Bus-F260 Chapters 1-4 for Test 1
The Rule of 72 is:
Used to estimate how fast prices will double using a given annual inflation rate
When creating a personal balance sheet, which of the following is a real estate asset?
Vacation Property
Which of the following is a cash inflow?
income from employment
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
Which of the following is a component of money management?
All of the above are components of money management.
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
ATM stands for
Automatic teller machine.
Who is less likely to be harmed by inflation?
Borrowers
Which of the following will increase the net worth of a household?
Decrease spending by $5 per day.
Present Value computations are also referred to as
Discounting
Which of the following is NOT a tax credit?
Domestic tax credit
A tax imposed on the value of a person's property at the time of death is called a(n)
Estate tax.
Which of the following is NOT a tax that most people pay?
Federal taxes on possessions
Investments, insurance, and tax assistance are tools for financial planning and are also known as
Financial Services
Tim Taylor received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use?
Future Value of a single amount
When Paul completes his taxes, he can include all of the following as exemptions except
His 20 year old son who is working fulltime and living in an apartment. To qualify for tax exemptions, a dependent must be under age 19 or a full time student under the age of 24.
The number of personal financial records a household has to organize may seem overwhelming. How long should you keep documents relating to the purchase and sale of real estate?
Indefinitely
Brokerage statements are an example of a(n) ____________ record.
Investment
When Angela wanted to provide financial security for her dependents, she considered purchasing a specific type of account at a
Life Insurance Company
The "Borrowing" Component in a financial plan relates to
Maintaining control over credit-buying habits
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
Another name for a regular savings account is a
Passbook or statement account.
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
Which of the following would increase the interest rate for a loan?
Poor Credit Rating
Wanda bought a certificate of deposit and automatically received a free bike. She purchased a
Promotional CD
Which of the following is most correct?
Rare coins and stamps belong in a safe deposit box
When Jack picked up a personal computer from the _____, he was really leasing it.
Rent to Own Center
When creating a personal balance sheet, which of the following is an investment asset?
Retirement account
Which of the following goals would be the easiest to implement and measure?
Save $100 a month to create a $2400 emergency fund in 2 years
The number of personal financial records a household has to organize may seem overwhelming. How long should you keep copies of your tax returns?
Seven Years
Taxes on earnings that fund old age, survivor, and disability insurance benefits are called
Social Security taxes.
Income that is taxed at a later date is
Tax deferred income.
Opportunity cost refers to
The trade-off of a decision
You may be required to make estimated tax payments if
You are an independent contractor.
The goal of purchasing a long-term care insurance policy would be most appropriate for
an older single person with children
Tanya is a single lowincome working parent, and Fred is a single highincome working parent. Because of her status, Tanya, but not Fred, may be eligible for the
earned income credit
A tax due on the purchase of gasoline is called a(n)
excise tax
Attempts to increase income through employment are part of the _____________ component of financial planning.
obtaining
Which of the following appears as a cash outflow on a cash flow statement?
variable expenses
