Managing Your Personal Finances 7th Edition by Joan S. Ryan – Test Bank
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Sample Test
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Chapter_03_Income_Tax 1. Federal income taxes are regressive.
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2. Consumption taxes are taxes on
goods and services.
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3. On a local level, taxes pay for
services such as education, parks, roads, and police, fire, and health
departments.
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4. In the United States, both businesses
and individuals pay income taxes and must file income tax returns each year.
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5. Revenue bills must pass a vote
in the Senate and then be signed by the President before they become law.
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6. When government spends more
than it receives in revenue, it has a surplus.
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7. In the United States, all
citizens are expected to prepare and file tax returns on their own without
being forced to do so by the government.
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8. If you file a joint tax return,
you can take an exemption for your spouse.
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9. Only married taxpayers qualify
for the head of
household filing status.
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10. All forms of income are
taxable and must be reported to the IRS for tax purposes.
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11. Gross income is the income on
which you will pay tax.
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12. You do not need to file a tax
return if you are over the age of 65.
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13. Most people will probably use
either Form 1040EZ or Form 1040A to file their first tax return.
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14. Even if you hire a
professional tax preparer, you are responsible for supplying accurate and
complete tax information.
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15. By law, only professional tax
preparers may use tax preparation software.
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16. The largest source of
government revenue in the United States is
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17. A tax for which the rate stays
the same, regardless of income, is called a
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18. In the United States, the
power to impose federal taxes rests with
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19. In this kind of audit, the IRS
sends a letter to the taxpayer, asking him or her to answer specific
questions about the tax return.
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20. Which of the following is an
example of a flat tax?
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21. In the United States, the
responsibility for filing a tax return rests with the individual. This
defines the concept of
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22. Your filing status on
your tax return is based on
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23. Which of the following is an
example of non-taxable income?
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24. A tax _____ is an amount
subtracted directly from the tax owed.
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25. You must file your tax return
by this date every year.
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26. Incoming funds to the
government are called __________.
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27. __________ taxes take a larger
share of income as the amount of income grows.
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28. Sales taxes on specific goods
and services, such as gasoline or cigarettes, are called __________ taxes.
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29. Willful failure to pay taxes
is called tax __________.
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30. Tax rates apply to different
income ranges, or tax __________.
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31. A(n) __________ is an amount
you may subtract from your income for each person who depends on your income
to live.
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32. Someone who lives with you and
for whom you pay more than half of his/her living expenses is called a(n)
__________.
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33. All the taxable income you
receive is called __________ income.
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34. Money paid to support a former
spouse is called __________.
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35. Money paid to a former spouse
for support of dependent children is called __________ support.
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36. Ryan earned $17,000 at his job
last year. He pays 15 percent of his income as taxes. What amount did Ryan
pay in taxes last year?
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37. Sales tax in your community is
6 percent. If you go to a sporting goods store and buy a soccer ball for
$19.95, socks for $5.95, and a headband for $10.00, what amount will you pay
once the sales tax is added to your purchase?
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38. Sue earned $21,000 at her waitress
job last year; she also made $7,000 in tips. In addition, Sue earned $95
interest on her savings account and received a $500 gift from her father.
Find Sue’s gross income for the year.
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39. Use the following information
to calculate a taxpayer’s taxable income: Gross income: $13,000
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40. Use the following information
to calculate a taxpayer’s adjusted gross income: Gross income: $15,000
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41. What is the ability-to-pay
principle?
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42. Are sales taxes progressive or
regressive? Explain your answer.
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43. Identify the three basic
components that allow the U.S. tax system to operate.
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44. Under what circumstances would
you not be
allowed to claim an exemption for yourself on your tax form?
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45. What is the difference between
earned income and unearned income?
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46. Which taxpayers may use Form
1040EZ to file their taxes?
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47. What are the main functions of
the Internal Revenue Service? What are some other services the IRS offers to
taxpayers?
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48. What is an audit? What should
taxpayers do if they are being audited?
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49. What are deductions on a
tax return? What is the difference between itemized deductions and the
standard deduction? How does a taxpayer itemize deductions?
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50. In general, which taxpayers
should use Form 1040 to file their tax returns? Explain.
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Chapter_05_Checking_and_Banking 1. A canceled check is one that has been processed by the
bank.
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2. Floating a check is illegal in
most states.
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3. Writing a future date on a
check is called postdating.
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4. Paying bills online is
generally considered slower and riskier than writing checks.
