This quiz works best with JavaScript enabled. Home > Finance > Taxation > Income Tax Planning > Income Tax Planning – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Income Tax Planning Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. As a young person, saving for your retirement is an example of a ..... goal. A) Medium-term. B) Long-term. C) Short-term. D) Value-added. Show Answer Correct Answer: B) Long-term. 2. Federal tax return mistakes can be avoided by A) Using the proper tax forms, tax tables, and correct filing status. B) Signing the completed return. C) Filing online or mailing your return before the deadline. D) All of the above. Show Answer Correct Answer: D) All of the above. 3. Where is savings in your budget A) Cash surplus. B) Income. C) Expenses. D) Savings. Show Answer Correct Answer: A) Cash surplus. 4. The ..... is the cash you give to the dealer to lower the principal amount of the car. A) Warranty expense. B) Down payment. C) Interest amount. D) Trade-in. Show Answer Correct Answer: B) Down payment. 5. One of the first things you should do as part of the financial planning process is to A) Begin searching for a better-paying job. B) Create a balance sheet and cash flow statement. C) Develop financial goals. D) Purchase life insurance. Show Answer Correct Answer: B) Create a balance sheet and cash flow statement. 6. Document that list your valuables, when purchased and their present value A) Personal property inventory. B) Net worth. C) Expense record. D) Personal values. Show Answer Correct Answer: A) Personal property inventory. 7. When is using a credit card to cover an emergency expense a good idea and won't cost you any interest? A) When you have a high enough credit limit to cover the emergency expense. B) When you can pay off the balance in full before the end of the month. C) When you can make the minimum payments each month. D) When you have a low interest rate. Show Answer Correct Answer: B) When you can pay off the balance in full before the end of the month. 8. This is a tax-sheltered retirement plan in which people can annually invest earnings up to a certain amount; the funds are taxed when they are withdrawn after age 59 1/2. A) Annuity. B) Social Security. C) Individual retirement account. D) Pension. Show Answer Correct Answer: C) Individual retirement account. 9. Define long-term budget. A) A budget from one year to five years in the future. B) Making future predictions about the budget based on current situations and trends. C) A budget that is based on several possible levels of sales activity, also known as a variable budget. D) A formal one-year operating plan to achieve the financial goals of an organization. Show Answer Correct Answer: A) A budget from one year to five years in the future. 10. Planning to finance higher education helps people prepare for their financial future because it teaches them about A) Loans and interest. B) Savings accounts. C) Filing taxes. D) Short-term goals. Show Answer Correct Answer: A) Loans and interest. 11. ..... expenses are costs that vary in amounts and type, depending on the choices you make A) Variable. B) Changing. C) Conditional. D) Fixed. Show Answer Correct Answer: A) Variable. 12. ..... income is the result of earnings from dividends, interest, and rent. A) Tax-exempt. B) Earned. C) Investment. D) Adjusted. Show Answer Correct Answer: C) Investment. 13. This tax is based upon the value of land and buildings. A) Income tax. B) Real estate property tax. C) Gift tax. D) Sales tax. Show Answer Correct Answer: B) Real estate property tax. 14. What is the first step in financial planning? A) Estimating income. B) Estimating expenses. C) Estimating income and expenses. D) Knowing your net worth. Show Answer Correct Answer: C) Estimating income and expenses. 15. A detailed plan of income and expenses expected over a certain period of time, often a month. A) Financial Plan. B) Budget. C) Taxonomy. D) Investment. Show Answer Correct Answer: B) Budget. 16. Olivia has a bit of money saved and is considering using it as a down payment toward one of the following choices. If Olivia wants to only have good debt, which of the following should she avoid? A) College education. B) Stock investment. C) Home mortgage. D) Car loan. Show Answer Correct Answer: D) Car loan. 17. Which of the following would be a personal asset? A) Your car payment. B) Your college loan. C) Your personal computer. D) Your home mortgage. Show Answer Correct Answer: C) Your personal computer. 18. Amounts spent for food, clothing, transportation, and other living costs are called cash what? A) Inflows. B) Outflows. C) Fixed. D) None of above. Show Answer Correct Answer: B) Outflows. 19. Which of the following is an example of unnecessary debt? A) Paying for education with student loans. B) Using a mortgage to purchase a home. C) Paying for entertainment with a credit card. D) Using a car loan to buy a used car. Show Answer Correct Answer: C) Paying for entertainment with a credit card. 20. A decrease in the value of an asset A) Depreciation. B) Appreciation. C) Liabilities. D) Scarcity. Show Answer Correct Answer: A) Depreciation. 21. Lara received $ 900 in one paycheck. If she follows the 50-30-20 method, how much money will she put toward her wants? 1. $ 900 2. $ 450 3. $ 270 4. $ 180 A) $ 180. B) $ 450. C) $ 270. D) $ 900. Show Answer Correct Answer: C) $ 270. 22. At what age are you required to begin taking distributions from your Roth IRA? A) 70 1/2. B) 65. C) Never. D) 59 1/2. Show Answer Correct Answer: C) Never. 23. This month Anthony's take-home pay was $ 1, 500. He also earned $ 20 interest on a savings account. He spent $ 250 for rent, $ 100 for groceries, and $ 300 for other expenses. Anthony's total cash inflows this month totaled A) $ 850. B) $ 1, 520. C) $ 1, 500. D) $ 870. Show Answer Correct Answer: B) $ 1, 520. 24. On taxes, this is an amount that reduces taxable income. A) Fixed. B) Exemptions. C) Liabilities. D) None of above. Show Answer Correct Answer: B) Exemptions. 25. The employee knows exactly which day his/her paycheck will be deposited into their depository institution account. A) Paycheck with attached paycheck stub. B) Direct Deposit. C) Payroll Card. D) None of above. Show Answer Correct Answer: B) Direct Deposit. 26. A financial ..... is a report that summarizes your current financial condition and helps set a direction for your future financial activities. A) Record. B) Plan. C) Statement. D) Budget. Show Answer Correct Answer: B) Plan. 27. Financial needs and financial wants both A) Are needed to survive. B) Cost money. C) Are the same. D) None of the above. Show Answer Correct Answer: B) Cost money. 28. After Form P is completed, Form CP30 is issued. Once a partner receives Form CP30, they will declare the partnership income and loss that is stated on their Form CP30 onto their ..... A) Form BE. B) CP500. C) Form B. D) Form P. Show Answer Correct Answer: C) Form B. 29. Stafford loans, Perkins loans, and Plus loans are all ..... from the government. A) Federal loans. B) Scholarships. C) Alternative loans. D) Grants. Show Answer Correct Answer: A) Federal loans. 30. Which of the following is a fixed expense? A) Food. B) Rent. C) Clothing. D) Utilities. Show Answer Correct Answer: B) Rent. Next →Related QuizzesTaxation QuizzesFinance QuizzesIncome Tax Planning Quiz 2Income Tax Planning Quiz 3Income Tax Planning Quiz 4Income Tax Planning Quiz 5Income Tax Planning Quiz 6Income Tax Planning Quiz 7Income Tax Planning Quiz 8Income Tax Planning Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books