Personal Finance Ch 1,2,3 learnsmart
If Mary has cash inflow for the year of $120,000 with cash outflows of $135,000, her cash flow statement would show a:
$15,000 deficit
So many Americans have money problems because
-poor planning -weak money managing habits
What is the typical time frame for an intermediate goal?
1 to 5 years
Place the steps of budgeting in the correct order.This is found under the budgeting process.
1. Set Financial goals 2.estimate expected income 3. budget for emergency fund 4. budget fixed and variable expenses 5. record actual income and spending amounts 6. evaluate spending and saving patterns
If you want to amend (change) a previous return, you would need to file a ______ form.
1040x
Two possible tax planning activities for April are filing the tax return by April Blank 1 of 2, and, if necessary, filing for an automatic six-month Blank 2 of 2.
15; extension
As of 2018, the IRA contribution limit was
5500
You are in the 25% tax bracket. So, the yield on the savings account is 8%, and the after-tax savings rate of return is:
6%
Fill in the blanks to complete the sentence. Fraud charges on a debit card should be reported within Blank 1 of 1 days of receiving your statement to protect your right not to be charged for the transaction.
60
Fraud charges should be reported within how many days of receiving your statement?
60
You are in the 25% tax bracket, the after tax savings rate of return is 6%, the yield on the savings account is:
8%
Select all the accurate observations below about different types of audits.
A field audit involves an IRS agent visit to your home or office and is the most complex type of audit. The simplest audit is a correspondence audit With an office audit, you must visit the IRS office to answer questions about your return.
Which of the following statements are correct about the various types of budgeting systems that an individual can use to create, implement, and monitor a budget?
A mental budget exists only in your mind. A physical budget could involve placing money in envelopes. A computerized budget can be done in MS Excel. Quicken is a software package that can help you with budgeting.
A money market fund is a:
A money market fund is a savings-investment plan offered by investment companies, with earnings based on investments in various short term financial instruments. aka savings instrument
Which of the following statements are true about software and taxes?
A spreadsheet program can help you keep track of income and expenses as the year plays out. Software packages such as H&R Block At Home and Turbo tax help users prepare and file returns. A spreadsheet program such as MS Excel can help you with your tax planning.
You have developed a savings plan and will be setting aside money for the next one year to make an investment. You plan to use the return from this investment to make down payment to purchase a home after three years. What are key time frames for this goal? Look at the timing of goals in the chapter.
Achieving short-term and intermediate goals
What is a good description of a job?
An activity regularly performed for monetary payment.
What is a common employee benefit designed to meet varied life situation needs?
An employer compensates an employee with a gym membership.
Use a debit card to:
Avoid an annual fee Avoid possible interest charges Avoid bills to be paid in the future
Bill is concerned about his year-end tax payments. What are some options that are available to him to lessen his concerns?
Bill can file quarterly tax payments. Bill can increase his tax withheld from each paycheck.
Which of the following should be kept in a safe deposit box?
Birth, marriage, and death certificates Certificates of deposit, lists of financial account numbers, and mortgage papers
Which of the following are a direct result of the work that you do?
Business associates Income Decisions Leisure time
Use a credit card to:
Buy online for large purchases Build credit history Delay the payment for a purchase
Use a credit card to:
Buy online for large purchases Delay the payment for a purchase Build credit history
What does the Occupational Outlook Handbook cover?
Career planning and job search tools and specific job information
How is a cash surplus (or deficit) on a statement of cash flows calculated?
Cash inflows (receipts) less cash outflows (expenditures) during a given period of time
Which of the following are deposit-type institutions that serve as financial intermediaries?
Commercial banks Credit unions Savings and loans
Qualified people will not get the job they deserve without an effective presentation of their skills and experiences. What are the three elements involved in this process?
Cover letter Resume An interview
Which of the following are the basic major money management activities?
Creating and implementing a plan for spending and saving Storing and maintaining personal financial records Preparing personal financial statements
Which of the following is a tax avoidance strategy?
Delay the receipt of income because you want to delay the payment of taxes until next year. Accelerate deductions to save taxes this year.
