HW 7 (Chapters 5 & 6)

Strategizing so that you can pay less in taxes is _________. Deliberately misrepresenting income or expenses is _________ and is illegal.

1. tax avoidance

2. tax evasion

Your adjusted gross income is a result of your total income and which of the following?

deducting amount of applicable adjustments

In the United States, taxes are assessed by whom?

1. state government

2. federal government

3. municipal government

A tax rate that decreases as the amount to be taxed increases is __________. 

1. regressive

Money left after living expenses and debts have been paid is _________. Taking into account the time value of money, this should be used for ______________.

1. free cash flow

2. investments and capital expenditures

The timing for planning and reviewing your budget should be

1. often enough to have manageable data

2. not so often that the data isn’t meaningful

Next year, you want to replace your home’s oil furnace with electric heat pumps, which will cost $16,000. This budget item should be included in which of the following?

1. comprehensive budget

2. capital budget

Reasons for a budget variance?

1. unexpected expense

2. loss of income

3. micro factors

4. cost of living raise

5. inaccurate planning

A budget that shows expenses and income on a monthly basis with the detailed timing of your financial activities is a ________ budget.

cash flow

Governments typically use an income tax because it is based on __________. Income categories are broken into _________.

1. the ability to pay

2. tax brackets

When working on your own personal finances, the_______ is the most critical to account for in your financial planning.

income tax

1. FICA

2. Social Security

3. Medicare

monthly; one year

1. wages

2. dividends

3. interest

1. define goals, gather data

2. form expectations

3. create a budget

4. monitor outcomes

5. adjust budget

6. redefine goals

The effects of financial choices can be understood by performing?

1. financial statement analysis

2. budget variance analysis

With income tax, a(n) _______ reduces tax obligation while a(n) ________ reduces actual taxable income.

1. credit

2. deduction

Consumption taxes are considered to be _________ because a person with a lower income would use a higher percentage of that income for non-discretionary purchases than would a person with a higher income.

regressive

Creating a budget allows you to _________ in order to __________.

1. analyze past behavior

2. plan for future behavior

The ________ budget includes recurring items and short-term goals.
The ________ budget includes non-recurring items and plans for long-term goals.

1. operating

2. capital

High taxes placed on specific consumption items are ________ and are often substantial in order to help curb the use of those items. A(n) ________ is more evenly applied to all items purchased.

1. excise taxes

2. sales tax

The correct selections are health, family planning, and age

1. low deductions and exemptions

2. accumulating asset base

3. low asset base

4. high deductions and exemptions

budget variance

1. investment deposits

2. regular savings deposits

3. living expenses

4. loan repayments

For the self-employed, _________ should be made __________ to avoid penalties or interest.

1. estimated payments

2. quarterly

A best practice when budgeting is to ________ expenses and to ________ income.

overestimate; underestimate

Using heat pumps will increase your monthly electric bill, which will affect which of the following?

operating budget and comprehensive budget

What types are possible income tax filing statuses for individuals?

1. head of household (one adult with dependents)

2. married filing jointly

3. married filing separately

4. single, with no dependents

A(n) _________ tax means that as your income ___________ the tax rate you should pay will increase.

progressive; increases

A budget that covers all aspects of financial life is a __________ budget.

comprehensive

Increases or decreases in the cost of living would be considered _____ factors in a budget.

macro

A conservative budgeting approach dictates that you should overestimate your expenses to ensure you never run short of allocated funds. By planning for the highest expected monthly cost, you guarantee your budget can cover the bill during the most expensive months, while creating a natural cash surplus during the cheaper months.

Therefore, you should plan for $105.

Throughout your life, your tax strategy:

A. should stay the same 

B. never changes

C. changes as you go through different life stages

D. only changes when you retire

changes as you go through different life stages