FINANCIAL LITERACY FINAL EXAM
WITH MULTIPLE CHOICES.
Which of these is an example of income? - Answers-money earned from a part-time job
money won at a poker game
money received as a gift
A. all of the above
Which of the following are different kinds of income? - Answers-passive income
earned income
taxable income
A. all of the above
Use the following information to answer the next two questions. Marshall just started a
new job and is excited to be earning income. He is paid monthly, and his salary is
$12,000 per year. When he gets his first paycheck, it is for $900, and he thinks there is
a mistake. - Answers--
What is Marshall's gross income for the month he got paid? - Answers-$1,000
What is the most likely reason Marshall's check was only $900? - Answers-because his
gross amount was reduced to his net amount because of tax deductions
Which term matches this definition: "an amount taken from your gross pay that is
required by the state and/or federal government"? - Answers-deduction
Use the following paystub information to answer the next two questions: Charlie's gross
pay is $5,000. He had $1,400 taken out of that amount; $1,050 is in taxes and $350 is
for savings and retirement funds. - Answers--
Of the money taken out of Charlie's checking account, which number corresponds to the
amount for deductions? - Answers-$1,050
Based on the above paystub information, what is Charlie's net income? - Answers-
$3,600
Which of these is considered to be a perk? - Answers-Which of these is considered to
be a perk?
Which term best matches this definition: "each individual or household pays a fixed
percentage"? - Answers-proportional (flat) tax
If you make $10,000 and you are being charged a flat tax of 5%, how much tax will you
owe? - Answers-$500
,Which amendment to the Constitution allows Congress to tax Americans? - Answers-
the Sixteenth Amendment
Which method is currently used in America to calculate federal income taxes? -
Answers-progressive tax
Which term best matches this definition: "everyone, regardless of income level, pays the
same dollar amount"? - Answers-regressive tax
Some states in the country do not impose which type of tax? - Answers-sales tax
In 1935, people usually did not live to be over the age of 61. By 2012, life expectancy
was which of the following? - Answers-around 78 years old
What is the reason that the change in the average life expectancy is significant for
Social Security taxes? - Answers-Because the government has enacted FICA, it insures
that people will get payments when they retire.
Because more people are living to an older age and, consequently, more people are
retiring, the government must pay out more money to those who retire.
Because the average life expectancy has changed, the government may not be able to
keep up with the payments for people's retirements.
A. All of the above.
In which situation would a luxury tax be imposed? - Answers-The LA Lakers franchise
wants to keep its star player. In order to entice him to stay, it will need to pay him a
salary which exceeds the limit of salaries for professional basketball players.
What is the purpose for imposing property taxes? - Answers-The money is used to pay
for schools, roads, snow removal, and so on.
Which option best describes an estate tax? - Answers-a tax imposed when you transfer
property after your death
Which statement does not apply to Form W-2? - Answers-Your employer must provide
you this form no later than April 15 each year.
Which of these can you claim as a dependent on your W-4 form without any
restrictions? - Answers-your children
the elderly
yourself
A. none of the above
Which form is necessary to either you or your employer in preparing your taxes? -
Answers-W-4
W-2
,1040 or 1040EZ
A. all of the above
Use the following information to answer the next two questions. Jack has a yearly gross
income of $30,000. His total deductions for the year are $7,300 and expenditures are
$2,250. - Answers--
What is Jack's net income? - Answers-$20,450
What are Jack's total deductions and expenditures for the year? - Answers-$9,550
Which of these are types of income? - Answers-net and passive
earned and unearned
gross and taxable
A. all of the above
net
taxable
gross
all of the above
What is the purpose of the Sixteenth Amendment to the Constitution? - Answers-It
allows Congress to tax citizens.
Why was the FICA law enacted? - Answers-to create a fund for employees' Social
Security taxes that the employee will get back once retired
Which of these would be considered a company perk? - Answers-a fitness center at
work
daycare provided by the employer
massages provided at work
A. all of the above
What is the definition of gross income? - Answers-the amount earned before any taxes
or deductions are taken out
Which statement is not true? - Answers-Some states in the country do not impose
federal income tax.