Select the bonds that are a type of federal savings bond.
EE I
The demographic trends will not influence employment opportunities in a country.
F
True or false: The definition of job creation is: The development of an employment position that matches your skills with the needs of your income.
F
True or false: Take-home pay is the same as discretionary income and disposable income.
False
True or false: The definition of job creation is: The development of an employment position that matches your skills with the needs of your income.
False
Which of the following tax activities must be completed by April 15?
File your federal tax return or file for an extension.
What are some common types of nonmonetary compensation?
Flexible work schedules Exercise programs Counseling
What type of training is used if you enroll in graduate or advanced college courses?
Formal training.
According to the text, why is goal setting an important aspect for personal financial growth?
Goal setting assists with the financial decision making process.
Bill recently created his financial plan after much thought and decision making. He implemented his plan, and so far the plan is working. What must Bill do now?
He must maintain his financial plan. He must continue to review and revise his plan.
What is good to do to increase your financial compensation and career success?
Increase education and knowledge of new technology.
If individuals' personal situation change, what should they also reassess?
Individuals should assess the career they are preparing for.
What is the relationship between interest rates and employment opportunities in home construction?
Interest rates and employment opportunities have a inverse relationship; one increases when the other decreases.
What are examples of well-written financial goals?
Investing $250 per month for retirement in 40 years Developing a savings plan of $100 per week to make a down payment on a car in a year
What type of financial institution typically does not have federal deposit insurance?
Investment companies
Which statement best describes how taxpayers pay their taxes to the IRS?
It is a pay-as-you-go system utilizing withholding of tax from paychecks and estimated quarterly payments.
What is defined as the development of an employment position that matches your skills with the needs of an organization? This is found in the discussion of identifying job opportunities.
Job creation
When making a purchase, which of the following is an opportunity cost?
Lost investment earnings
Which of the following is an example of an opportunity cost?
Lower future investment earnings as a result of purchases
Which of the following activities offers the most comprehensive concept of money management?
Managing current (or short-term) resources while planning for long-term goals
Which of the following best describes why the home can be a tax shelter?
Mortgage interest and real estate taxes are tax deductible, which helps lower the cost of home ownership.
What is the typical time frame for an intermediate goal?
One to five years
Why do many people change jobs at some point in their lifetime?
Personal and social factors will cause people to reassess their work situation.
What are formal training options for additional skills and training?
Professional organizations. Company programs
What is the definition of cafeteria-style employee benefits?
Programs that allow workers to base their job benefits on a credit system and personal needs.
What are some measures you should take before accepting a position?
Research the company and the reason the other person left the company, if that is the case.
Which of the following are measures you should take before accepting a position?
Research the company and the reason the other person left the company. Read over the employment contract carefully. Research the type of work you will be doing.
What types of financial institutions have federal deposit insurance through FDIC?
Savings and loans Commercial banks
Online payments do NOT include
Smart cards
What is the best explanation of technical skills?
Specific skill sets that are needed to perform your job
The rate of return you earn on your savings account should be compared with the inflation rate.
T
Which of the following are not estate and retirement planning records?
Tax records and copies of past tax returns Credit card statements
What does it mean to work as a "temp"?
Temporarily working for a company
What is one of the career information sources that the library has that can help you plan your career?
The Occupational Outlook Handbook
You filed a Form 4868 and received a six month extension on your taxes for 2018. Which of the following is true?
The filing will not postpone your payment liability, so you must pay your estimated payment liability by April 15, 2019.
The relationship of education and earnings is best described by which of the following?
The more education you have, the greater knowledge and skills you have that your employer may be willing to reward.
How can a person's personality lead to career growth?
The person may acclimate to a career faster and this will lead to career growth.
What is the definition of the adult life cycle?
The stages in the family and financial needs of an adult
What is the definition of economics as described in this text under economic factors?
The study of how wealth is created and distributed
Which of the following attributes is not important when selecting a financial institution?
There is a state or national charter for the institution
What is it called when there is an increased need for services in a portion of the population that in turn provides employment opportunities for workers in other portions of the population? This is found in the discussion of social influences.
This is known as a Demographic trend.
