Week 2 Quiz Flashcards
T/F
Financial planning is necessary only if an individual earns a lot of money.
False
T/F
An individual’s auto loan payments are listed as an expense on the income and expense statement.
True
T/F
It is best to prepare your financial statements at least once a year, ideally when drawing up your budget.
True
T/F
An individual can maintain their personal financial statements using spreadsheet software.
True
T/F
A cash budget has value only if you use it and keep careful records of actual income and expenses.
True
Which of the following statements regarding an individual’s income and expense statement is true?
The income and expense statement measures financial performance over time.
Stephen paid $20,000 for his car 3 years ago. He still has 24 monthly payments of $400 left to pay, and the current balance on his auto loan is $9,000. He estimates the market value of his vehicle to be $13,000. What is his equity or ownership position in his car?
$4,000
Which of these is an example of a liquid asset?
Checking account
When your assets exceed your liabilities, you:
are solvent.
A cash budget helps you:
monitor and control your finances.
The concept that a dollar today is worth more than a dollar received in the future is known as:
the time value of money.
The value today of an amount to be received in the future is called:
present value
Inflation is expected to be 4% in the coming year. If Mr. Gonza earned $37,000 this year, how much must he earn in the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures?
$38,480
T/F
Adjustments to (gross) income will decrease your taxable income.
True
Ethan and Alana are married with four dependent children. Which of the following filing statuses can Ethan and Alana use if they want to legally file one tax return?
Married filing jointly
Your income tax withholding is dependent on:
your level of earnings and the number of withholding allowances you have claimed.
Sarah is a homeowner and a single taxpayer. She has owned and occupied the house as a principal residence for the last 8 years. In the current taxable year, she receives a promotion. She sells her home and moves to another area. The capital gain on the sale of the principal residence will:
be taxable excluding the first $250,000 of the gain.
If you do not wish to itemize deductions, the other deduction you can take is the:
standard deduction.
Tax credits reduce your:
tax liability.
If you are a professional who is likely to receive income that is not subject to withholding, then you are required to:
pay an estimated tax.
Which of the following is an illegal method of reducing your current tax liability?
Not reporting the taxable income you receive
Which of these would most likely have to pay estimated taxes?
Independent consultant
