CSM 204

When an individual makes a purchase without considering the financial consequences of that purchase, he/she ignores the ________ aspect of financial planning.

spending

An IRA, Keogh plan, and 401(k) plan are examples of:

tax-deferred retirement plans

A budget is a spending plan that outlines how you will spend available income.

true

A restrictive endorsement on a check to be deposited consists of the words "for deposit only."

true

Reduced spending causes unemployment from staff reduction.

true

Taxpayers should beware of tax preparers who offer your refund in advance (refund anticipation loans) and charge interest rates exceeding 300 percent.

true

Using a debit card to make purchases means you are spending your own funds.

true

The "head of household" filing status is for someone who is:

unmarried and has a dependent child

Michele Walsh is considering an additional charitable contribution of $1,500 to a tax-deductible charity, bringing her total itemized deductions to $16,000. If Michele is in a 24 percent tax bracket, how much will this $1,500 contribution reduce her taxes?

$360

A taxable investment produced interest earnings of $1,200. A person in a 22 percent tax bracket would have after-tax earnings of:

$936

Increased home building results in:

- increased job opportunities. - higher wages. - increased consumer spending. - overall economic expansion

A person with erratic or seasonal income may need an emergency fund of ________ months or more.

6 months

Which one of the following would reduce gross income to obtain adjusted gross income?

IRA contributions

Which one of the following people is least likely to have to file a federal income tax return?

a person earning less than 9000

The earnings you receive as a saver or an investor reflect:

a risk premium based on length of the savings period

Which statement is true regarding a tax credit?

a tax credit reduces the tax payment dollar for dollar

William Davis has a goal of "saving $60 a month for vacation." William's goal lacks:

a time frame

When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.

false

A budget deficit would result when a person's or family's:

actual spending is greater than planned spending

An organized system of financial records provides a basis for:

all of these

Characteristics of successful budgets include being:

all of these

Inflation risk may include changes in buying power and:

all of these

The advantages of personal financial planning include:

all of these

Which of the following items is something that would typically not be stored in a safe deposit box?

bank statements

An example of a liquid asset is:

cash

An excise tax is imposed by the federal and state governments on all of the following specific goods, except:

clothing

Which of the following is organized as a corporation and owned by stockholders?

commercial banks

The Federal Deposit Insurance Corporation insures savings plans at:

commerical banks

Examples of tax credits do not include a/an ________ tax credit.

credit card

Sophia Martin wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?

developing her financial goals

The Truth in Savings law requires that financial institutions:

disclosed annual percentage yield on savings accounts

What is the rate that the Federal Reserve banks charge financial institutions for loans called?

discount rate

Which of the following payments would be considered a variable expense?

electricity bill

A regular savings account usually offers a higher rate of return to savers than a certificate of deposit.

false

Furniture, jewelry, and an automobile are examples of liquid assets.

false

Present value is often referred to as compounding.

false

The principal purpose of taxes is to control economic conditions.

false

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid. What type of IRS audit is this?

field audit

Determining your current financial situation is a part of which step in the financial planning process?

first

Joan Martin expects interest rates to decline over the next few months. To achieve her long-term financial goals, she will trade off liquidity for a higher return by using a:

five year certificate of deposit

If a person deposited $75 a month for 5 years earning 7 percent, this would involve what type of computation?

future value of a series of deposits

The time value of money refers to:

increases in an amount of money as a result of interest earned

Which of the following is usually considered a long-term financial strategy?

investing in a mutual fund for six years to accumulate retirement funds

Funds set aside for retirement is an example of a(n) ________ asset.

investment

The main responsibility of The Fed is to:

maintain an adequate supply of money

A person who owes total federal income taxes of $3,450 but had total withholdings of $3,125 would:

make a payment of $325

Which one of the following savings plans is not covered by federal deposit insurance?

money market fund with an investment company

What is the rate an individual will pay to borrow for the purchase of a new home called?

mortgage rate

Which one of these investments produces tax-exempt income?

municipal bond

Which of the following is a drawback of a money market fund from an investment company?

not covered by FDIC insurance

The 50/30/20 financial rule of thumb suggests that 50 percent of income be used for:

pay on needs

A tax on the value of automobiles, boats, or furniture is referred to as:

personal property tax

The ________ property tax is based on the value of land and buildings.

real estate

A person's net worth would increase as a result of:

reducing the amounts you owe to others.

What type of account would be considered the most liquid?

regular savings account

Which of the following would be considered a fixed expense?

rent

The uncertainty associated with every decision is referred to as:

risk

Which of these is an example of an opportunity cost?

saving and investing for the future reduces the amount you can spend now

What type of account would you expect to provide the poorest yield?

savings account earning 4% compounded annually

Which of the following would be organized as a personal and employment record in a home file?

social security number