Millestone 2

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School

Strayer University *

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110

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Finance

Date

Jan 9, 2024

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docx

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Uploaded by inmanudwell

14/15 that's 93% RETAKE 14 questions were answered correctly . 1 question was answered incorrectly . 1 Which type of tax will Nikhil pay based on the value of his house?  Payroll tax  Property tax  FICA tax  Sales tax RATIONALE A property tax is assessed based on the value of the property that you own, such as your car or your home. CONCEPT Understanding Taxes Report an issue with this question 2 Elena runs a small business selling crafts. She decides to get a rewards credit card in order to buy the raw material for her products. Which of the following would indicate that Elena should opt for a regular credit card instead of a rewards card?  She plans to pay only the minimum payment each month and carry a high monthly balance.

 She has never applied for a credit card before.  She wants to earn airline and hotel travel points to use for business travel.  She plans to pay off the credit card balance in full each month. RATIONALE If a person plans to pay off their credit card balance each month, they can consider reward credit cards. If they plan to carry a monthly balance, rewards credit cards may not be a good choice because of their higher interest rates and fees. CONCEPT Credit Cards Report an issue with this question 3 In which of the following cases does a person receive income as an investor?  Deanna receives money by inheritance from her parents.  Alina receives income from Social Security benefits.  Juan receives income from interest payments on money deposited in a bank.  Tim receives a share of the profits of a business through dividends. RATIONALE

Investors are people who put their money at risk through the partial ownership of businesses. If the company is profitable, investors get to share in the profits of the firm. An investor’s share of the profits is known as a dividend. CONCEPT Investment Income Report an issue with this question 4 In what kind of business structure is each owner responsible for the mistakes and business decisions of the other owners?  A limited liability company  A sole proprietorship  A general partnership  A corporation RATIONALE In a general partnership, each partner has unlimited liability for the entire partnership. This means that each partner is totally responsible for the mistakes of other partners. As a result, other partnership structures have been developed. CONCEPT Self-Employment Income Report an issue with this question 5 For which of the following people would a prepaid card be the most productive method of payment? 

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Henri, who wants to ensure that he pays minimum fees and additional charges  Juana, who wants maximum fraud protection in case of a theft or loss  Sam, who doesn't have a bank account or checking account  Paula, who wants to ensure access to credit in case of an emergency RATIONALE A prepaid card consists of money loaded on to the card in advance that can then be used to make payments in the future. Unlike a debit card, you don’t need a bank or checking account to get a prepaid card. CONCEPT Debit Cards, Prepaid Cards, and Electronic Transfers Report an issue with this question 6 Nonrefundable tax credits can __________.  cause the taxpayer's calculated tax to become negative  cause the federal government to owe money to the taxpayer  increase the amount of tax owed by the tax payer  decrease the taxpayer's calculated tax to zero RATIONALE Nonrefundable tax credits help in reducing an individual’s assessed tax to zero but cannot make it negative. If an individual's tax credit is

greater than their tax liability, the tax due decreases to zero, but the federal government does not owe the remaining money to the taxpayer. CONCEPT Federal Income Tax Credits Report an issue with this question 7 Thirty-five-year-old Filipe saves $9,000 each year from an annual income of $60,000. The formula for savings ratio is as follows: Savings Ratio = Savings ÷ Income What is Filipe's calculated savings ratio?  17%  20%  15%  12% RATIONALE The savings ratio is calculated as follows: Savings Ratio = Savings ÷ Income Savings Ratio = 9000/60,000 Savings Ratio = 0.15 or 15% CONCEPT Accumulating More Than You Spend Report an issue with this question 8 Which of the following can have an unfavorable impact on Ian's credit report?

 Losing his previous property to foreclosure  Having two different credit cards  Opting for student loans, toward which he makes regular payments  Purchasing a vehicle by opting for an auto loan and pledging it as collateral RATIONALE Certain actions like declaring bankruptcy, losing a home to foreclosure, being sued and losing the court battle, and having unpaid fines can negatively impact an individual's credit report. CONCEPT Credit Reports Report an issue with this question 9 Nel sells her car for $11,000 and her gold jewelry for $15,000. She spent a total of $24,000 to buy her car and the jewelry 3 years ago. What is the percentage of gain or loss obtained by selling her capital assets?  Nel loses 7.8%.  Nel gains 8.33%.  Nel loses 8.33%.  Nel gains 7.8%.

