UGBA 135 MIDTERM EXAMS UPDATED
QUESTIONS AND ANSWERS SURE A+
✔✔What is a Gift tax? - ✔✔Can give up to $15,000 to as many people - free of tax
tuition and medical does not count as a gift
the max gift rate is 40%
✔✔What is an excise tax? - ✔✔- tax on production or sale of goods - luxury items and
highway use - wagering, fuels, airline tickets
✔✔What is the alternative minimum tax? (AMT) - ✔✔A separate tax for high earners -
must recalculate using AltMinTax and pay higher of the two
- designed to prevent high income people from using tax loopholes and evade their
taxes
✔✔What is the Quarterly estimated taxes? - ✔✔Pays taxes 4 times a year on income
not subject to withholding
✔✔What is the kiddie tax? - ✔✔unearned income of children is taxed as earned income
designed to prevent children from using their kids as a tax shield
✔✔What is the corporate tax rate? - ✔✔21%
✔✔What is an emergency fund? - ✔✔- 3 to 6 months of expenses in readily available
cash to be used only in the event of an emergency
✔✔What is the rule of Fred? - ✔✔I get paid first
✔✔Why is it hard to pay back debt? - ✔✔- because you must first pay taxes on income -
then pay back + interest
it doesnt work as if you make $1,000 then you can pay $1,000
, ✔✔What is frugality - ✔✔Cornerstone of saving money
Frugal means not spending freely or unnecessarily - but considering quality and value
as well as needs and benefits along with price
✔✔What is budgeting? - ✔✔- a financial plan that enables one to manage their money
instead of letting the money manage you
✔✔How much of your earned income should you save - ✔✔-15% dawg
✔✔What is a spending plan? - ✔✔answer: where is the money coming from AND where
is it going
✔✔What is a sole proprietorship? - ✔✔A business owned by one person - with
UNLIMITED liability
- when the proprietor dies - so does the business
- has ordinary tax rates
✔✔Partnership - ✔✔an enterprise that is jointly owned by 2 entities
the enterprise will survive the death of either entity
do NOT pay federal income taxes
each partner get K - 1 form for taxes of their proportional share of profits
✔✔Corporations - ✔✔Most large enterprises are chartered by the state or country and
are subject to the laws of that given country - will raise money by selling shares of their
stock
✔✔What is a limited partnership? - ✔✔share in profits/losses
liable only up to their investment
A partnership with at least one general partner AND at least one limited partner
✔✔what is a general partner? - ✔✔Runs the business with unlimited liability
✔✔What is a limited Liability Corporation? - ✔✔One person owns all the stock and is
taxed like a partnershpi
✔✔Dividends - ✔✔optional - they are taxed once at corporate level and once at
shareholder level
✔✔IPO - ✔✔first time a corporation sells stock to the public
✔✔common stock - ✔✔Share of ownership in corporation - limited liability
liquid and volatile
Term used to describe the total amount paid in by stockholders for the shares they
purchase.
QUESTIONS AND ANSWERS SURE A+
✔✔What is a Gift tax? - ✔✔Can give up to $15,000 to as many people - free of tax
tuition and medical does not count as a gift
the max gift rate is 40%
✔✔What is an excise tax? - ✔✔- tax on production or sale of goods - luxury items and
highway use - wagering, fuels, airline tickets
✔✔What is the alternative minimum tax? (AMT) - ✔✔A separate tax for high earners -
must recalculate using AltMinTax and pay higher of the two
- designed to prevent high income people from using tax loopholes and evade their
taxes
✔✔What is the Quarterly estimated taxes? - ✔✔Pays taxes 4 times a year on income
not subject to withholding
✔✔What is the kiddie tax? - ✔✔unearned income of children is taxed as earned income
designed to prevent children from using their kids as a tax shield
✔✔What is the corporate tax rate? - ✔✔21%
✔✔What is an emergency fund? - ✔✔- 3 to 6 months of expenses in readily available
cash to be used only in the event of an emergency
✔✔What is the rule of Fred? - ✔✔I get paid first
✔✔Why is it hard to pay back debt? - ✔✔- because you must first pay taxes on income -
then pay back + interest
it doesnt work as if you make $1,000 then you can pay $1,000
, ✔✔What is frugality - ✔✔Cornerstone of saving money
Frugal means not spending freely or unnecessarily - but considering quality and value
as well as needs and benefits along with price
✔✔What is budgeting? - ✔✔- a financial plan that enables one to manage their money
instead of letting the money manage you
✔✔How much of your earned income should you save - ✔✔-15% dawg
✔✔What is a spending plan? - ✔✔answer: where is the money coming from AND where
is it going
✔✔What is a sole proprietorship? - ✔✔A business owned by one person - with
UNLIMITED liability
- when the proprietor dies - so does the business
- has ordinary tax rates
✔✔Partnership - ✔✔an enterprise that is jointly owned by 2 entities
the enterprise will survive the death of either entity
do NOT pay federal income taxes
each partner get K - 1 form for taxes of their proportional share of profits
✔✔Corporations - ✔✔Most large enterprises are chartered by the state or country and
are subject to the laws of that given country - will raise money by selling shares of their
stock
✔✔What is a limited partnership? - ✔✔share in profits/losses
liable only up to their investment
A partnership with at least one general partner AND at least one limited partner
✔✔what is a general partner? - ✔✔Runs the business with unlimited liability
✔✔What is a limited Liability Corporation? - ✔✔One person owns all the stock and is
taxed like a partnershpi
✔✔Dividends - ✔✔optional - they are taxed once at corporate level and once at
shareholder level
✔✔IPO - ✔✔first time a corporation sells stock to the public
✔✔common stock - ✔✔Share of ownership in corporation - limited liability
liquid and volatile
Term used to describe the total amount paid in by stockholders for the shares they
purchase.
