Personal Finance Test 1
Your income is directly related to your
Geographical location, age, and education
A progressive tax system is one in which
Higher-income people pay tax at a higher rate than lower income people
The income statement includes
Income, expenditures, and cash surplus or deficit
An _______ would not be listed as an asset on your balance sheet
Leased automobile
Henry is married to Lillian they two dependent children. Henry can legally file using which of the statuses
Married filing jointly
When considering a lease for a car, the size will depend on
Money factor, capitalizaion cost, forecasted residual value, and length of lease term
Who is not covered by FDIC
Money market mutual fund
One benefit of home ownership is
No restrictions on what you can or cant do
(T/F) Financial assets include investments such as stocks and bonds
True
T/F A cash deficit decreases net worth
True
Tax avoidance is legal, tax evasion is illegal
True
The main difference between leasing and buying a car is
a bought car is an asset, leasing is a liability
New cars will depreciate
as soon as you drive off the lot
Earning interest on interest is called
compounding
The main difference between commercial banks and credit unions is that
credit unions are non-profit organizations which is owned by its members
what are depository financial institutions
insurance company
A CD is
is a type of savings plan that requires you to deposit your money for a specified amount of time, and early withdrawl results in penalty fees
The federal income tax
is progressive
Investments are distinguished from savings on the basis of
level of risk and expected return
a drawback of a regular savings account is
low rate of return
The main purpose of a budget is to
monitor and control financial outcomes
On a balance sheet, a mortgage loan is recorded as the
principal portion only
As the rate of inflation increases
purchasing power of a dollar increases
Family financial goals should be:
realistically attainable
A capital gain is the result of
selling an asset for more than purchase price
The interest bearing checking account you can find at credit unions is called a
share draft account
If you do not wish to itemize deductions, you can use the
standard deduction
Tax credits reduce your
tax liability
Utility refers to
the satisfaction you receive from purchasing something
When a cash surplus exists on your income and expenditure statements, you can
Acquire assets, pay off existing debts, increase savings, or increase investments
Sam and Lele are in their late 20s with 3 young children, Their most important financial planning concerns would probably be
Asset acquisition planning, liability and insurance planning, saving and investment planning
These checks that come with a stamp indicating the bank guarantees the funds are available. When you get these your bank will immediately deduct the money from you account
Certified checks
Your ___ is an example of a liquid asset
Checking account