personal financial planning exam 1
Difference between deductions and credits
deductions: chip away at the income you will pay taxes on Credits: directly reduce the amount you owe
A budget is a detailed statement of what income and expenses occurred over a past period.
false
A long-term capital gain is taxed at the same rate as ordinary income.
false
A savings account may be a useful tool in managing everyday household transactions.
false
Approximately 50 percent of Americans prepare a detailed household budget.
false
Average propensity to consume refers to how much of your money you plan to save in your financial plan.
false
FDIC covers stocks, bonds, and mutual funds purchased at banks.
false
If you are married, you can legally file a single tax return.
false
Interest you earned on your savings account would be an entry on your personal balance sheet.
false
Internet-only banks typically pay lower interest rates on savings than traditional banks.
false
One's marginal tax rate is typically lower than one's average tax rate.
false
Saving accounts are sometimes referred to as demand deposits.
false
Social security taxes are deducted from all wages and salaries earned in a year.
false
The Consumer Price Index (CPI) is the amount of goods and services each dollar buys at a given point in time.
false
The heart of sound financial planning is improved standard of living.
false
The income and expense statement looks forward in time, while a budget is backward looking.
false
The minimum denomination for Treasury bills is now $1,000
false
There is a penalty for early withdrawal of funds from CDs purchased from brokerage firms
false
There is no limit on the amount of social security tax withheld annually.
false
f you are married, you can legally file a single tax return
false
he rate of return on cash or other liquid assets is relatively high compared to other types of investments.
false
A balance sheet is like a photograph of your financial condition, while an income and expense statement is like a motion picture.
true
A house and land are examples of real property
true
A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments.
true
ATM transactions require the use of a PIN.
true
Alimony received is included in gross income for the receiver and deducted from gross income for the payer.
true
An investment must be owned over one year in order to qualify for long-term capital gains treatment.
true
Credit unions typically pay higher rates of return on savings than banks and savings and loan associations.
true
Current consumption affects future consumption
true
Debit and ATM card transactions are linked to your checking account.
true
If your bank states that it compounds monthly, the effective interest rate (APY) will be greater than the nominal interest rate.
true
Jewelry, furniture, and computers are examples of personal property.
true
One could expect to earn a higher rate of interest on a certificate of deposit than on a checking account.
true
Personal financial planning involves translating financial goals into action plans.
true
Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or family.
true
Tax credits are dollar-for-dollar reductions in taxes due.
true
The Medicare portion of the FICA tax is paid on 100% of earnings.
true
The Six-Step Financial Planning Process is: 1. Define financial goals. 2. Develop financial plans and strategies to achieve goals. 3. Implement financial plans and strategies. 4. Periodically develop and implement budgets to monitor and control progress toward goals. 5. Use financial statements to evaluate results of plans and budgets, taking corrective action as required. 6. Redefine goals and revise plans and strategies as personal circumstances change.
true
The equity in your home is the difference between the loan balance and the purchase price.
true
The federal personal income tax is a progressive tax
true
The federal personal income tax is a progressive tax.
true
Treasury bills are sold at a discount of their maturity value.
true
Utility refers to the amount of satisfaction a person gets from buying certain items.
true
When the income and expense statement indicates a cash surplus, this may be used to increase net worth by increasing assets or decreasing liabilities.
true
Your personal value system will shape your attitude toward money and wealth accumulation.
true
balance sheet is like a photograph of your financial condition, while an income and expense statement is like a motion picture.
true
How much can you get on a T-Bill?
$100 all the way to $5 million
What are the tax brackets?
10%-0k-9k 12%-9k-39k 22%-39k-84k 24%-84k-160k 32%-160k-204k 35%-204K-510K 37%-510K+
If you have a 200K house and you took out a 100K loan and the market value is 210K what is the equity?
110K
What is the rule of 72 and if you are making 2% per year, approximately how many years does it take to double your money?
72 divided by the percent
How do you receive direct interest?
added to account or paid directly
What are the three different types of cash?
liquid, stable, fungible
Are money market mutual funds guaranteed?
no
From Class, which goal has "Last resort assets
retirement
Cash is what kind of goal?
short term