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RATIONALE The sale of an asset can lead to profits or losses, or it can break even. Here, Nel obtains a total of $26,000 by selling her car and gold jewelry, which is $2,000 more than the basis. Therefore, Nel makes a $2,000 gain from her investment: Percentage of rate gain = Realized capital gain / Basis Percentage of rate gain = $2,000 / $24,000 * 100 Percentage of rate gain = 8.33% CONCEPT Capital Gain Income Report an issue with this question 10 Sarah pays her personal trainer, Lily, by check. Lily uses the check to pay her grocery bills in a supermarket. How is Lily able to use the check to make her grocery payments?  Sarah made the check payable to her "credit union account."  Sarah made the check for "deposit in bank only."  Sarah made the check payable to "Cash."  Sarah made the check payable to "Lily." RATIONALE It is possible to make a check payable to "Cash" instead of a person or company. Once a check is made payable to "Cash," anyone who comes into possession of the check can cash it. CONCEPT Checking Accounts Report an issue with this question

11 Who among the following people receives a bonus as part of their income?  Paul, who receives an extra $5,000 each year if he performs well on the job  Agnetha, who earns a fixed monthly income of $5,000 at her job  Simon, who earns double his hourly rate when he works on Sundays  Anni, who earns a percentage of the selling price of every house she sells RATIONALE A bonus is an extra payment usually based on performance or meeting certain production or sales requirements. Sometimes companies offer a bonus to employees as a way to improve productivity or to reward high performers. CONCEPT Employment Income Report an issue with this question 12 Which of the following payments is an example of secured debt?  A pair of shoes  Groceries  A bus ticket

 Car loan payments RATIONALE Secured debt is money borrowed to buy things like cars and homes. These secured assets can be taken back by a lender if the debt is not repaid. CONCEPT Credit Scores Report an issue with this question 13 Federal Tax Brackets and Associated Tax Rates for Married Filing Jointly (2018) If your taxable income is over but not over your tax is $0 $19,050 10% of your taxable income $19,050 $77,400 $1,905 + 12% of the amount over $19,050 $77,400 $165,000 $8,907 + 22% of the amount over $77,400 $165,000 $315,000 $28,179 + 24% of the amount over $165,000 $315,000 $400,000 $64,179 + 32% of the amount over $315,000 $400,000 $600,000 $91,379 + 35% of the amount over $400,000 Using this table, if you are a married couple filing jointly with a taxable income of $102,000, how much tax do you owe?  $12,240  $22,440  $14,319 

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$8,907 RATIONALE A tax bracket is a predefined range of taxable income for which a single rate of tax applies. The tax rate differs depending on the status of an individual, whether single or married. Since your taxable income is $102,000, your income tax equals $8,907 + 22% of the amount over $77,400. $8,907 + (0.22 * ($102,000-$77,400)) $8,907 + (0.22 * $24,600) $8,907 + $5,412 = $14,319 You owe a total tax of $14,319. CONCEPT Federal Income Tax Rates Report an issue with this question 14 Josh's friend Tony lives with him, and Josh wants to claim Tony as a dependent on his tax return. What condition must Tony fulfill to be Josh's dependent?  Tony must be younger than Josh.  Tony must be listed as a dependent on someone else's tax return.  Tony must have lived with Josh for the entire year.  Tony must be unemployed. RATIONALE

If an unrelated person lives with you for the entire year, then she or he satisfies the relationship test. To be a dependent, he or she must also fulfill the other conditions to be a dependent relative. CONCEPT Federal Income Tax Base Report an issue with this question 15 Riaz obtains a loan of $100,000 to purchase a house. The conditions of his loan state that he will repay the principal and interest through fixed installments. Which of the following statements is true about Riaz's situation?  Riaz's future earnings may not be used for collateral even if he defaults on the repayment of his loan.  Riaz's installment payments will change each month based on what he can afford.  The payment that Riaz owes will not change from one month to the next.  The interest rate applied to Riaz's loan will change periodically throughout the loan term. RATIONALE In a fixed installment loan, the borrower repays the money through fixed monthly payments that will not change during the loan term. Even when property is involved, the borrower is pledging a portion of their future earnings as collateral when they sign a loan agreement.