Question: Explain why opening a checking account and

> Explain why setting financial goals is an important step in budgeting.

> Name different ways to handle budget variances.

> List two ways you can maximize the benefits from a tax-sheltered retirement program.

> Create a math example of why many employees participate in a tax-sheltered employee benefit plan, such as an HSA or 401(k) plan

> Kate Beckett and her two children, Austin and Alexandra, moved into the home of her new husband, Richard Castle, in New York City. Kate is a novelist, and her husband is a police detective. The family income consists of the following: $60,000 from Kate&a

> Summarize the benefits of participating in a high-deductible health care plan at work.

> What is a flexible spending account and what do pretax dollars have to do with it?

> Distinguish between Chapter 7 and Chapter 13 bankruptcy, and explain who might be forced to use Chapter 13 rather than Chapter 7.

> What services are provided by a credit counseling agency, and how might a debt management plan work to provide relief for someone who is having debt problems?

> List the major provisions of the Fair Debt Collection Practices Act.

> Identify four signs of over indebtedness.

> Summarize the rules that apply if you lose your ATM or debit card and it is used without your authorization.

> List the steps you should take if you find an error in your monthly statement regarding an electronic transaction.

> Distinguish among credit cards, debit cards, and stored-value cards.

> Summarize what you know about Bitcoin.

> Julia does well financially because she earns a good salary as an engineer, is somewhat frugal, and is making the maximum contribution to her employer-sponsored retirement plan. After reading about ways to decrease her income tax liability, she has some

> Use Table 1-1 to calculate the future value of (a) $2,000 at 5 percent for four years, (b) $4,500 at 9 percent for eight years, and (c) $10,000 at 6 percent for ten years. Table 1-1: Table 1-1 Future Value of $1 After a Given Number of Periods Pe

> Explain the difference between simple interest and compound interest, and describe why that difference is critical.

> What are the two common questions about money?

> Summarize how to fix errors in your credit report, and explain why some people add a consumer statement to their report.

> Name three steps to help establish a good credit history.

> What is a credit history, and what role do credit bureaus play in the development of it?

> Distinguish among the credit terms: prescreened, invitation-to-apply, and preapproved.

> Differentiate between ownership via joint tenancy with right of survivorship and tenancy in common.

> Explain why correctly owning assets is important to the personal finances of people, especially couples.

> Identify three strategies to avoid overpayment of income taxes, and summarize the essence of each.

> Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income taxes. The Johnsons’ total income la

> Summarize the differences between a traditional individual retirement account (IRA) and a Roth IRA.

> Explain how to reduce income taxes via your employer, and name three employer sponsored plans to do so.

> Distinguish between two major types of tax-sheltered investment returns

> Name three financial records that might be best kept in a safe-deposit box or in an envelope at a safe place like at work.

> List some advantages of keeping good financial records.

> Give three suggestions on how to succeed in an interview.

> Give examples of how to identify specific job opportunities.

> Offer suggestions on correctly assembling a résumé and what style formats are available.

> Give two career advancement tips.

> Explain how to compare salary and living costs in different cities.

> A Couple Creates an Educational Savings Plan Stanley Marsh and Wendy Testaburger of South Park, Colorado, have two young children. They both work and earn a substantial income, over $100,000 annually. Their monthly budget is illustrated in Table 3-5 on p

> Describe and give an example of how your marginal income tax rate can affect financial decision making.

> Explain and give an example of how marginal utility and marginal cost makes some financial decisions easier.

> Define opportunity cost and give an example of how opportunity costs might affect your financial decision making.

> What is the best thought on the list of keeping student loan debt under control?

> Summarize the effects of increasing debt payments from 10 percent to 15 percent on a budget. (Hint: See the Run the Numbers worksheet.) Worksheet: RUN THE NUMBERS Make Spending Reductions to Pay for Increasing Credit Usage 15 percent perhaps for a v

> What are the borrower’s feelings when he/she has a limit of debt of 11 to 14 percent of disposable personal income compared to a debt limit of 15 to 18 percent? (Hint: See Table 6-1.) Table 6-1: Table 6-1 Debt-Payment Limits as a P

> Distinguish among the continuous debt method, debt-to-income, debt payments-to-disposable income, and debt-to-income methods for setting your debt limit

> Explain the benefits and drawbacks of certificates of deposit.

> Distinguish between a money market account and a money market mutual fund account.

