Financial Literacy Final Exam Study Guide PDF

Financial Literacy-Final Exam Study Guide-KEY 1. What is the purpose of a tax return? To show that you’ve met your obligation in paying taxes to the U.S. Government 2. Which States have no State tax? Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee,...

Financial Literacy-Final Exam Study Guide-KEY 1. What is the purpose of a tax return? To show that you’ve met your obligation in paying taxes to the U.S. Government 2. Which States have no State tax? Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming 3. The #1 expense for the government is Social Security. True or False? 4. If the standard deduction for 2023 is $13,850.00 and John’s income for 2023 was $16,430.00, is he required to file a return? Yes. John is required to file a return. 5. Sheila inherited $1000.00 from her grandmother. Is she required to file a return? (note: the new “kiddie tax” standard deduction is now $1250.00) No. Sheila would not be required to file a return. 6. What is the purpose of a W-4 form? Let’s your employer know how much tax to withhold from your paycheck. 7. When you use your debit card, this money comes from? Your checking account. 8. What are the ways to access the money in your checking account? Use a debit card, use an ATM, use a bank teller 9. What is FDIC insurance? Insurance that protects your deposits at the bank up to $250,000. Should the bank go out of business, your funds would be protected by this insurance. 10. Bank statements are received how often? Every 30 days. (monthly) 11. How do you decrease the amount of money you owe to the credit card company? By paying your balance in full each month. 12. How do you compute a penalty APR of 30% on a balance of $2000.00 for the year? For the month? 2000 x.30=$600.00 for the year $600.00/12 months = $50.00 per month 13. Where does the money come from when you use your credit card? Loan from the bank. 14. Jeff goes on a trip to Africa with a $0 credit card balance. He uses his card to purchase $500.00 in items in Africa. If his card has a 5% foreign transaction fee, what will be his new balance when his credit card bill arrives after he returns home from the trip? $500.00 x.05= $525.00 15. What actions lead to credit card fees? Paying your bill late; going over your available balance; writing a bad check to pay your bill 16. Student loans are an example of revolving credit True or False 17. A credit card is an example of revolving credit True or False 18. A mortgage is an example of an installment loan True or False 19. Is an auto loan Secured or Unsecured debt? An auto loan is secured debt. The loan is secured by collateral which is the vehicle. 20. The percentage being charged for the right to borrow money is called? Interest 21. Someone who takes on the responsibility of a loan if the principal borrower can no longer pay? Co-signer 22. A loan whose rate fluctuates (goes up and down) is referred to as what type of loan? Variable rate loan 23. The length of time you have to pay off your loan is called the? Loan term 24. What is the difference between a secured credit card and an unsecured credit card? A secured card is opened with a cash deposit by the user; this becomes their available line of credit. An unsecured card is provided by the bank with an established line of credit from the bank, and does not require you to put up personal funds for the initial line of credit. 25. What types of transactions reduce your checking account balance? Using your debit card for purchases; making cash withdrawals with your debit card at an ATM; writing checks;