FP 101 Week 9 Final Exam

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Week Nine

Athena wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is NOT a proper deduction?

1. Contributions to charity organizations
2. Medical and dental expenses that exceed 7.5% of AGI
3. State interest rate
4. Miscellaneous expenses less than 2% of AGI
5. Fred has been completing his own tax return for many years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?
6. Until he files his returns
7. 3 years
8. 6 years
9. 10 years

2. The form you file with your employer to determine how much income tax is withheld from your check is
3. W-2
4. W-4
5. 1098-E
6. 1099

3. The Federal Insurance Contributions Act (FICA) created this payroll deduction for federal government retirement benefits (such as old age, survivor, and disability insurance)
4. Estate taxes
5. Excise taxes
6. Social Security taxes
7. Sales taxes

5. All of the following can reduce your taxes today except investing in
6. Traditional IRA contributions
7. Section 529 savings plan contributions
8. 401(k) plan contributions
9. Roth IRA contributions

6. Gross income after certain reductions have been made is
7. Adjusted gross income
8. Earned income
9. Exclusions from income
10. Tax-deferred income

7. Flat taxes are:
8. Available to everyone not income based
9. The higher income the higher interest rate
10. Must be paid in full
11. None of these

8. This type of deduction represents the set amount of income on which no taxes are paid
9. Exemption
10. Itemized deduction
11. Standard deduction
12. Tax deduction

9. At the end of the year, employees receive a ________ form that reports annual earnings and the amounts deducted for taxes from their employers.
10. 1040
11. 1099
12. W-2
13. W-4

10. Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?
11. Single
12. Married, filing a joint return
13. Married, filing individually
14. Head of household

11. A family with $50,000 in assets and $30,000 of liabilities would have a net worth of
12. $10,000
13. $20,000
14. $50,000
15. $80,000

12. Opportunity cost can be defined as
13. A trade-off of a decision
14. Failing at goals
15. Creating financial wisdom
16. The amount paid for taxes when a purchase is made

13. If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?
14. Call 911.
15. Contact your local bank.
16. File a police report.
17. All of these steps should be taken immediately.

14. Many think that perhaps the greatest disadvantage of using credit is
15. The temptation to overspend
16. The convenience offered instead of using cash
17. The float from using credit
18. The increase in total purchasing power

15. Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?
16. A credit card
17. Closed-end credit
18. A debit card
19. A gift card

16. Information gathering is part of the ________________ phase of the decision-making process.
17. Evaluating alternatives
18. Pre-shopping activities
19. Selection and purchase
20. Ordering activities

17. A valid long-term investment goal is
18. Saving $5,000 per year for 40 years for retirement
19. Spending less than $500 per month for housing
20. Accumulating $3,000 in a savings account over the next 18 months
21. Using credit cards less in the next six months

18. A valid short-term investment goal is
19. Saving $5,000 per year for 40 years of retirement
20. Spending less than $500 per month for housing
21. Accumulating $3,000 in a savings account over the next 12 months
22. Using credit cards less in the next six months

19. If you start a new job and are offered the opportunity to participate in the company’s 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?
20. Participating in the retirement account to reduce income taxes
21. Participating in the retirement account to take advantage of the employer’s matching contributions
22. Basing your actual choice of investments on your age, how long before you retire, and your tolerance for risk
23. All of these decisions would have a financial impact.

20. What is the fee that a policyholder pays when an insurance company agrees to take on the risk?
21. Coverage
22. Insured
23. Premium
24. Risk