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5. When depositing a check into
your account, you should write the check’s ABA number on the deposit slip.
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6. The column headed by a check
mark in a checkbook register is provided so you can make a note of your
checks that have bounced.
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7. You should reconcile your
checking account as soon as you receive your bank statement.
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8. A check cannot be cashed until
it has been reconciled.
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9. A joint checking account can
be opened by two or more people.
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10. A money order can never
bounce.
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11. Debit card transactions do not
need to be recorded in your checkbook register.
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12. For safety, do not carry your
PIN in written form; instead, commit it to memory.
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13. The usual reason for a stop-payment
order is that the check has been lost or stolen.
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14. You can purchase or sell
savings bonds at most full-service banks.
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15. FDIC insurance protects the
deposits of customers against loss up to $1,000,000 per account.
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16. The person to whom a check is
payable is called the
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17. When a check is returned to
the payee’s bank due to insufficient funds, the check is said to have
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18. When you open a checking
account, most banks will require you to have an initial deposit of at least
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19. Which part of a check provides
a place for you to write the purpose of the check?
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20. Darren writes a check to the
phone company for $45.60. He should record this amount in his checkbook
register in the
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21. A check is written to Taylor
Thomas. On the back of the check, Taylor writes “Pay to the order of Rose
Dryer,” then signs his name. What kind of endorsement is this?
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22. An interest-bearing checking
account that pays a higher rate of interest than a usual account, but
typically has more restrictions, is called a
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23. A check written by a bank on
its own funds is called a
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24. A request that a bank not
honor a specific check is called a(n)
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25. A person or institution that
manages property for the benefit of someone else under a special agreement is
called a(n)
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26. A(n) __________ is a written
order to a bank to pay the amount stated to the person or business named on it.
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27. A checking account is also
called a(n) __________ deposit, because the money may be withdrawn at any
time.
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28. A check written for more money
than your account contains is called a(n) __________.
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29. A booklet used to record
checking transactions is called a checkbook __________.
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30. A(n) __________ endorsement is
the signature of the payee written exactly as his or her name appears on the
front of the check.
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31. A personal check that the bank
guarantees to be good is called a(n) __________ check.
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32. A(n) __________ card is a
plastic card that allows immediate deductions from a checking account to pay
for purchases.
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33. With __________ protection,
your checks will be covered even if you have insufficient funds in your
checking account.
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34. Financial institutions offer customers
a(n) __________ box to store valuable items or documents.
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35. A(n) __________ verifies a
person’s identity, witnesses the person’s signature on a legal document, and
then “notarizes” the signature as valid.
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36. Marti begins the month with a
checking account balance of $700. She writes three checks: one for $43.50,
one for $90.00, and one for $250.00. She makes one deposit, for $300. Her
bank charges her a $0.20 fee for each check she writes. She also pays a
monthly account fee of $5.00. What is the balance of Marti’s account at the
end of the month?
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37. Ted begins the month with a
checking account balance of $1,400. He writes five checks: one for $350.45,
one for $200.01, one for $11.53, one for $68.10, and one for $177.37. He
makes two deposits, each for $450. His bank charges him a $0.25 fee for each
check she writes. He also pays a monthly account fee of $5.00. What is the
balance of Ted’s account at the end of the month?
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38. Suppose your bank charges you
a monthly fee of $8.00 plus 15 cents for each check you write. If you write
three checks every month, how much will you pay your bank in fees over the
course of one year?
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39. Gary purchased two money
orders from his bank: one for $41.50 and one for $32.65. Each money order
cost one dollar. What is the total amount Gary spent at the bank?
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40. Erin does not have to pay a fee
if she uses her own bank’s ATM, but she must pay a $2.00 fee if she uses
another bank’s ATM. If Erin makes 76 ATM transactions over the course of a
year, and 25 percent of them are at another bank’s machine, how much will she
pay in ATM fees?
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41. What does it mean to float a check?
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42. What is an ABA number? Explain
the two parts of an ABA number.
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43. What is bank reconciliation?
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44. What kinds of services
do full-service banks typically offer?
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45. Under what circumstances might
a cashier’s check be used?
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46. What is electronic funds
transfer (EFT)?
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47. What is a checking account? Describe
several advantages of a checking account.
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48. Describe the two ways you can
pay bills online.
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49. The balance your checkbook
register shows will not always match the ending balance shown on your bank
statement. Why not?
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50. What is the best way to avoid
banking fees?
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