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FCS 340 Test 1 | Actual Exam Questions
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Higher consumer prices are likely to be accompanied by _______ interest rate. - ✔✔higher What is the definition of economics? - ✔✔Study of how wealth is created and distributed What is the Fed? - ✔✔Federal Reserves What is the main responsibility of the Fed? - ✔✔Regulate national money supply The "obtaining" component of financial planning is defined - ✔✔Foundation of financial planning, resources used for all financial activities What is liquidity refer to? - ✔✔Be able to take financial resources and convert to cash What goals should be considered as a part of the saving component of financial planning? - ✔✔Emergency fund of $1,000 minimum Define financial plan - ✔✔Formalized report that summarizes your current financial situation, analyzes your financial needs and recommends future financial activities What determines the success or failure of a financial plan - ✔✔Success- must coordinate various components through an organized plan and wise decision making Short term, intermediate, and long term goals - ✔✔Short term- within next year intermediate- 2 - 5 years long term- 5+ years
Smart Goals - ✔✔Specific, measurable, action oriented, realistic, time based What is opportunity cost? - ✔✔what a person gives up by making a choice What is the time value of money? - ✔✔Increase in an amount of money as a result of interest earned The amount of interest is determined by multiplying the amount in savings by the _______ interest rate and the _______ periods - ✔✔annual, time Future value calculations are also referred to as - ✔✔compounding What is inflation risk? - ✔✔danger of loss buying power due to using prices When should you evaluate and revise your actions in your financial plan - ✔✔Change of income- change of family situation Give an example of long-term financial strategy - ✔✔pay off consumer debts, home mortgages An example of goals of a short-term financial objective - ✔✔create and implement a budget What type of records should be kept in a home file? - ✔✔birth, marriage, death certificates, custody/adoption papers, list of checking/savings account numbers, serial numbers, valuable photos, mortgage papers, copy of will, stock and bond certificate What type of financial documents would most likely be stored in a safe deposit box? - ✔✔Personal employment records, money management records, tax records, financial services, auto, housing, insurance, investment records
What are some actions that could be taken to improve your financial standing? - ✔✔Increase savings, earnings, investments, assets, decrease spending, pay off debt Which payment items should be budgeted first? Fixed or variable expenses? - ✔✔Fixed What is a surplus? deficit? - ✔✔Surplus- amount by which actual spending is less than planned spending Deficit- amount that actual spending exceeds planned spending What is an excise tax? - ✔✔a tax imposed on specific goods and services, ie cigarettes, alcohol, tires and air The _____ property tax is based on the value of land and buildings? - ✔✔real estate Money received in the form of dividends or interest is ______ outcome. - ✔✔investment An exclusion affects a person's taxes by _____ the amount of taxable income - ✔✔reducing _____ are expenses that a taxpayer is allowed to deduct from adjusted gross income. - ✔✔tax deduction (itemized deduction) An exemption affects a persons tax situation by _____ the tax payer's taxable income - ✔✔reducing What is a tax credit and what are some examples? - ✔✔An amount subtracted directly from the amount taxes owed. Ex- child care, dependent care Most people pay federal income tax by having amounts ____ from income - ✔✔withheld
The "head of the household" filing status is for people who are - ✔✔not living with a spouse, divorced, children The form 1040 is most helpful to whom? - ✔✔people who have less that $100, Which type of audit is least complicated for tax payers - ✔✔correspondence audit The use of legitimate methods to reduce one's taxes is - ✔✔tax avoidance Give an example of a tax-exempt investment - ✔✔bond An IRA, Keogh Plan, and 401 K are examples of _______ retirement plans - ✔✔tax deferred A tax credit of $50 for a person in a 28% tax bracket would reduce a person's taxes by - ✔✔dollar for dollar What is a capital gain? - ✔✔Profits from the sale of a capital asset such as stocks, bonds, or real estate Who is ultimately responsible for supplying accurate and complete information for completing a tax return? - ✔✔we are What actions can you take to reduce your taxes? - ✔✔Capital gains, self employment, retirement plans, children's investments At the end of the year a form used by employers that reports annual earnings and the amounts deducted for taxes is called - ✔✔W- 2 The tax due on the next dollar of income is referred to as the - ✔✔marginal tax rate
