Bill and Ann bought a home in 1970 for $100,000. They put $20,000 down. The original $80,000 mortgage was
refinanced for $200,000 on October 13, 1987 when the Fair Market Value of the home was $300,000. That
refinanced mortgage of $200,000 has only 13 yea
What is forward-funded?
Means that five years worth of annual exclusion gifts can be contributed in the first
year, without incurring a taxable gift.
What is gift-splitting?
Technique that reduces gift taxes, but can only be used when a husband and wife
What happens if the minor of the UTMA or UGMA passes away?
Assets would be passed on to his or her estate
What are other financial aid approaches?
1. Home equity loan
2. Life insurance cash values
3. Borrow from qualified plans
4. Skip a year
5. Live at h
What does available income include?
1. Taxed and untaxed income
2. IRA deductions
3. Child support
4. Capital gains from investments
What does available income not include?
1. Some tax credits such as Earned Income Tax Credit
2. Funds from public assistan
What causes the creation of a deferred tax account on the balance sheet?
Temporary differences in the recognition of revenue and expense for taxable
income relative to reported income
When you make a payment on a loan, QuickBooks _ the amount
of the check
What are the other factors considered when applying for financial aid?
Other factors such as family size, the number of family members in college at the
same time, and special circumstances (for example a job loss or the death of a
What is the pa
What are the factors that are apart of an educational funding needs analysis?
1. Number of children
2. Ages of each child
3. Age at which the child will attend college
4. Number of years the child will attend college
5. Assumed after-tax savings rate of t
The three major methods of valuing inventory are what?
FIFO, LIFO, & Average
The amount of money that the original common shareholders paid for
ownership shares in the company is for is the sum of _ and
COMMON STOCK and ADDITIONAL PAID-IN CAPITAL.
What are the characteristics of an UGMA?
1. Authorize bank accounts and the purchase of stocks, bonds and mutual funds
2. Terminate at age 18
How are UTMAs and UGMAs selected?
1. Depend upon the state of residency of the minor.
How are UTMA and UGMA accou
What is the American Opportunity education credit?
1. Parents receive this credit for the first four years of child's postsecondary
2. Applies to tuition, books and fees, but not room or board expenses
What is the qualification for American Oppo
What is the qualified educational assistance plan?
Tax exemption for payments for part-time schooling.
What happens to qualifying educational expenses if employer's receive taxexempt payments?
Must reduce by the tax-exempt payments amount. They cannot rec
What is the CSS/Financial aid profile?
The data on this form is used to award college's institutional aid.
What does the financial aid package include?
Grants, loans, scholarships, and work-study funds.
What are the different types of government grants an
Your client brings the attached insurance illustration to you. To summarize, the insurance
Who determines the concept of "need"?
The federal government and colleges.
How much financial aid does the federal government provide?
The federal government is the largest dispenser of financial aid, with nearly 50% of
student loans and grants distribute
. Which of the following statements is true?
A. GAAP-based financial statements are prepared according to the "cash"
rather than the "accrual" basis of accounting.
B. Accounting choices and estimates can have a significant impact on the
outcome of financi
Which of the following accounts would be classified as current assets?
A.Cash, accounts receivable, accounts payable.
B.Accrued liabilities, unearned revenue, interest payable.
C.Marketable securities, deferred taxes, goodwill
A firm purchases a
When is the interest rate adjusted for Federal Direct PLUS Loans?
Each year on July 1st and parents are notified of interest rate changes throughout
the life of their loan.
When is interest charged on Federal Direct PLUS loans?
Interest is charged on the
When is kiddie tax not apply?
1. Distributions from disability trust (Tax Increase Prevention and Reconciliation
Act of 2005 (TIPRA)
2. Earned income
What is the standard deduction for a child?
Greater of $950 or earned income plus $300.
What happens to i
What was the percentage increase on the number of bachelor's degrees issued
by the year 2008-09
1,160,000 to 1,257,000.
What are pell grants?
Pell grants do not have to be repaid. They are awarded to only to full-time or parttime vocational school or unde
What is the repayment period for Stafford loans?
Up to ten years but payments can be extended by deferring or consolidating these
What are the interest rates for Stafford loans?
Stafford loans have variable interest rates that cannot exceed 8.25%.
What are Perkins Loans?
5% interest loans. Loans are made through a school's financial aid office. School
acts as the lender, and the loan is made with government funds.
When do payments on Perkins loans begin?
Nine months after students graduate or leave
T/F: The balance sheet summarizes the financial position of a business at a
point in time.
T/F: The SEC requires all companies, both public and private, to file annually
a Form 10-K report
T/F: Inventory is reported on balance sheet at the lower
An income stock could also be called a:
The four Basic Financial Statements are the
Balance Sheet, Income Statement, Statement of Stockholders' Equity, Statement of
In business, transactions are recorded in several types
grandparents are excluded.
Retirement assets and home equity are not counted towards the EFC.
What assets owned directly by the student that will result in a reduction of
UGMA and UTMA accounts are counted as the student's asset for financi
Certificate of Deposit
Depository institution account that has the potential to earn the most interest.
Pay yourself first strategy
Recommends a person set aside a portion of money for saving each time money is recieved.
Portion of current income not spen
Certificate of Deposit, Money Market Account, Stocks and Bonds
Examples of interest earning accounts:
Contractless payment cards
Devices such as key fobs, wrist bands, and plastic cards which look like a credit card and are
connected to a carholder's bank
Basic wealth protection, wealth accumlation, and weath distribution
Order in which the stages of traditional wealth occur over the financial life cycle.
True statement about lifestyle conditions
A change in a persons life may affect the financial plan in
A _ on the balance sheet for your firm will be unearned revenue on
the balance sheet for another firm
A major difference between an accounts payable and a short-term notes
payable is that a short-term notes payable has a stated _.
Amount of money, lenght of time, and interest rate
The factors that affect the time value of money are _.
Earning interest on interest.
When a goal has been set to save $100.00 a month for an emerency fund of $2000.00, givin
Benefits to creatinag a spending plan
Track income and expense, help individuals meet finanacial goals, and help individuals live
within their income.
Major expenditure categories
Housing, Transportation and Food.