Unit 1 Review - Personal Finance

Which of the following statements is false about interest?

• Interest is the price paid for using someone else’s money.

• When earning interest, look for low rates.

• When paying interest, look for low rates.

• The amount of interest earned or paid is determined by the interest rate.

Sue made a mistake in her checking account recordkeeping and spent $100 more than she had deposited in her account. As a result, she can expect to be charged a(n):

• Overdraft fee

• Late fee

• ATM fee

• Minimum Balance Fee

Which statement is TRUE about Payroll Taxes?

• Payroll taxes are paid are paid on both earned and unearned income.

• Payroll taxes fund different operations and programs of the federal government.

• Payroll taxes fund the Social Security and Medicare programs.

• The amount of tax paid depends on many different factors but increases as income increases.

As Joe was looking over his sales receipt for the shirt he bought at a retail store, he discovered that she was charged 6% more than the price tag showed for the item. What is this extra 6% charge most likely to be?

• An excise tax on the shirt she purchased.

• Property tax on the shirt she purchased.

• Income tax on the shirt she purchased.

• Sales tax on the shirt she purchased.

Taxes that are charged on consumption items such as gasoline, hotel rooms, and airline tickets are called _____________ taxes.

• Sales

• Excise

• Property

• Income

Fred has just received his first paycheck. He worked 20 hours at his new job and is being paid $8.00 per hour. He calculated that his paycheck should be $160. His paycheck amount is almost 1/3 less than he expected. What is the most likely reason that Fred’s pay is less than he expected it to be?

• Fred calculated the hours he worked without deducting the hours he spent doing on‐the‐job training.

• Fred neglected to deduct the excise tax paid on the uniforms he purchased to wear at his job.

• Fred neglected to deduct the amount required to pay income and payroll taxes.

• Fred’s employer made a mistake calculating the number of hours Austin worked during his first pay period.

To increase his net worth, Jim could:

• Increase his liabilities

• Decrease his assets

• Increase his market value

• Increase his assets

Amanda and Marcus just finished their Income and Expense Statement for last month. They discovered that they have a net gain. What does this mean and what should they do?

• Amanda and Marcus are spending more money than they are earning. They need to find a way to balance their income and expenses by spending less on non‐contractual expenses.

• Amanda and Marcus are earning more money than they are spending. They could place additional money in savings and/or spend it on other expenses.

• Amanda and Marcus are spending more money than they are earning. One of them should consider getting a second job for a time to help boost their income.

• Amanda and Marcus are earning more money than they are spending. They should increase spending for non‐contractual items to bring their income into balance with the expenses.

Parker banks at a local credit union in his town. He knows they require the members to keep $50 in their account at all times. If he goes below the $50, he can expect to be charged which type of fee?

• Overdraft fee

• ATM fee

• Late fee

• Minimum Balance Fee

Example of a Tangible Asset

• Furniture

• Savings Account

• Retirement Account

• Student Loan