W!SE Financial Literacy Certification Test
Earned Income - ANS-Income derived from active participation
in a trade or business, including wages, salary, tips,
commissions and bonuses.
Unearned Income - ANS-Any income that comes from investments and other sources
unrelated to employment services. Examples: interest from a savings account, bond
interest, alimony, and dividends from stock
Exemptions (aka allowance) and how they work - ANS-If you are not claimed as a
dependent on another
taxpayer's return, then you can claim one personal tax
exemption. The exemption reduces your taxable income just like a deduction does, but
has fewer restrictions to claiming it. If you are married and file a joint tax return, both
you and your spouse each get an exemption.
Exemptions (aka allowance) and how they work PART 2 - ANS-The IRS allows you to
take additional exemptions for each dependent you claim. Frequently, the source of
these exemptions are the children who live with you for more than half the year, are
under 19 years old (or under 24 if a full-time student) and who don't provide more than
half of their own financial support during the tax year.
Liquidity - what does it mean? - ANS-The ability to convert an asset to cash quickly and
with
minimal impact to the price.
Liquidity - what financial products are liquid? - ANS-Examples: Cash, Most stocks,
money market instruments and government bonds.
Gift cards - how do they work? - ANS-A gift card is a restricted monetary equivalent is
issued by retailers or banks to be used as an alternative to a non-monetary gift.
Gift cards - how do they work - fees? - ANS-Prepaid cards, gift cards, and gift
certificates cannot expire within five years of activation or unless the terms of the
expiration are clearly disclosed. The law bans dormancy fees, inactivity fees or service
fees on gift cards unless there has been no activity in a 12-month period and the issuer
clearly discloses all fees before the gift card is purchased.
, Gift cards - how do they work - fees? (Exclusions) - ANS-Prepaid phone cards ,
re-loadable cards, loyalty
or rewards cards, cards issued for admission to special
events or venues and certificates issued in paper form only are exempt.
Discretionary income and budget surplus - ANS-The amount of an individual's income
that is left for
spending, investing or saving after taxes and personal
necessities (such as food, shelter, and clothing) have been paid. Discretionary income
includes money spent on luxury items, vacations and non-essential goods and services.
Money orders - high rate of counterfeits - ANS-A certificate that allows the stated payee
to receive cash
on-demand, usually issued by governments and banking institutions. A money order
functions much like a check, in that the person who purchased the money order may
stop payment.
Why does the US currency have value? - ANS-Its value is only based on what we can
get in exchange for it. Or put it another way, money has value as long as other people
believe the money you give them can be
exchanged for the goods and services they desire in the
future.
Opportunity cost - ANS-The second-best alternative (or the value of that
alternative) that must be given up when scarce resources are used for one purpose
instead of another
Who is hurt the most and least with inflation - ANS-Inflation is a general increase in
prices and a corresponding decrease in money's purchasing power.
Who is hurt the most with inflation? - ANS-Those on fixed incomes (retired people)
Who is hurt the least with inflation? - ANS-Borrowers and producers
Role of the treasury department - ANS-The United States Department of the Treasury is
the
government (Cabinet) department responsible for issuing all Treasury bonds, notes and
bills.
Earned Income - ANS-Income derived from active participation
in a trade or business, including wages, salary, tips,
commissions and bonuses.
Unearned Income - ANS-Any income that comes from investments and other sources
unrelated to employment services. Examples: interest from a savings account, bond
interest, alimony, and dividends from stock
Exemptions (aka allowance) and how they work - ANS-If you are not claimed as a
dependent on another
taxpayer's return, then you can claim one personal tax
exemption. The exemption reduces your taxable income just like a deduction does, but
has fewer restrictions to claiming it. If you are married and file a joint tax return, both
you and your spouse each get an exemption.
Exemptions (aka allowance) and how they work PART 2 - ANS-The IRS allows you to
take additional exemptions for each dependent you claim. Frequently, the source of
these exemptions are the children who live with you for more than half the year, are
under 19 years old (or under 24 if a full-time student) and who don't provide more than
half of their own financial support during the tax year.
Liquidity - what does it mean? - ANS-The ability to convert an asset to cash quickly and
with
minimal impact to the price.
Liquidity - what financial products are liquid? - ANS-Examples: Cash, Most stocks,
money market instruments and government bonds.
Gift cards - how do they work? - ANS-A gift card is a restricted monetary equivalent is
issued by retailers or banks to be used as an alternative to a non-monetary gift.
Gift cards - how do they work - fees? - ANS-Prepaid cards, gift cards, and gift
certificates cannot expire within five years of activation or unless the terms of the
expiration are clearly disclosed. The law bans dormancy fees, inactivity fees or service
fees on gift cards unless there has been no activity in a 12-month period and the issuer
clearly discloses all fees before the gift card is purchased.
, Gift cards - how do they work - fees? (Exclusions) - ANS-Prepaid phone cards ,
re-loadable cards, loyalty
or rewards cards, cards issued for admission to special
events or venues and certificates issued in paper form only are exempt.
Discretionary income and budget surplus - ANS-The amount of an individual's income
that is left for
spending, investing or saving after taxes and personal
necessities (such as food, shelter, and clothing) have been paid. Discretionary income
includes money spent on luxury items, vacations and non-essential goods and services.
Money orders - high rate of counterfeits - ANS-A certificate that allows the stated payee
to receive cash
on-demand, usually issued by governments and banking institutions. A money order
functions much like a check, in that the person who purchased the money order may
stop payment.
Why does the US currency have value? - ANS-Its value is only based on what we can
get in exchange for it. Or put it another way, money has value as long as other people
believe the money you give them can be
exchanged for the goods and services they desire in the
future.
Opportunity cost - ANS-The second-best alternative (or the value of that
alternative) that must be given up when scarce resources are used for one purpose
instead of another
Who is hurt the most and least with inflation - ANS-Inflation is a general increase in
prices and a corresponding decrease in money's purchasing power.
Who is hurt the most with inflation? - ANS-Those on fixed incomes (retired people)
Who is hurt the least with inflation? - ANS-Borrowers and producers
Role of the treasury department - ANS-The United States Department of the Treasury is
the
government (Cabinet) department responsible for issuing all Treasury bonds, notes and
bills.
