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