PFS (3 &4)
A time deposit is also known as
A savings account
Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his funds are safe (insured), which of the following should he use?
A savings account
A legal agreement that provides for the management and control of assets by one party for the benefit of another is known as
A trust
Claudette's grandchildren are 7 and 9 years old. When Claudette passed away, her grandchildren inherited her money. However, the will stipulated that they should not get control of the money until age 25. Which of the following should be set up to provide for the management and control of the funds?
A trust
The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called the
AMT
The tax based on the total tax due divided by taxable income is called the
Average tax rate.
When calculating federal income taxes, "gross income" includes all of the following except
Earned income credit.
A tax imposed on the value of a person's property at the time of death is called a(n)
Estate tax.
A tax due on the purchase of gasoline is called a(n)
Excise tax.
Taxpayers over 65 can only deduct expenses that are greater than 7.5% of adjusted gross income for
Medical and dental expenses.
Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper itemized deduction?
Miscellaneous expenses less than 2% of AGI
Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction?
Miscellaneous expenses that exceed 2% of AGI
Common payment choices for everyday activities include all of the following except
Short-term loan
Taxes on earnings that fund old age, survivor, and disability insurance benefits are called
Social Security taxes.
Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?
Subtract his itemized deductions.
Income that is not subject to tax is called
Tax-exempt income.
Income that is taxed at a later date is
tax deferred income
Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 70 days. What is the most that he is liable for?
$238
The maximum amount that an individual can give another in a year without being subject to estate taxes is
$14,000.
If Diane was in a 25% tax bracket and received a $2300.00 tax credit, by how much would her taxes be reduced?
$2300.00
Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?
$50
Peter filed his federal income taxes, but he needs to make a correction to his income. Which form should he use?
1040X
At the end of the year, Walter received a form that showed his payments from independent contracting. That form is called a
1099
At the end of the year, Yvonne received a form from her bank that reported income from her savings. That form is called a
1099
George Franklin paid taxes of $3500 on a taxable income of $26,000. What was his average tax rate?
13.46%
Penny knows that she needs to file her federal income taxes, but she is unable to do so by April 15. What form does she need to complete to obtain an automatic six-month extension?
4868
Fred has been completing his own tax returns for years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?
6 years.
A demand deposit is also known as
A checking account
Cathy needs a full range of financial services, including checking, savings, and lending. To which of the following should she go?
A commercial bank
Which of the following is organized as a corporation with investors (stockholders) contributing the needed capital to operate?
A commercial bank
Which of the following offers a full range of financial services including checking, savings, lending, and other services?
A commercial bank
Billy accepted a job at a company that specializes in providing money for short-term retail lending. Where did he go to work?
A credit card company
All of the following are non-deposit institutions except
A credit union
All of the following are deposit institutions except
A finance company
Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?
A money market account
Amber wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurance. What kind of account should she open?
A money market fund
Which of the following primarily provides loans for home purchases?
A mortgage company
Harvey needed some cash quickly, so he received a short-term loan based on the value of an old ring. Where did he go?
A pawnshop
Which of the following will likely provide the most expensive loans?
A payday loan company
Recent tax credits include all of the following except the
AMT tax credit
When calculating federal income taxes, what increases "gross income"?
Alimony received
When you select a financial services provider, you should ask all of the following questions except
All of these questions should be asked.
An all-in-one account that provides a complete financial services program for a single fee is known as
An asset management account
Which of the following usually offers money market mutual funds?
An investment company
Many people make mistakes when managing current cash needs. Which of these is NOT a frequently made mistake?
Budgeting spending
Tanya is a single low-income working parent, and Fred is a single high-income working parent. Because of her status, Tanya, but not Fred, may be eligible for the
Earned income credit.
Adjustments to income include all of the following except
Charity contributions.
When you select a financial services provider, you may find all of the following to be major factors except
Company logo
Individuals can file their federal taxes using all of the following except
Deliver in person
Which of the following is NOT a tax credit?
Domestic tax credit
Investments, insurance, and tax assistance are tools for financial planning and are also known as
Financial services
When Paul completes his taxes, he can include all of the following as exemptions except
His 20-year-old son who is working full-time and living in an apartment.
This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.
Income tax
The amount levied on the value of property bequeathed by a deceased person is
Inheritance tax.
When Angela wanted to provide financial security for her dependents, she considered purchasing a product that would provide income replacement in the event of her untimely death and also provide a savings/investment component while she is alive. Which company would she most likely do business with?
Life insurance company.
A credit card is a type of
Loan/borrowing
The rate used to calculate the tax due on the next dollar of income is referred to as the
Marginal tax rate.
Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?
Married, filing a joint return
Another name for a regular savings account is a
Passbook or statement account.
Gross (or total) income includes
Passive income.
Bob was married to Sandy, and they have a 12-year-old son. Sandy passed away last year. Bob needs to complete his federal income taxes for the year. What filing status could he use for 2 years after the death of his spouse?
Qualifying widow or widower
The tax that is a major source of revenue for local governments is called a(n)
Real estate property tax.
Which of the following is NOT a financial publication that can provide information about financial services and economic conditions?
The Daily Market
Why are some financial service operations referred to as financial supermarkets?
They offer a combination of services from one source
When Jack picked up a personal computer from the ________, he was really leasing it.
rent-to-own center
At the end of the year, Xavier received a form from his employer that reported annual earnings and the amounts deducted for taxes. That form is called a
W-2
At the end of the year, employees receive a ________ form that reports annual earnings and the amounts deducted for taxes from their employers.
W-2
You may be required to make estimated tax payments if
You are an independent contractor.
Gross income less Adjustments to Income equals
adjusted gross income
ATM stands for
automatic teller machine
Fees, tips, and bonuses are forms of
earned income
A drawback of a regular savings account is
low rate of return
When Imogene brought a necklace to a ________, she received a loan based on its value.
pawnshop
Louise got caught in a cash flow trap and desperately needed money quickly. Unfortunately, she didn't shop around and she went to a ________. As a result, her annual percentage rate was higher than 780%.
payday loan company
