UGBA 135 EVALUATION EXAMS UPDATED
QUESTIONS AND ANSWERS SURE A+
✔✔Secure vs unsecure line of credit - ✔✔Debit is secure
Credit is unsecure (nothing to back it up other than credit history)
✔✔How does cancelling inactive credit cards affect your credit score? - ✔✔-can lower
because it will increase your d/c ratio
-if you cancel, cancel newest card first
✔✔Prepaid cards - ✔✔-offered by banks and nonbanks
-not linked to bank accounts
-fees: activation, inactivity, to load money onto cards, if you don't load money each
month, check balance info, to use an ATM for cash, for using a check to close an
account
✔✔Cash advance - ✔✔-using your credit card to withdraw cash
-higher interest rates, no grace period (incur interest rates right off the bat)
✔✔grace period - ✔✔set length of time after the due date during which payment may be
made without penalty
✔✔What is a retail charge card? - ✔✔-a credit card issued by a retailer allowing you to
charge purchases made only with their store
-higher interest rate 20-30% on unpaid balances
-no grace period and interest begins on date of purchase
-credit score can be lowered if you cancel card
✔✔Can you increase credit score by increasing your credit limit? - ✔✔Yes, only if you
stay below a 50% debt-to-credit ratio on each credit card. 30% ratio is the best for top
scores. Increase credit limit to lower credit ratio
✔✔How often are credit card balances calculated? - ✔✔daily
, ✔✔Credit report vs Credit score - ✔✔-credit report: individual report card telling you if
you have been making CC and loan payments on time and personal info
-credit score: credit report DETERMINES credit score
✔✔How many interest rates are used in determining how much interest you pay on
credit cards? - ✔✔
✔✔How often should you balance and review your credit card statement? - ✔✔Monthly
✔✔If you are charged penalties and fees, do they charge interest on them? - ✔✔the
next month you start paying a higher interest on balances and fees
✔✔overdraft fee - ✔✔applies when you charge more than your credit limit
✔✔Do all credit cards offer unconditional warranty on products? - ✔✔
✔✔Do credit card statements have to show the # of months needed to pay the minimum
payment? - ✔✔
✔✔Proprietorship - ✔✔-business owned by one person
-business dies when owner dies
-unlimited liability
✔✔Does a proprietor file a separate tax return for the business? - ✔✔Yes, along with
the 1040 form for themselves.
-profits are taxed at ordinary income tax rates
-losses can be used to reduce taxable income
✔✔Partnership - ✔✔-owned by 2 or more entities
-death of partner->continue business
-limited liability to the amount of their investment
-does not pay federal income taxes
-share profit/loss proportionally
✔✔Types of Partners - ✔✔unlimited and limited
✔✔General vs Limited Partnership - ✔✔General: manages and runs partnership;
unlimited liability; if dies, business goes to beneficiary
Limited: invest in the business and have limited liability; can only lose their investment
✔✔Are partners in partnerships liable for federal income taxes? - ✔✔No
QUESTIONS AND ANSWERS SURE A+
✔✔Secure vs unsecure line of credit - ✔✔Debit is secure
Credit is unsecure (nothing to back it up other than credit history)
✔✔How does cancelling inactive credit cards affect your credit score? - ✔✔-can lower
because it will increase your d/c ratio
-if you cancel, cancel newest card first
✔✔Prepaid cards - ✔✔-offered by banks and nonbanks
-not linked to bank accounts
-fees: activation, inactivity, to load money onto cards, if you don't load money each
month, check balance info, to use an ATM for cash, for using a check to close an
account
✔✔Cash advance - ✔✔-using your credit card to withdraw cash
-higher interest rates, no grace period (incur interest rates right off the bat)
✔✔grace period - ✔✔set length of time after the due date during which payment may be
made without penalty
✔✔What is a retail charge card? - ✔✔-a credit card issued by a retailer allowing you to
charge purchases made only with their store
-higher interest rate 20-30% on unpaid balances
-no grace period and interest begins on date of purchase
-credit score can be lowered if you cancel card
✔✔Can you increase credit score by increasing your credit limit? - ✔✔Yes, only if you
stay below a 50% debt-to-credit ratio on each credit card. 30% ratio is the best for top
scores. Increase credit limit to lower credit ratio
✔✔How often are credit card balances calculated? - ✔✔daily
, ✔✔Credit report vs Credit score - ✔✔-credit report: individual report card telling you if
you have been making CC and loan payments on time and personal info
-credit score: credit report DETERMINES credit score
✔✔How many interest rates are used in determining how much interest you pay on
credit cards? - ✔✔
✔✔How often should you balance and review your credit card statement? - ✔✔Monthly
✔✔If you are charged penalties and fees, do they charge interest on them? - ✔✔the
next month you start paying a higher interest on balances and fees
✔✔overdraft fee - ✔✔applies when you charge more than your credit limit
✔✔Do all credit cards offer unconditional warranty on products? - ✔✔
✔✔Do credit card statements have to show the # of months needed to pay the minimum
payment? - ✔✔
✔✔Proprietorship - ✔✔-business owned by one person
-business dies when owner dies
-unlimited liability
✔✔Does a proprietor file a separate tax return for the business? - ✔✔Yes, along with
the 1040 form for themselves.
-profits are taxed at ordinary income tax rates
-losses can be used to reduce taxable income
✔✔Partnership - ✔✔-owned by 2 or more entities
-death of partner->continue business
-limited liability to the amount of their investment
-does not pay federal income taxes
-share profit/loss proportionally
✔✔Types of Partners - ✔✔unlimited and limited
✔✔General vs Limited Partnership - ✔✔General: manages and runs partnership;
unlimited liability; if dies, business goes to beneficiary
Limited: invest in the business and have limited liability; can only lose their investment
✔✔Are partners in partnerships liable for federal income taxes? - ✔✔No
