Question 1

John is thinking about preparing a durable power of attorney. This indicates that he wants to

Accepted Answer

A)   ensure that a single lawyer will be able to handle all of his legal needs.
B)   declare that his current will is invalid.
C)   eliminate the taxes on his estate when he dies.
D)   appoint someone to take over his finances if he should become incapacitated.

Question 2

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

Accepted Answer

A) True 
 B)False

Question 3

The tax shelter offered by home ownership increases the overall cost of owning your home.

Accepted Answer

A) True 
 B)False  False

Question 4

What are the advantages of investing in a home?

Accepted Answer

One of the better investments persons can make is home ownership. Homes historically have grown in value each year, particularly if located in the "best part of town." Once you buy a home, the payments are relatively fixed. As income rises, the house payments get easier and easier to make. Paying for a home is a good way of forcing yourself to save. You must make the payments every month. Home ownership also offers tax relief in that both real estate taxes and mortgage interest are deductible from federally taxed income. Finally, a home is the one investment in which you can live.

Question 5

Elizabeth has just opened a 401(k) retirement plan. The money she invests in this plan will reduce her present taxable income.

Accepted Answer

A) True 
 B)False

Question 6

The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.

Accepted Answer

A) True 
 B)False

Question 7

A(n)  ________ is a personal financial plan that allows you to take control of future spending.

Accepted Answer

A)   expense tracker
B)   revenue sheet
C)   budget
D)   debt manager C

Question 8

Bree expects to be in a much higher tax bracket when she retires than she is now, so she wants to invest in a retirement account in which her withdrawals will be tax-free. One way for her to achieve this is through a traditional IRA.

Accepted Answer

A) True 
 B)False

Question 9

The Social Security program was established in

Accepted Answer

A)   1889.
B)   1935.
C)   1953.
D)   1976.

Question 10

A Keogh retirement plan would be used by a(n)

Accepted Answer

A)   self-employed engineering consultant.
B)   employee at a small manufacturing firm.
C)   CEO of a major corporation.
D)   librarian at a city library.

Question 11

Joe and Megan are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to

Accepted Answer

A)   borrow heavily to buy a house.
B)   use their credit cards to acquire assets while prices are relatively low.
C)   live on just one of their incomes and save the other.
D)   quit their jobs and return to school to earn graduate degrees.

Question 12

In preparing an income statement for yourself, the wages from your job would be shown as

Accepted Answer

A)   your revenue.
B)   an expense.
C)   an asset.
D)   your owner's equity.

Question 13

Which of the following accounting statements would assist an individual in taking inventory of personal assets and liabilities?

Accepted Answer

A)   income statement
B)   balance sheet
C)   budget
D)   statement of cash flows

Question 14

A financial planner would encourage you to borrow money

Accepted Answer

A)   only to buy assets that are likely to generate income or increase in value.
B)   to pay your day-to-day expenses and then to invest your income.
C)   only when facing bankruptcy.
D)   in order to reduce your debt level.

Question 15

Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.

Accepted Answer

A) True 
 B)False

Question 16

As a recent college graduate just starting out on his own, Tyrone needs health, disability, home, and auto insurance. He may be able to save money by obtaining an umbrella policy.

Accepted Answer

A) True 
 B)False

Question 17

One disadvantage of term life insurance is that

Accepted Answer

A)   when renewed it usually is at a higher premium.
B)   the risk of lost income from the death of the insured is shifted to the insurance company.
C)   it is pure insurance protection for a given time period.
D)   it is generally not available to young people.

Question 18

Your personal balance sheet will reflect the same fundamental accounting equation as the balance sheet for a business: assets = liabilities + owners' equity.

Accepted Answer

A) True 
 B)False

Question 19

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Accepted Answer

A) True 
 B)False

Question 20

Dani has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities (largely college loans)  are $48,000. What does this show for Dani?

Accepted Answer

A)   Her net income is only $6,000.
B)   Her net worth is $6,000.
C)   Her cash flow will not be sufficient to repay her college loans.
D)   Her balance sheet is out of balance.