What is the purpose of liquidity?
To allow you to withdraw money on short notice
Which of the following are common reasons to save money?
To pay for unexpected expenses To pay for the replacement of an appliance To pay for a vacation
Budgets allow you to live within your income while increasing your chances of achieving your financial goals.
True
Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investments value.
True
People should prepare a personal balance sheet on a periodic basis to evaluate financial progress.
True
True or false: Financial goals should be realistic, measurable, have a time frame, and imply the type of action to be taken.
True
What do equal employment rights provide for individuals?
Ways to avoid discrimination within the employment selection process Ways to ensure that worker's compensation, social security, and unemployment insurance is provided
Benefits of money market accounts include:
a favorable interest rate deposit insurance
A regular savings account usually does not have:
a high rate of interest overdraft protection a high balance requirement
An employment situation that is taken on without regard to advancement opportunities is often times called:
a job
A regular savings account usually offers:
a low or no minimum balance requirement
If you are not enjoying the work you are doing and you feel distressed about it, then it may be time for:
a new job
Chris puts money in envelopes each month to help him avoid overspending. Which of the following budgeting systems is he using?
a physical budget
Personal opportunity costs include using your time, in addition to or in place of money, to
achieve your goals satisfy your personal values meet your needs
When husband and wife file a joint return, the income of a husband and wife is
added together
The different stages of the financial and family needs of an adult is called the:
adult life cycle
A deposit ticket is used to add funds to:
an account
Most Americans do not have
an adequate amount set aside for emergencies.
The definition of a mentor is:
an experienced employee who serves as a teacher and counselor for a less experienced person in a career field
To calculate time value of money, the following items are needed:
annual interest rate, length of time, principal amount
Share draft accounts at a credit union:
are interest bearing
You can ______ a six-month extension on filing an income tax return by filing the proper forms with the IRS before the April 15 filing deadline.
automatically receive
Fill in the blanks to complete the sentence. Tax Blank 1 of 2 means using legitimate strategies to reduce taxes while tax Blank 2 of 2 involves using illegal means to lower tax liability.
avoidance; evasion
When comparing savings accounts rates of return, you should choose one that:
beats the rate of inflation
Growth is expected for Web consultants, foreign language translators, employee benefit managers, operations consultants, and research data analysts. These type of services are typically called (found in discussion of industry trends):
business services
Which of the following are fixed expenses?
cable television rent mortgage payments installment loan payments
Programs that allow workers to base their job benefits on a credit system and personal needs are called (found in discussion of evaluating employee benefits):
cafeteria-style employee benefits
The inflow and outflow of cash during a given period is called:
cash flow
A savings plan that requires a certain amount of money to be left for a specified amount of time, subject to penalty for early withdrawal, is called a:
certificate of deposit
The savings alternative that offers less liquidity is:
certificates of deposit
A Blank 1 of 1 check is a personal check with guaranteed payment. This is a one word answer.
certified
Common payment choices do not include:
corporate bonds municipal bonds
The simplest type of IRS audit is the Blank 1 of 1 audit. This is a one word answer.
correspondence
Overdraft protection is designed to:
cover underfunded checks
A tax Blank 1 of 1 is directly subtracted from taxes owed. This is a one word answer.
credit
Fill in the blanks to complete the sentence. Using savings for Blank 1 of 1 living expenses is one of the mistakes people make when managing current cash needs. This is a one word answer.
current, daily, normal, regular etc.
Financial services include all of the following except:
debt counseling
A tax ______ is an amount subtracted from adjusted gross income to arrive at taxable income.
deduction
A tax ______ reduces taxable income, thereby reducing the tax liability.
deduction
A Blank 1 of 1 ticket or slip is used to add funds to a checking account. This is a one word answer.
deposit
Qualifying widow or widower status is for an individual whose spouse has Blank 1 of 2 within the past Blank 2 of 2 years and who has a dependent. This is found in the discussion of who must file.
died; two
Take-home pay is:
earnings (salary, wages, and commissions) after deducting for taxes and other items
The ________ environment includes various institutions, including businesses, labor, and government, that work together to satisfy needs and wants.