> Summarize what happens when you write a check.

> Julia Price Thinks About Financial Statements, Tools, and Budgets Julia graduated over six years ago in aeronautical engineering and changed job once. Her income is more than sufficient for her needs. Julia contributes the maximum into her employer’s ret

> List five examples of tax credits.

> What advice on filing a Form 1040X can you offer someone who did not file a federal income tax return last year or in any one of the past three years?

> Distinguish between a standard deduction and a personal exemption.

> List three examples of adjustments to income.

> Give five examples of income that is excluded from IRS reporting.

> How are long-term and short-term capital gains treated differently for income tax purposes?

> Give five examples of income that must be included in income reported to the Internal Revenue Service.

> Distinguish between fixed and variable expenses, and give two examples of each

> How should assets and liabilities be valued for the balance sheet, and why?

> Victor and Maria Hernandez Victor and Maria, both in their late 30s, have two children: John, age 13, and Joseph, age 15. Victor has had a long sales career with a retail appliance store. Maria works part-time as a medical records assistant. The Hernande

> Throughout this book, we will present a continuing narrative about Harry and Belinda Johnson. Following is a brief description of the lives of this couple. Harry is 28 years old and graduated five years ago with a bachelor’s degree in i

> What is taxable income for an individual? How does it differ from taxable income for a corporation?

> The company president is reviewing the performance and budget of the marketing department with the vice president of marketing. Should that be a one-on-one meeting or should the CFO be present? Why? If you feel the CFO should be there, what should be his

> Diversified companies are made up of divisions, each of which is a separate business. Large companies have divisions spread over the entire country. In such companies most treasury functions are centralized, whereas most accounting functions are carried

> If the Johnson Company of Problem 2 is subject to a marginal tax rate of 34%, what is the cash flow associated with the sale of the used truck?

> The Johnson Company bought a truck costing $24,000 two and a half years ago. The truck's estimated life was four years at the time of purchase. It was accounted for using straight line depreciation with zero salvage value. The truck was sold yesterday fo

> Canaday Ltd. has the following receivables balances ($M) Gross Accounts Receivable………………………………………. $175 Bad Debt Reserve………………………………………………………. (3) Net Accounts Receivable…………………………………………...$172 Two years ago a customer was approved for an unusually lar

> You've been hired by the nation of Utopia to computerize its approach to calculating taxes. Utopia's progressive tax system contains only two brackets, which are applicable to all households. These are as follows:

> Rachel and Harry are planning to get married. Both have successful careers and expect to earn the following this year. whether getting married will cost or save them money and how much. Assume that getting married during a year subjects the entire yea

> The Snyder Company had the following income and expense items: Sales…………$180,870,000 Cost…………...$110,450,000 Expenses…...$65

> Inky Inc. reported the following financial information in 2015. Operating income (EBIT)………………$650,000 Interest………………………………………...$430,000 Dividends from Printers Inc. not included in operating income (Inky owns 3% of Printers) …$20,000 Dividends paid t

> Compare and contrast the terms “stockholder” and “stakeholder.”

> Microchip Inc had the following profits and losses in the years indicated 2013………........$5,000,000 2014……………...$350,000 2015…….

> Ed Fletcher is planning to start a business that requires an investment of $500,000. He has that much money, but can also borrow virtually the whole amount from a rich relative. (This is very unusual.) Ed feels that after the business is started, it w

> Calculate the corporate tax on earnings before tax (EBT) of the following amounts a. $37,000 b. $57,000 c. $88,500 d. $110,000 e. $5,375,000 f. $14,000,000 g. $17,350,000 h. $23,500,000

> Dick Dowen is considering three investment opportunities: 1. A 4.5% City of Chicago bond that is tax exempt at both the state and federal level. 2. A 4.75% State of Illinois bond that is tax exempt at the federal level but taxable at the state level. 3.

