Personal Finance Test 1

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Your income is directly related to your

Geographical location, age, and education

A progressive tax system is one in which

Higher-income people pay tax at a higher rate than lower income people

The income statement includes

Income, expenditures, and cash surplus or deficit

An _______ would not be listed as an asset on your balance sheet

Leased automobile

Henry is married to Lillian they two dependent children. Henry can legally file using which of the statuses

Married filing jointly

When considering a lease for a car, the size will depend on

Money factor, capitalizaion cost, forecasted residual value, and length of lease term

Who is not covered by FDIC

Money market mutual fund

One benefit of home ownership is

No restrictions on what you can or cant do

(T/F) Financial assets include investments such as stocks and bonds

True

T/F A cash deficit decreases net worth

True

Tax avoidance is legal, tax evasion is illegal

True

The main difference between leasing and buying a car is

a bought car is an asset, leasing is a liability

New cars will depreciate

as soon as you drive off the lot

Earning interest on interest is called

compounding

The main difference between commercial banks and credit unions is that

credit unions are non-profit organizations which is owned by its members

what are depository financial institutions

insurance company

A CD is

is a type of savings plan that requires you to deposit your money for a specified amount of time, and early withdrawl results in penalty fees

The federal income tax

is progressive

Investments are distinguished from savings on the basis of

level of risk and expected return

a drawback of a regular savings account is

low rate of return

The main purpose of a budget is to

monitor and control financial outcomes

On a balance sheet, a mortgage loan is recorded as the

principal portion only

As the rate of inflation increases

purchasing power of a dollar increases

Family financial goals should be:

realistically attainable

A capital gain is the result of

selling an asset for more than purchase price

The interest bearing checking account you can find at credit unions is called a

share draft account

If you do not wish to itemize deductions, you can use the

standard deduction

Tax credits reduce your

tax liability

Utility refers to

the satisfaction you receive from purchasing something

When a cash surplus exists on your income and expenditure statements, you can

Acquire assets, pay off existing debts, increase savings, or increase investments

Sam and Lele are in their late 20s with 3 young children, Their most important financial planning concerns would probably be

Asset acquisition planning, liability and insurance planning, saving and investment planning

These checks that come with a stamp indicating the bank guarantees the funds are available. When you get these your bank will immediately deduct the money from you account

Certified checks

Your ___ is an example of a liquid asset

Checking account


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