Week 4

Question 1

A tax audit is a(n):

A. International Revenue Service (IRS) charge of illegal process
B. The International Revenue Service (IRS) attempts to verify the accuracy of return
C. International Revenue Service (IRS) revise a previous tax return

Answer 1

B.The International Revenue Service (IRS) attempts to verify the accuracy of return

Question 2

Tax _______ is an illegal process.

A. Evasion
B. Planning
C. Preparation
D. Deferring

Answer 2

A. Evasion

Question 3

Social Security Benefits (cash benefits) are funded by:

A. Charitable contributions
B. Contributions from employers, employees, and self-employed people
C. State taxes
D. Income taxes

Answer 3

B. Contributions from employers, employees, and self-employed people

Question 4

Funds in commercial banks are protected by:

A. Federal Deposit Insurance Corporation (FDIC)
B. Savings Association Insurance Fund (SAIF)
C. National Credit Union Administration (NCUA)

Answer 4

A. Federal Deposit Insurance Corporation (FDIC)

Question 5

What is a good reason to invest in mutual funds?

A. Mutual funds provide diversification of invested funds.
B. Mutual funds are issued as no-load funds.
C. Mutual funds earn tax-free returns.

Answer 5

A. Mutual funds provide diversification of invested funds.

Question 6

Straight bankruptcy is allowed under which bankruptcy code?

A. Chapter 7
B. Chapter 19
C. Chapter 13

Answer 6

A. Chapter 7

Question 7

A federal income penalty of what % is required if you withdraw funds from most pension plans before 59 1/2?

A. 40%
B. 10%
C. 30%

Answer 7

B. 10%

Question 8

The other deduction you can take if you do not itemize deductions is called:

A. Standard
B. Bracket
C. Pay as you go

Answer 8

A. Standard

Question 9

A time delay from the date of the issuance of the policy until benefits are activated for disability policies is called:

A. Waiting Survival Period
B. Internal Limit Period
C. Probationary Period

Answer 9

C. Probationary Period

Question 10

To determine finance charges, when the simple interest method is used, the interest is calculated based on:

A. present value of all finance charges
B. future value of all finance charges
C. average outstanding balance.
D. actual balance of the loan.

Answer 10

D. actual balance of the loan