Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Exams > Exam 1 > Flashcards

Exam 1 Flashcards

Chapters 1-3

1
Q

What is rule 72?

A

Used to find inflation rate. 72/annual inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is inflation

A

a rise in general prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is interest rate?

A

Price to pay of borrowed money.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What influences interest rates?

A

Forces of supply and demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Simple interest calculations

A

Refer to PV & FV sheets. (PV-Av)/AV = x
(Current x FV) = x

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is financial plan?

A

formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Types of risks to plan for..

A

inflation, interest rate, income, personal, & liquidity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Money Management

A

Day to day financial activities necessary to manage current personal economic resources while working toward long-term financial security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Money Management activities

A

financial documents, financial statements, budgeting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Variable Expenses

A

Flexible payments that change from month to month. (Food, clothing, utilities)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Fixed Expenses

A

Payments that do not vary from month to month. (Rent or mortgage, loans)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Take home pay

A

Also known as net pay. A persons earnings after deductions for taxes and other items

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Disposable Income

A

Also known as take home pay. The amount a person or household has available to spend.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Debt-Payments Ratio

A

Monthly credit payments divided by take home pay. Indicates how much of a persons earnings goes for debt payments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are goals? Lengths?

A

Where you want to see yourself financially. Long-term: 5+ years. Short-term: Months to 1 year. Mid-term: 2-4 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Opportunity costs

A

What you give up when making a choice. Also known as a trade off.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Compounding

A

Future value computations. Allows the FV of a deposit to grow faster than it would if interest were paid only on the original deposit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Discounting

A

Present value computations.
Allow you to determine how much to deposit now to obtain a desired total in the future.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Personal Financial Statements

A

Tell you the starting point of your financial journey. (Report, measure, maintain, provide)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Balance sheet

A

Also called: Net worth statement. Reports what you own and what you owe. (Calculates net worth)

21
Q

Cash flow

A

Is that actual inflow and outflow of cash during a given time period.N

22
Q

Net worth

A

Difference between assets and liabilities.

23
Q

Purpose of tax

A

To provide revenue for government funded services

24
Q

Excise tax

A

imposed by federal government on goods such as gas, cigs, alcohol, tires etc

25
Q

Real estate property tax

A

taxes on lands & buildings

26
Q

Personal property tax

A

taxes on automobiles, boats, furniture, livestock

27
Q

Estate tax

A

imposed on the value of a persons property at time of death

28
Q

Inheritance tax

A

value of property from deceased

29
Q

Filing statuses

A

Married, single, widowed, head of household

30
Q

Tax credit

A

Results in a dollar for dollar reduction in the amount of taxes owed

31
Q

Tax deduction

A

Reduces the taxable income on which taxes are based

32
Q

Itemized deductions

A

Expenses a taxpayer is allowed to deduct from adjusted gross income. (Medical expenses, taxes, interest, contributions)

33
Q

Tax forms

A

1040,

34
Q

Types of income

A

Earned, investment, & passive

35
Q

Earned income

A

usually in the form of wages, salary, commissions

36
Q

Investment income

A

Also known as portfolio. Money received in the form of dividends, interest, or rent

37
Q

Passive income

A

results from business activities in which you don’t participate in (limited partnership)

38
Q

Adjusted gross income

A

gross income after certain reductions have been made

39
Q

tax shelters

A

investments that provide immediate tax benefits and a reasonable expectation of a future financial return

40
Q

tax deductions

A

an amount subtracted from adjusted gross income to arrive at taxable income

41
Q

standard deduction

A

a set amount on which no taxes are paid

42
Q

exemptions

A

allowed as a deduction from adjusted gross income for yourself of other dependents

43
Q

marginal tax rate

A

highest bracket and associated rate that applies to your income

44
Q

average tax rate

A

based on the total tax due divided by taxable income

45
Q

tax credit

A

an amount subtracted directly from the amount of taxes owed

46
Q

tax audit

A

a detailed examination of your tax return by the IRS

47
Q

Types of audit

A

correspondence, office & field

48
Q
A

Exams (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions