Fin 101 Exam 1 Review || 100% Verified Solutions.
TRUE OR FALSE: A home and land should be recorded on the personal balance sheet at their
original cost. correct answers False
TRUE OR FALSE: All assets, regardless of category, should be recorded on your balance sheet
at their current fair market value. correct answers False
TRUE OR FALSE: Money I loaned to a friend is a liability on my balance sheet. correct answers
False
TRUE OR FALSE: You may be under-budgeting for food if you continually have monthly
deficits in the food category. correct answers True
Your ________ is an example of a liquid asset.
a) home
b) charge account
c)checking account
d)life insurance cash value
e) car correct answers C
Sam and his wife Ann purchased a home in Lubbock, Texas in 1980 for $100,000. Their original
home mortgage was for $90,000. The house has a current market value of $175,000 and a
replacement value of $200,000. They still owe $55,000 on their home mortgage. Sam and Sally
are now constructing their balance sheet. How should their home be reflected on their current
personal balance sheet? correct answers $175,000 asset and $55,000 liability
The balance sheet equation is correct answers Total assets - total liabilities = net worth
Mandy and Jeff have a net worth of $25,000 and total assets of $140,000. If their revolving credit
and unpaid bills total $2,200, what are their total liabilities? correct answers $115,000
You are solvent if your .... correct answers total assets exceed total liabilities
The income and expense statement is specific to ... correct answers a specific period of time
TRUE OR FALSE: Tax avoidance is legal, tax evasion is illegal correct answers True
The federal income tax is .... correct answers progressive
TRUE OR FALSE: One's marginal tax rate is typically lower than one's average tax rate correct
answers False
TRUE OR FALSE: The main objective of tax planning is to maximize the amount of money you
keep by minimizing the amount of taxes you pay correct answers True
, TRUE OR FALSE: As a single taxpayer with no dependents, one is generally eligible to file as
"head of household" correct answers False
TRUE OR FALSE: Social security taxes are paid on earned income but not investment income
correct answers True
TRUE OR FALSE: The Medicare portion of the Social Security tax is paid on 100% of earnings
correct answers True
For tax purposes, head-of-household refers to ... correct answers single individual with
dependents
In 2014, the total social security tax was ... correct answers 6.2%
Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to
college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were
$11,000. How much tax would Tom owe on those gains? correct answers $0
This is the name applied to interest earned on the initial deposit amount plus the previously
earned interest correct answers Compound Interest
This is the general name given to an account that allows the account holder to access the funds
through a variety of banking options such as ATM withdrawals, online banking, using debit card,
or through a teller correct answers Demand deposit
In this program, the insuring agency guarantees the safety of the account holder's total deposits
up to specified amount correct answers Deposit insurance
This form of check is drawn on the account of a financial institution and is backed by the
creditworthiness of the institution. It is often required by sellers in lieu of a personal check
correct answers Cashier's check
This is the process of verifying accuracy by comparing the balance on the check register, or
ledger with the balance on the bank's statements correct answers Account reconciliation
This is the term applied to the practice of routinely managing an individual's or family's cash and
near cash-assets correct answers Cash management
This is the name given to interest that is paid only on an investor's initial investment and not on
any previously earned interest correct answers Simple interest
This is the technical name of the condition that results when an account holder bounces a check
correct answers Overdraft
These financial institutions are legally allowed to solicit and accept monetary deposits from
individuals or entities correct answers Depository Institution
TRUE OR FALSE: A home and land should be recorded on the personal balance sheet at their
original cost. correct answers False
TRUE OR FALSE: All assets, regardless of category, should be recorded on your balance sheet
at their current fair market value. correct answers False
TRUE OR FALSE: Money I loaned to a friend is a liability on my balance sheet. correct answers
False
TRUE OR FALSE: You may be under-budgeting for food if you continually have monthly
deficits in the food category. correct answers True
Your ________ is an example of a liquid asset.
a) home
b) charge account
c)checking account
d)life insurance cash value
e) car correct answers C
Sam and his wife Ann purchased a home in Lubbock, Texas in 1980 for $100,000. Their original
home mortgage was for $90,000. The house has a current market value of $175,000 and a
replacement value of $200,000. They still owe $55,000 on their home mortgage. Sam and Sally
are now constructing their balance sheet. How should their home be reflected on their current
personal balance sheet? correct answers $175,000 asset and $55,000 liability
The balance sheet equation is correct answers Total assets - total liabilities = net worth
Mandy and Jeff have a net worth of $25,000 and total assets of $140,000. If their revolving credit
and unpaid bills total $2,200, what are their total liabilities? correct answers $115,000
You are solvent if your .... correct answers total assets exceed total liabilities
The income and expense statement is specific to ... correct answers a specific period of time
TRUE OR FALSE: Tax avoidance is legal, tax evasion is illegal correct answers True
The federal income tax is .... correct answers progressive
TRUE OR FALSE: One's marginal tax rate is typically lower than one's average tax rate correct
answers False
TRUE OR FALSE: The main objective of tax planning is to maximize the amount of money you
keep by minimizing the amount of taxes you pay correct answers True
, TRUE OR FALSE: As a single taxpayer with no dependents, one is generally eligible to file as
"head of household" correct answers False
TRUE OR FALSE: Social security taxes are paid on earned income but not investment income
correct answers True
TRUE OR FALSE: The Medicare portion of the Social Security tax is paid on 100% of earnings
correct answers True
For tax purposes, head-of-household refers to ... correct answers single individual with
dependents
In 2014, the total social security tax was ... correct answers 6.2%
Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to
college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were
$11,000. How much tax would Tom owe on those gains? correct answers $0
This is the name applied to interest earned on the initial deposit amount plus the previously
earned interest correct answers Compound Interest
This is the general name given to an account that allows the account holder to access the funds
through a variety of banking options such as ATM withdrawals, online banking, using debit card,
or through a teller correct answers Demand deposit
In this program, the insuring agency guarantees the safety of the account holder's total deposits
up to specified amount correct answers Deposit insurance
This form of check is drawn on the account of a financial institution and is backed by the
creditworthiness of the institution. It is often required by sellers in lieu of a personal check
correct answers Cashier's check
This is the process of verifying accuracy by comparing the balance on the check register, or
ledger with the balance on the bank's statements correct answers Account reconciliation
This is the term applied to the practice of routinely managing an individual's or family's cash and
near cash-assets correct answers Cash management
This is the name given to interest that is paid only on an investor's initial investment and not on
any previously earned interest correct answers Simple interest
This is the technical name of the condition that results when an account holder bounces a check
correct answers Overdraft
These financial institutions are legally allowed to solicit and accept monetary deposits from
individuals or entities correct answers Depository Institution
