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WorksheetsExam 2 (Chapter 4 and 5 questions)
Total questions: 51
Worksheet time: 26mins
When Lily goes shopping and buys a new pair of shoes, she notices an extra amount added to the price at checkout. Which of the following refers to this tax that is paid when purchasing goods and services?
Sales taxes.
Property taxes.
Federal income taxes.
Payroll taxes.
Which of the following are typically deducted from an employee's paycheck?
Only state income taxes.
Only sales taxes.
Both payroll (Medicare and OASDI taxes) and federal income taxes.
Only property taxes.
Elijah earns a high salary, while Aria earns a moderate income. Elijah notices that a larger percentage of his income goes to taxes compared to Aria. Which of the following refers to a tax that applies higher tax rates to higher-income households?
Progressive tax.
Regressive tax.
Flat tax.
Sales tax.
Which federal agency is responsible for administering and overseeing the collection of federal taxes?
Federal Reserve System (FRS).
Internal Revenue Service (IRS).
Department of Homeland Security (DHS).
Federal Trade Commission (FTC).
Which filing status should an unmarried individual choose if they financially support a dependent and maintain the main home for that person?
Married filing jointly
Single
Head of household
Married filing separately
Which of the following refers to a tax that imposes the same tax rate on all taxpayers subject to the tax?
Average tax.
Marginal tax.
Progressive tax.
Flat tax.
Which term describes your total earnings minus allowable expenses and deductions?
Adjusted gross income (AGI)
Taxable income
Net worth
Gross income
Aria received several scholarships and grants this year. Which of the following amounts must Aria include in her gross income?
A scholarship for tuition only
A scholarship for books and tuition
Municipal bond interest
Scholarships and grants in excess of tuition and books
Which of the following terms refers to the percentage of total income paid in taxes by an individual?
Tax deduction
Effective tax rate
Marginal tax rate
Tax credit
Jordan and Taylor are married and file their taxes jointly. Their total itemized deductions for the year amount to $18,000. What should Jordan and Taylor do when filing their taxes?
Claim the $18,000 itemized deduction.
Switch to single filing status to increase their deduction.
Claim both the itemized deduction and the standard deduction.
Take the standard deduction if it is higher than their itemized deduction.
Charlotte is filing her taxes and discovers a tax credit that can reduce her assessed tax to zero, but it cannot make it negative. Which of the following describes this type of tax credit?
Tax exemption
Tax deduction
Nonrefundable tax credit
Refundable tax credit
Which of the following directly reduces the amount of tax owed, rather than taxable income?
Tax credit
Tax withholding
Tax exemption
Tax deduction
Scarlett just finished her first year at her new job. At the end of the year, she receives a statement that summarizes her earned income. Which of the following is the name of this statement?
1040
W-9
W-2
1099
Abigail is turning 65 this year and is looking into her health insurance options. Which of the following refers to the national health insurance program available to individuals 65 years and older?
Medicaid
Medicare
Social Security
Federal Insurance Contributions Act (FICA)
Which term describes the practice of arranging financial affairs within the law to reduce tax liability?
Tax evasion
Tax avoidance
Tax fraud
Tax penalty
Mark and Betty want to keep $300,000 of their savings FDIC insured. They could accomplish this by:
dividing it equally into a mutual fund and a checking account at a bank.
dividing it equally and depositing it at two different banks.
investing $100,000 in a money market mutual fund and $200,000 in a savings account at a bank.
dividing it equally into stocks and mutual funds at the brokerage firm.
Which of the following refers to a tax credit that can reduce an individual's assessed tax
to zero but cannot make it negative?
Tax exemption
Tax deduction
Nonrefundable tax credit
Refundable tax credit
Anika sets up a series of financial transactions that have no real business or economic purpose, but are designed solely to avoid paying taxes. What is this fraudulent structuring of transactions called?
Tax evasion
Tax advantage
Tax loopholes
Tax avoidance
Luna is reviewing her finances and wants to legally reduce her tax liability. She considers using tax deductions, earning income from tax exempt sources, and claiming tax exemptions. Which of the following is an example of a tax avoidance strategy?
Tax deductions
Tax exempt sources of income
Tax exemptions
All of these answer choices are correct
The Federal Deposit Insurance Corporation (FDIC) insures accounts at:
credit unions.
brokerage companies.
banks.
All of these answer choices are correct.
Which of the following acts as a payment trail for transferred funds?
