage interest and paid home property taxes are both itemized deduction items.
True
One can and should check his credit bureau file regularly.
True
One's average tax rate is typically lower than one's marginal tax rate.
True
Personal exemptions are tax deductions based on the number of taxpayers and dependents in the taxpayer's household.
True
Revolving credit lines are often accessed by writing checks.
True
The Truth in Savings Act was designed to help consumers compare terms and costs of banking products.
True
The annual percentage yield (APY) formula considers compounding when determining an interest rate.
True
The main business of an S&L is to provide home mortgage and home improvement loans.
True
When negotiating either an auto purchase or a lease, do not reveal what you can afford to pay per month.
True
When preparing a cash budget, estimating expenses using actual expenses from previous years and by tracking current expenses makes the task easier.
True
You should itemize deductions when total itemized deductions exceed the standard deduction.
True
You should not talk with the car dealer about a trade-in until after you have negotiated the final price on the car you are purchasing.
True