> Harry Swartz wants to invest in a bond and has narrowed his choices down to two issues. The first is offered by Microsoft Corp. and pays an interest rate of 8%. The second option is offered by the city of Springfield, Massachusetts, and offers a return o

> Joan and Harry Leahy both had income in 2015. Harry made $72,500 in wages. Joan has an incorporated small business that paid her a salary of $50,000. In addition, the business had profits of $15,000, which were paid to the Leahys as dividends. They recei

> The Benjamin family had wage earnings of $185,000 in 2015. They received interest of $4,500 on corporate bonds and $1,500 on bonds issued by the state. Their dividend income was $500, and they had a $1,000 long term capital gain on the sale of securiti

> The Lindscomb family had the following income in 2015: Salaries: Mark …………… $63,500 Ashley …………. 57,900 Interest on investments: IBM bonds ……………………. $ 4,750 New York

> Joan Petros reported taxable income in 20X2 of $150,000 which included the following transactions: 1. In June, 20X2, Joan sold 100 shares of stock for $40 per share. She had purchased them three months earlier for $35 per share. 2. In October, 20X2, Jo

> Use the following tax brackets for taxable income: Bracket ………………………… Tax Rate $0 - $10,000 ………………………… 15% $10,000 - $50,000 ………………… 25%

> Is the agency problem an ethical issue or an economic issue?

> The Coolidge family has taxable income of $165,000. They live in a state in which income over $100,000 is taxed at 11%. What is their total effective (marginal) tax rate?

> The Digital Systems Company was organized two years ago to take advantage of an internet opportunity. Investors paid $12 a share for 2 million shares with a $4 par value. In the next two years the company had earnings of $2 million and $3 million respe

> Preston Road Inc. was organized was organized last year when its founders contributed $9 million and issued 3 million shares of $1.25 par value stock. The company earned $750,000 in its first year and paid dividends of $325,000. Construct the equity se

> Mints Entertainment, Inc. had Net Income of $170,000 and paid dividends of $0.25 per share on its 100,000 shares of outstanding stock this year. At the end of the year its balance sheet showed retained earnings of $250,000. What was Mints’ retained earn

> During the last year Alpha Co had Net Income of $150, paid $20 in dividends, and sold new stock for $40. Beginning equity for the year was $700. Calculate ending equity.

> Declan Ross wants to sell his business. The firm has no debt and earns an 8% return (ROE) on equity of $150,000. The business can borrow at an after tax rate of 5%. A consultant has advised that the business will be worth more if its financial statements

> Gatwick Ltd. has after tax profits (net income) of $500,000 and no debt. The owners have a $6 million investment in the business. If they borrow $2 million at 10% and use it to retire stock, how will the return on their investment (equity) change if ea

> Jacob Cornwall has a business in which he’s invested $250,000 of his own money, which is the firm’s only capital. (There are no other equity investors and no debt.) In a recent year the firm had net income of $20,000 for a return on equity of 8% ($20,00

> The Glavits Company opened for business on Monday, June 1, with inventory of $5,000 and cash in the bank of $7,000. These were its only assets. All start-up financing was provided from the owner's personal funds, and there were no other liabilities. T

> In January, 20X3, Elliott Industries recorded the following transactions: 1. Paid bills from 20X2 totaling $120,000 and collected $150,000 for sales that were made in 20X2. 2. Purchased inventory on credit totaling $500,000, 30% of which remain unpaid at

> What conflict(s) of interest can you imagine arising between members of the community in which a company operates and some other stakeholders? (Hint: Think about pollution.)

> Sanderson Metals Inc. accrues four liability items: payroll, employee vacation that has been earned but not used, property taxes, and inventory that arrives at its factory dock before an invoice is received from the vendor. Payroll: Sanderson pays its

> Belvedere Inc. has an annual payroll of $52 million. The firm pays employees every two weeks on Friday afternoon. Last month, the books were closed on the Tuesday after payday. How much is the payroll accrual at the end of the month?

> Becher Industries has three suppliers for its raw materials for manufacturing. The firm purchases $180 million per year from Johnson Corp. and normally takes 30 days to pay these bills. Belcher also purchases $150 million per year from Jensen, Inc. and

> On January 1, 20X2, Miller Corp. purchased a milling machine for $400,000. It will be depreciated on a straight line basis over 20 years. On January 1, 20X3, Miller purchased a heavy duty lathe for $250,000 which will be depreciated on a straight line

> Consider the Current Asset accounts (Cash, Accounts Receivable and Inventory) individually and as a group. What impact will the following transactions have on each account and current assets in total (Increase, Decrease, No Change)? (Hint: Each transac

> McFadden Corp. reports the following balances on their December 31, 20X2 Balance Sheet:

> Fred Gowen opened Gowen Retail Sales as a sole proprietorship and recorded the following transactions during his first month in business: 1. Purchased $50,000 of fixed assets, putting 10% down and borrowing the remainder. 2. Sold 1,000 units of product