The check number and the account number
The account number and the bank routing number
The bank routing number
The account number
A(n) [BLANK] is simply your written order to your bank to pay a third party.
endorsement
receipt
invoice
check
Which type of tax system charges all individuals the same percentage of their income?
Regressive tax
Flat tax
Progressive tax
Marginal tax
Aria is a self-employed graphic designer. How often should she pay her taxes?
Annually
Quarterly
Monthly
When she files her taxes.
Mark and Betty want to keep $300,000 of their savings FDIC insured. They could
accomplish this by:
dividing it equally into a mutual fund and a checking account at a bank.
dividing it equally and depositing it at two different banks.
investing $100,000 in a money market fund and $200,000 in a savings account at the bank.
dividing it equally into stocks and mutual funds at the brokerage firm.
How quickly you can access cash is referred to as:
overdraft.
insurance.
reconciliation.
liquidity.
What type of card allows you to make a payment using money that was loaded onto the
card without the need of a bank account?
Debit card with PIN
Debit card with signature
Prepaid card
Credit card
How are most goods and services purchased and money transfers done today?
Cash
Traditional checks
Electronic transactions
Coins
What types of fees may be incurred for prepaid cards?
Overdrafts
Load and reload of funds
Penalty interest rate if payment is late
All of these answer choices are correct.
A loan consists of what elements?
Principal and loan fees
Principal, interest, and loan fees
Principal and interest
Interest and loan fees
Marcus took out a loan of $1,500 to buy a laptop. He must repay the $1,500 he borrowed, $120 in interest, and $30 in loan processing fees. What is the finance charge on Marcus's loan?
$30
$120
$150
$1,650
What type of loan has an interest rate that fluctuates?
Variable installment loan
Fixed installment loan
All loans have an interest rate that fluctuates
All loans have a fixed interest rate
Which of the following actions is most likely to lower your credit score?
Paying your credit card bill on time
Filing for bankruptcy
Applying for a new credit card
Increasing your credit limit
Who maintains housing and credit files on all consumers?
Credit unions
Credit bureaus
Banks
Payday lenders
Which of the following companies is recognized as a major credit reporting agency in the United States?
Experian
Equifax
TransUnion
All of the above
What information is included in your credit report?
Education history
Inquiry history
Checking account balance
Compensation history
Credit reporting agencies can maintain bankruptcy information on your report:
for up to 7 years
for up to 10 years
for up to 15 years
forever
Negative items on your credit report include which of the following?
Low credit balances
Accounts sent to collections
Your request to review your own credit report
All of these answer choices are correct.
What is the range for FICO scores?
200-600
250-650
300-750
300-850
Your credit score is built, in part, using what input(s)?
Payment history
Amount of credit
Types of credit
All of these answer choices are correct
How does the length of time having an account affect your credit score?
The longevity only matters if you had declared bankruptcy.
The longer, the better your FICO score.
Longevity of an account has no bearing on your credit score.
The shorter, the better your FICO score.
How will having a credit score of 400 affect your application for new credit?
You will likely be approved for new credit.
You will likely be rejected for new credit.
It will not affect your application.
You will likely be approved but charged a high interest rate.
How will having a credit score of 775 impact your application for new credit?
You will likely be approved for new credit.
You will likely be rejected for new credit.
It will not affect your application.
You will likely be approved and receive the best borrowing terms.
An example of revolving credit includes:
mortgage loans
student loans
car loans
credit cards
[BLANK] is the amount of time allowed to pay a bill without incurring interest.
A grace period
60 days
An introductory period
30 days
Which of the following is a filing status?
Head of household
Qualifying household
Qualifying child
All of these answer choices are correct.
Generally, filing a joint tax return with your spouse results in [BLANK] tax liability
compared with filing separately.
the same
a higher
a lower
zero
What filing status would be appropriate for someone who is unmarried and has no
dependent children or relatives?
Head of household
Married filing jointly
Married filing separately
Single
The three primary national credit bureaus are:
Fair Isaac, Equifax, and Experian
Experian, Sallie Mae, and TransUnion
TransUnion, Equifax, and Experian
FICO, Equifax, and Sallie Mae
All of the following statements regarding credit inquiries are true, except:
hard credit inquiries generally have a negative impact on credit scores.
when an individual requests their own credit report, the request is considered a hard inquiry
soft credit inquiries generally do not affect credit scores.
hard credit inquiries generally have a negative impact on credit scores, but soft credit inquiries generally have no effect.
Which of the following refers to financial obligations imposed on individuals and
businesses by government entities?
Social welfare
Public service
Taxes
Loan
