FIN 201 Exam 1

If Jack was in a 25% tax bracket and received a $1,000 tax deduction, by how much would his taxes be reduced?

$250

A debt ratio of 0.5 indicates

For every dollar of net worth, debt equals $0.50.

Which of the following is NOT a valid form for filing federal income taxes?

1040Z

Insolvency

A financial state that occurs if liabilities are greater than assets

Financial Plan

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.

The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called the

AMT

David thinks that his salary and tax rate for next year will be higher than for this year. What step should he take minimize taxes over the period this year and next year?

Accelerate receipt of income

The major function of personal financial planning is to

Achieve personal economic satisfaction

Fees, tips, and bonuses are forms of

Earned income

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

Using the services of financial institutions or financial specialists (such as insurance agents, certified financial planners or investment advisers) to seek relevant information is done in which step in the financial planning process?

Evaluate your alternatives

A personal balance sheet reports

Items owned, amounts owed, and your net worth

Debt Ratio

Liabilities / Net Worth

Increased consumer saving and investing is likely to be accompanied by

Lower interest rates

Which of the following are two personal financial statements that you create yourself?

Personal balance sheet and cash flow statement

The main purpose of personal financial statements are to

Report your current financial position, measure your progress toward financial goals, maintain information about your financial activities, and provide data for preparing tax forms or applying for credit

Changes in personal, social, and economic factors may require you to

Review and revise your financial plan more frequently

Which of the following goals would be the easiest to implement and measure?

Save $100 a month to create a $2,400 emergency fund in 2 years

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

If Brenda wants to pay her fair share of taxes, no more and no less, she should practice

Tax avoidance

An example of a personal opportunity cost would be

Time comparing several brands of personal computers

Net Worth

Total assets - total liabilities

The Rule of 72 is:

Used to estimate how fast prices will double using a given annual inflation rate

Which of the following short-term goals is stated using the SMART approach?

Within the next 6 months, buy a car for less than $15,000