Ugba 135 Final Exam With Complete Solution.

UGBA 135 FINAL EXAM WITH COMPLETE SOLUTION. What's the rule of 72? - answerHow long it takes for a sum of money to double at a given interest rate 72/interest rate = # of years to double OR 72/# of years to double = interest rate What's a general partner? - answerA general partner has the authority to act on behalf of the business without the knowledge or permission of the other partners. Unlike a limited or silent partner, the general partner may have unlimited liability for the debts of the business. T/F f you start a business a lender will want you to personally gaurantee a loan i.e. a home - answerTrue what's the first thing you need to start a business? - answerAn idea what's part A of medicare? - answerPart A medicare is free to seniors who apply and is financed by a 2.9%payroll tax on all earned income paid by all workers with no salary cap. In effect, 1.45% is paid by the worker and 1.45% is paid by the employee Part B? - answerPart B of medicare is optional and means tested. It is financed by monthly premiums paid by the insured which currently range from about to $134 to $428 per month, based on a person's prior year's adjusted gross income. Is it paid directly or deducted from Social Security checks. Parts A, B, and D have deductibles. Part D? - answerPart D of medicare is optional and means tested. It is a prescription drug plan currently provided only by private insurance companies and financed 25% by monthly premiums from the insured and 75% by taxes. B & D are means tested which means your income must be low enough to quslify for the program At what age are benefits available for social security and medicare? - answer65 Are social security and unemployment benefits taxable income? - answeryes what's the most important thing when determining your credit score? - answerPaying bills on time over time what are late fees and how do you avoid them? - answerPay your shit on time. payment late on minimum credit card payment: can't be greater than your minimum payment If you are the victim of credit card theft, what 's the first thing you should do? - answercontact Transunion, Experian, and Equifax If you borrow money carrying a balance and you make an extra payment above the minimum where do you want the extra money to go? - answerto the credit card with the highest interest what is a prepaid card? - answerPrepaid cards are offered by banks and non banks. They are not linked to a bank account. Prepaid cards were initially designed to provide less the affluent, those without a bank account, to carry money. However, bnks have found that they can be quite lucrative as they may charge initiation fees, inactivity fees, fees to load money onto the card, fees if you do NOT load money onto the card, fees to check balane info, fees to use an atm for cash, and fees for using a check to close an account. What is variable rate of interest? - answerA variable rate of interest is an interest rate that moves up and down based upon a benchmark interest rate which is not controlled by the lender. It is now commonly used by credit card issues. It is now commonly used by the credit card issuers. One example would be to base the variable rate on the "prime rate" of interest which is supposesdly the lowest interest rate banks charge their best customers. What is a go-to rate? - answerA go-to rate is an interest rate you are charged on unpaid credit card balances, in additon to the variable rate, to determine the total rate of interest on your account. Your go-to rate is based on your credit history. As your credit card history improvesor declines, so is the likelihood that your go-to-rate will rise or fall on future borrowings. For examples, if your go-to-rate is 8% and the variable rate is 3% your total rate of interest o unpaid balances is 11%. If interest rates rise and the variable rate increases to 5% your total rate of interest will rise to 13%. What is the minimium crirteria for a credit score? - answerAt least one reported "account" which has been open for at least six months. At least one report that has been reported by a lender in the last six months and nothing that indicates you're deceased. What records need to be collected about you before you get a score? - answerRecord of paying bills on time over time Debt-tocerdit ratio Length of credit history New accounts and recent applications for credit Mix of credit cards and loans Whats the legal limit on interest? - answerThere is none If you pay your credit card balance completely every month does it lower your credit score? - answerno Do CC companies track your student loan payments? - answeryes Whats the difference bw a prepaid card and a gift card. - answerGift cards are stored value cards, usually for use at a specific merchant or retailer. Fees and deductions from the card are severely limited. Know the names of the three major credit reporting agaencies - answerTransunion, Experian, and equifax What is the default rate of interest for credit cards? - answerA default rate of interest , typically 28% to 35%, charged on your credit balance as a penalty when either of the following occurs 1) the issuer did not receive at least the minimum payment by the due date and time 2) Your payment is not honored by your bank, such as a bounced check What is an overlimit fee? - answerIf you have agreed to permit over limit charges, you generally can be charged a fee of up to $25 the first time you exceed your credit limit and a fee of up to $35 if you are over your limit a second time within six months. However, the fee cannot be larger than the amount by which you exceeded your credit limit The Credit Card Act? Six (long) key points - answerRemember the credit card act: it's for consumer not for small businesses. Its made to protect card holders. 1) no increase interest rates for 12 months unless an intro rate expires 2) After one year of the intro rate expires the card holder must be notified 45 days in advance of any rate change 2) If you are more than 60 days late the issuer may charge you the interest default rate, which is typically 28-35%. However, if you make your payments on time for six consecutive months , the original rate must be restored. Some banks may refund part of the default rate for each month you pay on time as an incentive to get the account "cleaned up" 4) For an account in good standing, interest rate increases can only be applied to new charges. 5)Promotional rate periods must be for a minimum of six months 6) Overdraft fees may not be charged unless the cardholder agrees to allow them. When you "accept" most modern day contracts you are probably agreeing to overdraft fees. Otherwise the issuer would reject the charge. T/F: If you are carrying a balance a cc calculates your balance on a daily basis. - answerTrue What is the 20% deduction of business income? - answerbrand new 20% tax deduction of business income from a proprietorship, partnership, limited liability corporation, or S corporation; only the remaining 80% of the income is taxed at the taxpayer's marginal rate (up to 37%); for those earning more than $157,500 (single) or $315,000 (married) this deduction is phased out or eliminated entirely if they are in certain "specified service businesses" such as medical, legal, or consulting practices What kinds of things do corporations deduct for tax purposes? - answer pass through deduction, interest on corporate bonds, etc.