economic
When individuals lose their jobs, they will cut back expenses. This is an example of how:
employment affects daily decisions
A tax imposed on the value of a person's property upon that person's death is called a(n):
estate tax
True or false: Discretionary income is the same as net pay.
f
True or false: Temp to hire means you will be hired after your temporary training.
f
True or false: The basics of money management include storing and maintaining your records, creating financial goals, and creating a budget.
f
Career assessment tests tell which career to pursue.
false
True or false: A tax deduction reduces tax liability directly, dollar for dollar.
false
True or false: The two main taxes on salary are income taxes and estate taxes.
false
True or false: When creating a financial plan, it is a simple, static process that is easy to implement and requires little maintenance moving forward.
false
If you find that you have income or deductions that you did not report on your tax return, you should
file a 1040X to amend the return.
Fill in the blanks to complete the sentence. Achieving your financial goals and carrying out your daily activities require many Blank 1 of 1 services.
financial
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is called a(n) ______ ______.
financial plan
What have poor financial management and extensive selling efforts created for Americans?
financial problems
Determining your current financial situation regarding income, savings, living expenses, and debts is the _______ step in the financial planning process.
first
Expenses that do not vary from month to month are referred to as __________ expenses.
fixed
Which of the following are variable expenses?
food clothing entertainment expenses
The more ______ you have, the greater your earning potential.
formal education
Identify four service industries that according to your textbook are expected to have the greatest employment potential?
health care Financial services Information technologies Social services
Drawbacks of money market accounts include:
higher minimum balance required some institutions charging for low balances
The third step in the financial planning process is:
identifying alternative courses of action
Cash flow statements show the inflows (______) and outflows (payments).
income
The two main types of federal taxes on wages and salary are ______ tax and Social Security tax.
income
Cash flow is the ______ of cash during a given period of time.
inflow and outflow
Common choices for making payments include all of the following except:
installment loans
All of the following are deposit-type institutions that serve as financial intermediaries except:
insurance companies
Employment opportunities in construction can most be affected by high ___________.
interest rates
Common mistakes made when managing current cash needs include:
lacking sufficient funds using savings for current expenses overspending
What are three main elements that affect overall financial planning?
life situation, personal values, economic factors
Blank 1 of 1 is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees.
liquidity
The ability to buy or sell an investment quickly without substantially affecting the investments value is called:
liquidity
Real estate property taxers are a major source of revenue for:
local governments
When people first begin planning for retirement, saving for a child's college education, and planning the purchase of a vacation home, these are usually:
long term goals
A job change is beneficial for a worker if in the current job he or she is experiencing
low motivation level emotional distress caused by the job poor performance evaluations
One way to reduce your tax liability is to
maximize contributions to tax-deferred retirement programs.
When setting financial goals, you should ensure they are
measurable, time-based, specific, action oriented
A ______ fund is an account used for savings offered by investment companies.
money market
The savings alternative that offers more liquidity is:
money market accts
Real estate taxes and ______ are tax deductible by the homeowner.
mortgage interest
Interest income from Blank 1 of 1 bonds, which are issued by state and local governments, is not subject to federal income taxes.
municipal
______ bonds are NOT a type of federal savings bond.
municipal
A personal balance sheet should be prepared
on a periodic basis
On average, the portion of a person's earnings that goes to taxes is:
one third
Fill in the blanks to complete the sentence. A(n) Blank 1 of 1 cost is what you give up when you evaluate, select, and use financial services. This is a one word answer.
opportunity
Paul can invest his money in the stock market now instead of buying a new car; however, that would require a trade-off or:
opportunity costs
Discretionary income is what you have left after you have paid for housing, food, and ______.
other necessities
Financial services include:
payment services financial planning savings investments borrowing insurance
Taxpayers pay income taxes through
payroll withholding and through estimated tax payments.