Exam 24: Appendix: Managing Personal Finances

John is thinking about preparing a durable power of attorney. This indicates that he wants to

Correct Answer
verified

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

Correct Answer
verified

The tax shelter offered by home ownership increases the overall cost of owning your home.

Correct Answer
verified
False

What are the advantages of investing in a home?

Elizabeth has just opened a 401(k) retirement plan. The money she invests in this plan will reduce her present taxable income.

Correct Answer
verified

The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.

Correct Answer
verified

A(n) ________ is a personal financial plan that allows you to take control of future spending.

Correct Answer
verified
C

Bree expects to be in a much higher tax bracket when she retires than she is now, so she wants to invest in a retirement account in which her withdrawals will be tax-free. One way for her to achieve this is through a traditional IRA.

Correct Answer
verified

The Social Security program was established in

Correct Answer
verified

A Keogh retirement plan would be used by a(n)

Correct Answer
verified

Joe and Megan are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to

Correct Answer
verified

In preparing an income statement for yourself, the wages from your job would be shown as

Correct Answer
verified

Which of the following accounting statements would assist an individual in taking inventory of personal assets and liabilities?

Correct Answer
verified

A financial planner would encourage you to borrow money

Correct Answer
verified

Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.

Correct Answer
verified

As a recent college graduate just starting out on his own, Tyrone needs health, disability, home, and auto insurance. He may be able to save money by obtaining an umbrella policy.

Correct Answer
verified

One disadvantage of term life insurance is that

Correct Answer
verified

Your personal balance sheet will reflect the same fundamental accounting equation as the balance sheet for a business: assets = liabilities + owners' equity.

Correct Answer
verified

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Correct Answer
verified

Dani has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities (largely college loans) are $48,000. What does this show for Dani?

Correct Answer
verified

Exam 24: Appendix: Managing Personal Finances

John is thinking about preparing a durable power of attorney. This indicates that he wants to

Correct AnswerverifiedShow Answer

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

Correct AnswerverifiedShow Answer

The tax shelter offered by home ownership increases the overall cost of owning your home.

Correct AnswerverifiedFalse

What are the advantages of investing in a home?

Elizabeth has just opened a 401(k) retirement plan. The money she invests in this plan will reduce her present taxable income.

Correct AnswerverifiedShow Answer

The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.

Correct AnswerverifiedShow Answer

A(n) ________ is a personal financial plan that allows you to take control of future spending.

Correct AnswerverifiedC

Bree expects to be in a much higher tax bracket when she retires than she is now, so she wants to invest in a retirement account in which her withdrawals will be tax-free. One way for her to achieve this is through a traditional IRA.

Correct AnswerverifiedShow Answer

The Social Security program was established in

Correct AnswerverifiedShow Answer

A Keogh retirement plan would be used by a(n)

Correct AnswerverifiedShow Answer

Joe and Megan are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to

Correct AnswerverifiedShow Answer

In preparing an income statement for yourself, the wages from your job would be shown as

Correct AnswerverifiedShow Answer

Which of the following accounting statements would assist an individual in taking inventory of personal assets and liabilities?

Correct AnswerverifiedShow Answer

A financial planner would encourage you to borrow money

Correct AnswerverifiedShow Answer

Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.

Correct AnswerverifiedShow Answer

As a recent college graduate just starting out on his own, Tyrone needs health, disability, home, and auto insurance. He may be able to save money by obtaining an umbrella policy.

Correct AnswerverifiedShow Answer

One disadvantage of term life insurance is that

Correct AnswerverifiedShow Answer

Your personal balance sheet will reflect the same fundamental accounting equation as the balance sheet for a business: assets = liabilities + owners' equity.

Correct AnswerverifiedShow Answer

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Correct AnswerverifiedShow Answer

Dani has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities (largely college loans) are $48,000. What does this show for Dani?

Correct AnswerverifiedShow Answer

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False

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C

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