Finance Flashcards


A balance sheet shows your financial condition as of the time the statement is prepared True
Money I loaned to a friend is a liability on my balance sheet. False
A charge made on your credit card becomes a liability as soon as the charge is incurred. True
The balance sheet equation is assets plus liabilities equals net worth. False
The equity in your home is the difference between the loan balance and the purchase price. False
A budget is a detailed financial forecast
Budgets are forward-looking
you are solvent if your total assets exceed total liabilities
the income statement is specific to a specific period of time
You should itemize deductions when total itemized deductions exceed the standard deduction. True
Mortgage interest and paid home property taxes are both itemized deduction items. True
State income taxes and real estate taxes are both itemized deduction items. True
The personal exemption for a student can be taken both by the parent and by the child. False
Marginal tax and average tax rate refer to the same thing. False
The federal government gets the majority of its revenue from the ____ tax. income
The federal income tax is progressive
For tax purposes, head-of-household refers to a single individual with dependents
You would typically not include ____ in your gross income. life insurance death benefit payments
Credit union members are expected to have some common bond. True
Convenience and improved record keeping are two advantages sited for on-line bill payment. True
Asset management accounts are offered by most banks and are typically FDIC insured. False
Debit and ATM card transactions are linked to your checking account. true
If your bank states that it compounds monthly, the effective interest rate (APY) will be greater than the nominal interest rate. True
Compound interest means that a savings account earns interest on the interest previously earned. true
A certified check is a personal check that the bank guarantees the funds are available true
Joint checking accounts typically imply the right of survivorship if one party should die true
You can stop payment when you purchase an item with your debit card. false
Your savings will grow faster with monthly interest compounding than with quarterly interest compounding. true
The largest single investment you will undertake in your lifetime will probably be the purchase of an automobile. false
A closed-end automobile lease is the most popular type of lease. true
Low-balling is a sales technique where the salesperson quotes a low price for a car to get you to make an offer, and negotiates the price upward prior to signing the sales agreement. true
One who leases an automobile is typically responsible for early termination costs, even when early termination is due to theft or auto accidents. true
A significant legal difference between a cooperative and a condominium is that the condominium owner normally holds a title to the property. true
You can deduct mortgage interest and property taxes on your home to reduce your federal income taxes only if you itemize deductions. true
The difference between the market value of your home and the balance of the mortgage is your equity in the property. true
A lender will generally require mortgage insurance if the down payment is less than 20 percent. true
A 5 percent down payment will result in larger monthly mortgage payments than a 10 percent down payment on the same house for the same maturity mortgage. true
The market price of a house is $125,000 and the homebuyer will borrow $100,000. Two points will equal $2,500. false
The required monthly payment on an open account will be the smaller of a minimum dollar amount or a specified percentage of the balance. false
Generally speaking, the interest rates on credit cards are lower than any other form of credit. false
Debit cards look like credit cards, but they work like check true
Revolving credit lines are often accessed by writing checks. true
All of the following are useful ways to build a strong credit rating except Apply for a long-term loan and occasionally be late with a payment.
As a percent of take-home pay, monthly consumer credit payments should not exceed 20%
Interest will almost always begin to accrue immediately when you use a bank credit card to get cash advances
William uses his bank credit card frequently; however, he always pays off the total balance on the card each month. What should William look for in a credit card given the way he uses a credit card? no annual fee and long grace period
Rebate card work best for those who use the rebates and charge large amounts on the card. pay the total card balance off monthly. A and B
Interest rates on ____ are typically lower than on any other form of consumer credit home equity loans
Generally speaking, variable rate loans are desirable if interest rates are expected to increase over the course of the loan. false
A characteristic of consumer loans is that they are all of these are arrived at through a formal process. b. include a repayment schedule. c. are used to purchase big-ticket durable goods and other items. d. include a negotiated contract
Commercial banks generally charge lower interest rates than other lending institutions becaus they usually take only the best credit risks
A loan from the cash value of your life insurance policy would be characterized by no specific repayment date
Besides the finance charge, you should also consider ____ when you shop for a consumer loan. all of the above collateral b. loan maturity c. repayment penalties d. total cost of the loan
Annual percentage rate is equivalent to simple interest method
You want to borrow $1,000 at an interest rate of 10%. The most expensive method of calculating the dollar cost of the interest on this installment loan will be the add on method
A legal claim that allows creditors to liquidate loan collateral is a lien
Before taking out students loans, all the following should be considered except all of the above personal resources b. grants c. federal student aid d. scholarships
collateral is an item of value used to secure the principle portion of a loan true
The cash value of a whole life insurance policy can be used as a source of loan collateral. true
The student loans with the best loan terms are the Stafford and the Perkins loans. true
Installment loans are typically repaid in one payment False
when would you have to pay additional money when returning a vehicle using a closed end lease mileage limits were exceeded
the capitol cost reduction on a vehicle lease is like the down payment on a loan
the quality of your credit rating is maintained by meeting credit obligations as contracts require
which of the following loan sources is the most expensive consumer finance companies
which source of customer loans specializes in home mortgage lending savings and loan associations
ones adverage tax rate is usually lower than ones marginal tax rate true
what income is subject to federal taxes taxable
annual percentage yield is same as the effective rate
the federal personal income tax is a progressive tax true
Tax credits reduce your tax liability
Whenever you write a check or make a deposit, an entry should be made on your checkbook ledger
If you write a check for an amount greater than your account balance, the result will be an overdraft
When doing a DDA reconciliation, interest earned on your account should be added to your checkbook ledger

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