1. Money management refers to a. Preparing personal financial statements b. Day-to-day financial activities c. Storing financial records for easy access d. Trade-offs that occur with financial decisions
2. Which of the following is NOT a main purpose of a budget? a. Help to live within personal income b. To attain financial goals c. Prepare for financial emergencies d. None of the above
3. Discretionary income equals a. Gross income b. Money left over after paying for housing, food, and other necessities c. Take-home pay d. Money saved after paying for household necessities
4. SMART Goals contain all of the following EXCEPT a. Specific – knowing exactly what the goals are and how to attain them b. Action-oriented – the bases for the goals c. Resourceful – to be able to rely on information used to understand the written goals d. Time-based – the time frame needed to reach the goal
5. Which of the following intermediate goals is stated most clearly? a. Buy a car for less than $17,000 within six months. b. Retire in ten years at age 65 with $2,000,000 in my 401(k) account. c. Purchase a home with a mortgage no greater than $150,000 within three years. d. Set up an emergency fund.
6. Which statement best explains the purpose of present value a. Calculating the cost of future investments b. Finding the current value for a future amount based on a certain interest rate and certain time frame c. Also known as discounting d. To reach an estimated guess
7. Which of the following is the most effective way to improve your credit score? a. Pay your bills on time. b. Never exceed your credit limit. c. Reduce your credit utilization rate. d. Close your credit card accounts as soon as you pay them off.
8. All of the following are signs of financial trouble EXCEPT a. You use savings to pay for necessities such as food and utilities. b. You exceed the credit limits on your credit cards. c. You pay your credit card bills in full each period. d. The total balance on your credit cards increases each month.
9. Which of the following is NOT a valid reason for borrowing? a. Purchasing a new dishwasher b. Paying for everyday living expenses c. Buying a car to start a new job d. Paying for a medical emergency
10. Steve bought a laptop that was defective. This laptop will be fixed or replaced by the manufacturer as long as he returns it in a reasonable amount of time. What type of warranty does he have on his laptop? a. “As-is” warranty b. Full warranty c. Implied warranty d. Limited warranty
11. Which of the following is a disadvantage of renting? a. Renters have fewer responsibilities than home owners. b. Tenants cannot take tax deductions for mortgage interest and property tax. c. Renters usually do not have to be concerned with maintenance and repairs. d. Taking possession of a rental unit is less expensive than buying a home.
12. A valid short-term investment goal is a. Saving $5,000 per year for 40 years of retirement b. Spending less than $500 per month for housing c. Accumulating $3,000 in a savings account over the next 12 months d. Using credit cards less in the next six months
13. If you need access to your funds in two years or less, which of the following investments would be least appropriate? a. Cash b. Certificates of deposit c. Short-term government bonds d. Stocks and mutual funds
14. Money in a 401(k) grows in what way a. Tax-free b. Tax-exempt c. Tax-deferred d. Taxable
15. Homeowner’s insurance covers all of the following EXCEPT a. Personal property b. Personal liability c. Additional living expenses d. Automobiles
16. If you want to purchase term insurance, you will receive all of the following EXCEPT a. Protection against loss of life for a specified term b. Cash value c. Temporary insurance d. A benefit during the period it covers, such as 1,5,10, or 20 years
17. When calculating federal income taxes, what increases "income"? a. Tax-exempt income b. Tax-deferred income c. Exclusions d. Alimony received
18. 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? a. Contributions to charity organizations b. Medical and dental expenses that exceed 7.5% of AGI c. State interest rate d. Miscellaneous expenses less than 2% of AGI
19. 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? a. Until he files his returns b. 3 years c. 6 years d. 10 years
20. The Federal Insurance Contributions Act (FICA) created this payroll deduction for federal government retirement benefits (such as old age, survivor, and disability insurance) a. Estate taxes b. Excise taxes c. Social Security taxes d. Sales taxes
21. All of the following can reduce your taxes today except investing in a. Traditional IRA contributions b. Self-employment business expenses c. 401(k) plan contributions d. Roth IRA contributions
22. Gross income after certain reductions have been made is a. Adjusted gross income b. Earned income c. Exclusions from income d. Tax-deferred income
23. Flat taxes are: a. Available to everyone not income based b. The higher income the higher interest rate c. Must be paid in full d. None of these
24. This type of deduction represents the set amount of income on which no taxes are paid a. Exemption b. Itemized deduction c. Standard deduction d. Tax deduction
25. 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? a. Single b. Married, filing a joint return c. Married, filing individually d. Head of household