Question 5
Bank A offers an account with a nominal yield of 2 percent, and it compounds interest monthly. Bank B offers an account with nominal yield of 2 percent, and it compounds interest daily. Which one has the higher APY?
Bank A has the higher APY.
Bank B has the higher APY.
They both have the same APY.
This cannot be solved from the given information.
Question 8
One approach to forecasting variable expenses is to
keep them constant.
assign probabilities to different outcomes.
use a wide range of estimates.
increase them by the expected inflation rate.
Question 9
The steps in the budgeting process are forecasting cash flows, __________, monitoring, and reevaluating over time.
selecting
negotiating
implementing
adjusting
The "Four Ps" to consider in choosing a financial institution include product, price, people, and
precision.
productivity.
profit.
place.
Question 12
If your projected net cash flow is negative, which of the following should you do first?
Make sure you have a large enough credit line to make up the difference.
Take steps to reduce your discretionary spending or increase your cash inflows.
Save more so that you can build up your emergency fund.
Apply for another credit card with a high credit limit.
Question 14
Which of the following types of taxes paid is not an allowable itemized deduction?
use taxes
personal property taxes
property taxes on your primary residence
state income taxes
Question 15
Reimbursement accounts for qualified medical and child care expenses are known as
flexible spending accounts.
deferred compensation plans.
option plans.
cafeteria plans.
Question 16
A tax that imposes higher rates on taxpayers with higher incomes is
usury.
illegal.
regressive.
progressive.
Question 17
Which of the following tax forms is known as the long form?
1040
1040A
1040X
1040B
Question 18
Matthew is 16 years old and can be claimed as a dependent by his parents. He received $1,500 in dividends and $650 in interest and earned $4,800 from odd jobs during the year. Will Matthew need to file a separate tax return? Why?
No. His unearned income and gross income do not exceed the maximum limits.
Yes. His earned income exceeds the maximum limit.
No. His gross income does not exceed the maximum limit.
Yes. His unearned income exceeds the maximum limit.
Question 19
What is the FICA payroll tax used to pay for?
Medicare
both Social Security and Medicare
Social Security
neither Social Security nor Medicare
Question 20
When your employer takes money out of your income and sends it to the government it is called
a tax credit.
payroll withholding.
a regressive tax.
an itemized deduction.
Married couples filing jointly can claim an exemption of $4,000 per person and they are allowed to take a standard deduction of $12,600. Greg and Jamie are married and both work. However, Greg was laid off near the beginning of the year and started school in summer. Their joint earned income was $22,250 before retirement contribution, and Jamie contributed $3,400 to her eligible IRA. Based on Greg and Jamie's situation, which of the following is true?
Greg and Jamie will pay federal income tax and payroll taxes.
Greg and Jamie will only pay payroll taxes.
Greg and Jamie will not pay any form of tax.
Greg and Jamie will only pay federal income tax.
Question 23
Which of the following is NOT deductible from income for federal income taxes?
traditional IRA contribution
employer retirement plan contribution
Roth IRA contribution
medical flexible spending account contribution
Question 25
His accountant has informed Ray that he qualifies for the American Opportunity Tax Credit because he is a full-time student at the local university. Assuming Ray qualifies for a $2,500 tax credit, this means the credit will
increase his itemized deductions by $2,500.
guarantee him a tax refund of $2,500.
reduce his taxes owed by $2,500.
reduce his taxable income by $2,500.
Bank A offers an account with a nominal yield of 2 percent, and it compounds interest monthly. Bank B offers an account with nominal yield of 2 percent, and it compounds interest daily. Which one has the higher APY?
Bank A has the higher APY.
Bank B has the higher APY.
They both have the same APY.
This cannot be solved from the given information.
Question 8
One approach to forecasting variable expenses is to
keep them constant.
assign probabilities to different outcomes.
use a wide range of estimates.
increase them by the expected inflation rate.
Question 9
The steps in the budgeting process are forecasting cash flows, __________, monitoring, and reevaluating over time.
selecting
negotiating
implementing
adjusting
The "Four Ps" to consider in choosing a financial institution include product, price, people, and
precision.
productivity.
profit.
place.
Question 12
If your projected net cash flow is negative, which of the following should you do first?
Make sure you have a large enough credit line to make up the difference.
Take steps to reduce your discretionary spending or increase your cash inflows.
Save more so that you can build up your emergency fund.
Apply for another credit card with a high credit limit.
Question 14
Which of the following types of taxes paid is not an allowable itemized deduction?
use taxes
personal property taxes
property taxes on your primary residence
state income taxes
Question 15
Reimbursement accounts for qualified medical and child care expenses are known as
flexible spending accounts.
deferred compensation plans.
option plans.
cafeteria plans.
Question 16
A tax that imposes higher rates on taxpayers with higher incomes is
usury.
illegal.
regressive.
progressive.
Question 17
Which of the following tax forms is known as the long form?
1040
1040A
1040X
1040B
Question 18
Matthew is 16 years old and can be claimed as a dependent by his parents. He received $1,500 in dividends and $650 in interest and earned $4,800 from odd jobs during the year. Will Matthew need to file a separate tax return? Why?
No. His unearned income and gross income do not exceed the maximum limits.
Yes. His earned income exceeds the maximum limit.
No. His gross income does not exceed the maximum limit.
Yes. His unearned income exceeds the maximum limit.
Question 19
What is the FICA payroll tax used to pay for?
Medicare
both Social Security and Medicare
Social Security
neither Social Security nor Medicare
Question 20
When your employer takes money out of your income and sends it to the government it is called
a tax credit.
payroll withholding.
a regressive tax.
an itemized deduction.
Married couples filing jointly can claim an exemption of $4,000 per person and they are allowed to take a standard deduction of $12,600. Greg and Jamie are married and both work. However, Greg was laid off near the beginning of the year and started school in summer. Their joint earned income was $22,250 before retirement contribution, and Jamie contributed $3,400 to her eligible IRA. Based on Greg and Jamie's situation, which of the following is true?
Greg and Jamie will pay federal income tax and payroll taxes.
Greg and Jamie will only pay payroll taxes.
Greg and Jamie will not pay any form of tax.
Greg and Jamie will only pay federal income tax.
Question 23
Which of the following is NOT deductible from income for federal income taxes?
traditional IRA contribution
employer retirement plan contribution
Roth IRA contribution
medical flexible spending account contribution
Question 25
His accountant has informed Ray that he qualifies for the American Opportunity Tax Credit because he is a full-time student at the local university. Assuming Ray qualifies for a $2,500 tax credit, this means the credit will
increase his itemized deductions by $2,500.
guarantee him a tax refund of $2,500.
reduce his taxes owed by $2,500.
reduce his taxable income by $2,500.
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