Money Matters Unit 1 Review Questions
Randal is 57 years old and has adjusted gross income of $32,000. He has medical expenses for the year of $6,000. How much of these expenses can he deduct from an adjusted gross income?
$2,800
A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of what percent?
12.3%
Joan is single and earns $40,000 in taxable income. What percent of taxes does she owe based on a tax rate schedule?
25%
Which would qualify a person for an exemption when computing taxable income?
A dependent
Nick has a savings account with $550 in it. He can withdraw this money when he wishes. This is an example of
A liquid Asset
The stages that an individual goes through based on age, financial needs, and family situation is called the
Adult Life Cycle
A major activity in the planning component of financial planning is
Allocating current resources for spending
Kyle has put $25 more per week in his savings account. This will reduce his ability to go out to eat each week but he thinks building his savings is important. This would be an example of
An opportunity cost
Which are considered to be personal financial statements?
Balance sheet and cash flow statements
Considered to be personal financial record
Birth Certificate, Marriage License, Certificate of Deposit, Social Security Card
Not included in the recent tax credits is which tax credit?
Energy-savings
Which of the following is not a recommended step individuals can use to weather a future financial crisis?
Establish a smaller than usual emergency fund
Which statement is not considered to be good advice for a potential investor starting an investment program
Establish specific and measurable investment goals.
What type of tax is imposed on the value of an individual's property at the time of his or her death?
Estate
Maryellen worked in Poland for part of the year and earned $50,000 while she was there. This income will not be included in her income for the year. This represents tax
Exclusion
A decrease in net worth could be the result of
Expenses exceeding income for a month
One aspect of financial planning is to make wise decisions as to what to purchase and when to purchase it. Which aspect of financial planning does this deal with?
Spending
You can determine you net worth by
Subtracting your liabilities from your assets.
Sam got $100 from his grandmother's estate. He thought about using the money for a new Harley but has decided to add money to his mutual funds account. Which suggestion is he following?
Taking advantage if gifts, inheritance and other windfalls
Mr and Mrs. Keating want to give their son a total of $24,000. They both write him a check for $12,000 so they won't have to pay any gift tax. This is an example of
Tax avoidence
A benefit on which you pay taxes at some future date
Tax-Deferred benefit
A person's net worth would increase as a result of
reduced amounts owed to others
Federal Tax-deferred employee benefits are
taxed at some future time
Liabilities: $98,000 + $7,500 What is the total value of the debts?
$105,500
Assets: $128,000 + $73,000 + $62,000 + $4,500 Liabilities: $98,000 + $7,500 What is the net worth?
$162,000
Assets: $1,200 + $850 + 98,000 + 12,000 + $3,300 + $12,500 + $5,500 + $38,550 What is the total value of the assets?
$171,900
Itemized deductions are recorded on
Schedule A
The "head of household" filing status is for people who are
Married and each spouse makes about the same income
Most likely classified as a current liability?
Monthly balance due on a credit card
Attempts to increase are part of what component of financial planning?
Obtaining
Alex goes on jeopardy and Earns $875,000 in winnings. What type of income is this?
Other income
Steve is buying each of his two children their own TV in their rooms so they do not have to join the family to watch TV together. Which explains Steve's spending?
Overindulgence of children
Neil writes a check to pay for daycare for his son. Which type of financial service is he using?
Payment services
An emergency fund should be deposited in a
Savings account at the highest available interest rate