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FCS 340 Test 1: Economics and Financial Planning Questions and Answers, Exams of Financial Accounting

A comprehensive set of questions and answers covering key concepts in economics and financial planning. topics include the definition of economics, the role of the federal reserve, financial planning components (saving, investing, budgeting), and tax planning. the questions are detailed and cover a wide range of concepts, making it a valuable study resource for students.

Typology: Exams

2024/2025

Available from 05/13/2025

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FCS 340 Test 1 | Actual Exam Questions
| 100% Correct Answers | Verified
2024 Version
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
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FCS 340 Test 1 | Actual Exam Questions

| 100% Correct Answers | Verified

2024 Version

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