Selecting your time rather than your money to meet your needs, achieve your goals and satisfy your personal values are examples of
personal opportunity costs
Your life situation, personal values, and economic factors influence what?
personal values, financial knowledge, financial problems, financial plan
People create budgets to help them:
prepare for emergencies reach their goals spend money wisely live within their income
Real estate ______ taxes are based on the value of land and buildings.
property
Three methods that help develop successful financial habits are:
providing adequate insurance coverage understanding tax and investment information focusing on a defined spending plan
Which of the following characteristics are legally protected from discrimination in hiring practices?
race marital status age
Budgeting should be well planned,
realistic, flexible, and clearly communicated.
The rate of Blank 1 of 1_ is the percentage increase in the value of savings as a result of interest earned.
return
Two methods that will NOT help develop long-term successful financial habits are:
saving as much money as possible for only one year regularly using your emergency fund for routine expenses
Increasing _____ will improve your net worth.
savings
Some things to consider when selecting your financial institution include
services offered fees and charges online banking convenience
A Blank 1 of 1 draft account is an interest-bearing checking account at a credit union. This is a one word answer.
share
A(n) __________ can be helpful in maintaining and updating income and expense data.
spreadsheet program
A savings plan that requires a certain amount of money to be left for a specified amount of time is NOT a:
stock option money market account passbook savings account
Financial services will usually NOT be affected by:
stock prices
A mentor is an experienced employee who serves as a teacher and counselor to a less-experienced person in a career field.
t
Money management involves financial activities to manage current personal economic resources while planning for the achievement of long-term financial security.
t
The steps to prepare a budget include setting financial goals, estimating expected income, budgeting for emergency funds and expenses, recording actual expenses, calculating variances, and evaluating.
t
True or false: The statement of cash flow is a summary of cash receipts and payments for a given period.
t
All of the following will increase net worth, except:
taking $1,000 cash from your liquid assets and paying down $1,000 of debt Reason: If you reduce your assets by the same amount that you reduce your debts, your net worth will remain unchanged.
CPAs and enrolled agents both offer tax services including return preparation while a(n) ______ will represent you in the case of an IRS lawsuit.
tax attorney
Taking advantage of tax credits, deferring capital gains and accelerating capital losses, and considering tax-exempt investments are all strategies to lower income Blank 1 of 1.
taxes
Specialized career training refers to ______ skills.
technical
The rate of return is:
the percentage increase in the value of an account.
The definition of personal financial planning is:
the process of managing your money to achieve personal economic satisfaction
Overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of:
their balance
What measures the increase in an amount of money as a result of interest earned?
time value of money
Financial services can change due to such factors as changing interest rates and rising consumer prices.
true
If you are concerned about year-end tax payments, you may increase the amount withheld from each paycheck.
true
Opportunity cost is what you give up by making a choice.
true
Target your tax planning efforts toward paying your fair share of taxes while taking advantage of tax benefits appropriate to your personal and financial situation.
true
True or false: A financial plan is a formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.
true
True or false: A key factor in making financial decisions is time value of money.
true
True or false: A tax credit is an amount subtracted directly from taxes owed.
true
True or false: Achieving your financial goals and carrying out your daily activities require various financial services.
true
True or false: Frank can invest some of the money he has been saving in the stock market now; however, that would probably require some trade-offs on his part.
true
True or false: Income tax is calculated on income less deductions and exemptions.
true
True or false: Most Americans do not have adequate amounts of money set aside for emergencies.
true
True or false: The contribution limit for an IRA (as of 2018) is $5,500 for workers under the age of 50.
true
True or false: Three items needed to calculate future value include: principal, length of time, annual interest rate
true
True or false: While municipal bonds pay a lower rate of interest than other types of bonds, the after-tax income may be higher than other types of bonds.
true
One the most compelling reasons to set aside money is to ready yourself for irregular and
unexpected expenses.
Which of the following do NOT offer for-profit tax services?
universities
Certified checks, cashier's checks, and money orders allow you to make a payment that the recipient knows is Blank 1 of 1.
valid
Estate taxes are calculated on the ______ of a person's property at death.
value
Flexible payments that change from month to month are called __________ expenses.
variable
A balance sheet is a personal financial statement that shows:
what you own and owe as of a certain date
A balance sheet is a listing of ______ as of a certain date.
your assets, liabilities, and net worth
