Metropolitan Community College Personal Finance (FINA 1200) Quiz 1 Study Guide Know the steps in the budgeting process – organizing, setting financial goals, decision making (3) Calculate the disposable income given wages, social security taxes and insurance cost (4) Know what is and is not unearned income – interest, dividends, etc (4) Be able to calculate the asset to debt ratio (3) Be able to calculate the basic liquidity ratio (3) Know examples of non-salary benefits – tuition reimbursement, sick leave, child care, etc (2) Know how to calculate future value of a lump sum (1) Review what are fixed vs. variable expenses in a budget (3) Know the time period of the business cycle – 4 to 5 years (1) Identify good sources to use when constructing a balance sheet (3) Understand what is a flexible spending account (FSA) – a government approved tax deferral of savings for medical expenses (1) Know the income which is the basis that taxes are determined – taxable income (4) Know the steps to successful career planning – career goals, assessments, Identify values, cost vs. benefit trade-off, networking, values, target employers, etc (2) Know the maximum credit available to a taxpayer per calendar year for the American Opportunity Tax Credit - $2,500 (4) Know when to itemize deductions vs. standard deduction to reduce tax liability (4) Know the legal rights of an employee once hired – (2) Identify the economic phase when conditions make it easy for consumers to buy a home – expansion (1) Be able to calculate and compare the return for a taxable bond vs a tax-exempt bond (4)