Personal and Family Finance Exam #1

Assets

Cash and other tangible property with a monetary value are called:

Fixed Expenses

Expenses that are definite obligations and that do not fluctuate from time to time are called:

Variable Expenses

Expenses that will fluctuate based on the time of year, economic conditions, health, and a variety of other factors are called:

Restrictions and Fees

Having to pay for deposits and withdrawals & having to leave your money in a deposit account in order to receive a "free" gift are examples of:

Up to 2 years

How long can someone file for taxes as a widow or widower, after their spouse's death?

An unmarried individual who maintains a household for a child ore dependent relative

If someone is filing for taxes as Head of Household, they are:

Activity Account

If you have to pay fees on your checks and deposits, what type of account do you have?

Balance Owed:

If your tax liability is higher than your tax withholding amount, it is a:

Refund

If your tax withholding amount is higher than your tax liability, it is a:

1. Consumer-product goals (food) 2. Durable-product goals (washer/dryer) 3. Intangible-purchase goals (education, insurance)

What 3 types of goals for different financial needs are there?

SMART

What acronym is used in relation to financial goal-setting guidelines?

Liquidity

What allows you to withdraw money on a short notice without penalty or fees?

1. They must not earn more than a set amount unless they're under the age of 19 or a full-time student under age 24 2. The taxpayer must provide more than half of the dependent's financial support 3. The dependent must live in the home of the tax payer or be a specified relative

What are 3 requirements that must be met by dependents in order to count them as a deduction?

1. Correspondence 2. Office 3. Field

What are 3 types of audits discussed in the text?

1. forces a supply and demand of prices!!! 2. interest rates 3. unemployment 4. housing market

What are some examples of ECONOMIC FACTOR influences that are part of Personal Financial Planning?

1. relationship status, household type, employment 2. graduation, career change, children, retirement

What are some examples of LIFE-SITUATION influences that are part of Personal Financial Planning?

1. influence our priorities 2. influence spending and saving decision

What are some examples of VALUE influences that are part of Personal Financial Planning?

1. Life Situation 2. Values 3. Economic Factors

What are the 3 influences on Personal Financial Planning?

1. Single or legally separated 2. Married, filing jointly 3. Married, filing separately 4. Head of household 5. Widow or widower

What are the five filing status categories?

Specific Measurable Action-oriented Realistic Time-based

What does each letter in the acronym "SMART" stand for?

Budget Deficit

What is it called when your spending exceeds your planned spending about?

Assets - Liabilities = Net Worth

What is the equation for figuring out Net Worth?

Principle x Interest Rate x Time = Interest

What is the equation for figuring out the Time Value of Money?

Total cash received during the time period - Cash outflows during the time period = cash surplus OR cash deficit

What is the equation for figuring out your Cash Surplus or Cash Deficit?

Determine your current financial situation

What is the first step to the Financial Planning Process?

Develop your financial goals

What is the second step to the Financial Planning Process?

Review and Revise Your Plan

What is the sixth step to the Financial Planning Process?

1. evaluate your income, savings, living expenses, and debt 2. match your financial goals to current income and potential earning power

What step(s) do you take when determining your current financial situation (which is step 1 to the financial planning process)?

1. make sure your goals are your own and are specific to your situation

What step(s) do you take when developing your financial goals?

1. asses the plan regularly 2. review at time of personal change and when social/economic factors change

What step(s) do you take when reviewing and revising your financial plan?

Physical

What type of budgeting system do yo use when you use envelopes for different expenses?

Mental

What type of budgeting system do you use when you memorize your budget?

Written

What type of budgeting system do you use when you use a spreadsheet or piece of paper to keep track of your budget?

Computerized

What type of budgeting system do you use when you use software to keep track of your budget?

Stored Value Card

What type of payment method is prepaid for a specific service or institution?

Estate Tax

What type of tax is based on the value of a person's property at the time of his or her death?

1. Taxes on purchases 2. Taxes on property 3. Taxes on wealth 4. Taxes on earnings

What types of taxes does the text discuss, and how many are there?

Opportunity Cost

What you give up by making a choice is called:

Tax Liability

When you calculate taxable income and the amount you owe for federal income tax, you are figuring out your:

Compounding

When you earn more interest on the interest previously earned, it is called:

The Financial Planning Process

the process of managing your money to achieve personal economic satisfaction is called:

Short, intermediate, and long-term

What 3 types of financial goals are there?

Cashier's Check

A check of a financial institution that you get by paying the face amount plus a fee is called:

Tax Audit

A detailed examination of your tax return by the IRS is called:

Balance Sheet

A document that reports what you own and what you owe is called:

Certified Check

A personalized check with a guaranteed payment is called:

Safe Deposit Box

A private storage area at a financial institution with maximum security for valuables and difficult-to-replace documents which requires two keys in order to be opened is called:

Standard Deduction

A set amount on which no tax payer needs to pay is called:

Exclusions

Amounts not included in gross income are called:

Liabilities

Amounts owed to others (but not including items that are due in the future) are called:

Tax Credit

An amount, that can be refundable or nonrefundable, that is SUBTRACTED DIRECTLY from the amount of your tax liability is called:

1. Principle (starting dollar amount) 2. interest rate 3. time

What 3 amounts are required to calculate the time value of money?

1. Fees on deposit accounts 2. Interest rates 3. Other terms and conditions

The Truth in Savings Act requires disclosure of what 3 things?

Cash Flow Statement

The actual inflow and outflow for a given period of time is called:

Future Value

The amount to which current savings will increase based on a certain interest rate and a certain time period is called:

Present Value

The current value of a future amount based on a certain interest rate and a certain time period is called:

Net Worth

The difference between your total assets and your total liabilities is called:

Time Value of Money

The increases in an amount of money as a result of interest earned is called:

Field Audit

The more complex type of audit in which an IRS agent visits you to have access to your records is called:

Electronic filing (free e-filing for federal tax returns, and refunds are generally received within 3 weeks)

The most common form of filing your taxes is:

Taxable Income

The net amount of income, after all allowable deductions, on which income tax is computed is called:

Correspondence Audit

The simplest and most common type of audit which is sent via mail and requires you to clarify minor questions about your tax return is called:

Adult Life Cycle

The stages in the family and financial needs of an adult (a.k.a. life situation) is called:

Sales Tax

The state and local tax that is added to the purchase price of products is called:

Income Tax

The tax that your employer withholds from your paycheck is called:

Office Audit

The type of audit that requires you to visit an IRS office to clarify some aspect of your tax return, which usually takes an hour or two, is called:

Capital Gains Tax

The type of tax you pay on sold stocks, bonds, or real estate is called:

Tax evasion

The use of illegal actions to reduce one's taxes is called:

False. Long-term goals SHOULD be planned in coordination with short-term and intermediate goals.

True or false: long-term goals should not be planned in coordination with short-term and intermediate goals