The Kansas City Royals franchise has lost its pitcher due to a bad injury. It wants to hire
an additional pitcher, but in order to attract the person it desires, it will have to pay the
new pitcher a salary that exceeds the salary cap imposed on professional baseball
teams. The franchise decides to go ahead and hire the new pitcher. The franchise is
subject to which tax? - Answers-luxury tax
, By which date are employers required to give employees their W-2 form? - Answers-
January 31 of each year
Which method is currently used in America to calculate federal taxes? - Answers-
progressive tax
Use the following information about John's income to answer the next two questions:
John's annual taxable income is $9,000; he has a 10% tax rate, and nothing is taken out
except taxes. - Answers--
What is John's tax deduction for the year? - Answers-$900
What is John's net income for the year? - Answers-$8,100
Which term matches this definition: "a tax where everyone pays the same amount
regardless of income"? - Answers-regressive tax
Which statement is correct about taxes? - Answers-An employee needs to complete a
W-4 so an employer knows how much money to deduct for taxes.
An employer needs to provide a W-2 to the employee each year.
An employee needs to use the W-2 to complete the 1040EZ.
A. all of the above
What is the definition of proportional tax? - Answers-Each individual or household pays
a fixed percentage.
What is the definition of net income? - Answers-the amount earned after any taxes or
other deductions are taken out
Which sales taxes are you probably paying when you purchase gasoline? - Answers-
federal taxes
state taxes
local taxes
A. all of the above
Which of the following is the most important skill needed in the workplace, according to
almost all employers? - Answers-communication
Which factor should you consider when thinking about your future income? - Answers-
previous experience
gender
interests and personality type
all of the above
Most Americans will work in different careers for at least how many years? - Answers-
30
WITH MULTIPLE CHOICES.
Which of these is an example of income? - Answers-money earned from a part-time job
money won at a poker game
money received as a gift
A. all of the above
Which of the following are different kinds of income? - Answers-passive income
earned income
taxable income
A. all of the above
Use the following information to answer the next two questions. Marshall just started a
new job and is excited to be earning income. He is paid monthly, and his salary is
$12,000 per year. When he gets his first paycheck, it is for $900, and he thinks there is
a mistake. - Answers--
What is Marshall's gross income for the month he got paid? - Answers-$1,000
What is the most likely reason Marshall's check was only $900? - Answers-because his
gross amount was reduced to his net amount because of tax deductions
Which term matches this definition: "an amount taken from your gross pay that is
required by the state and/or federal government"? - Answers-deduction
Use the following paystub information to answer the next two questions: Charlie's gross
pay is $5,000. He had $1,400 taken out of that amount; $1,050 is in taxes and $350 is
for savings and retirement funds. - Answers--
Of the money taken out of Charlie's checking account, which number corresponds to the
amount for deductions? - Answers-$1,050
Based on the above paystub information, what is Charlie's net income? - Answers-
$3,600
Which of these is considered to be a perk? - Answers-Which of these is considered to
be a perk?
Which term best matches this definition: "each individual or household pays a fixed
percentage"? - Answers-proportional (flat) tax
If you make $10,000 and you are being charged a flat tax of 5%, how much tax will you
owe? - Answers-$500
,Which amendment to the Constitution allows Congress to tax Americans? - Answers-
the Sixteenth Amendment
Which method is currently used in America to calculate federal income taxes? -
Answers-progressive tax
Which term best matches this definition: "everyone, regardless of income level, pays the
same dollar amount"? - Answers-regressive tax
Some states in the country do not impose which type of tax? - Answers-sales tax
In 1935, people usually did not live to be over the age of 61. By 2012, life expectancy
was which of the following? - Answers-around 78 years old
What is the reason that the change in the average life expectancy is significant for
Social Security taxes? - Answers-Because the government has enacted FICA, it insures
that people will get payments when they retire.
Because more people are living to an older age and, consequently, more people are
retiring, the government must pay out more money to those who retire.
Because the average life expectancy has changed, the government may not be able to
keep up with the payments for people's retirements.
A. All of the above.
In which situation would a luxury tax be imposed? - Answers-The LA Lakers franchise
wants to keep its star player. In order to entice him to stay, it will need to pay him a
salary which exceeds the limit of salaries for professional basketball players.
What is the purpose for imposing property taxes? - Answers-The money is used to pay
for schools, roads, snow removal, and so on.
Which option best describes an estate tax? - Answers-a tax imposed when you transfer
property after your death
Which statement does not apply to Form W-2? - Answers-Your employer must provide
you this form no later than April 15 each year.
Which of these can you claim as a dependent on your W-4 form without any
restrictions? - Answers-your children
the elderly
yourself
A. none of the above
Which form is necessary to either you or your employer in preparing your taxes? -
Answers-W-4
W-2
,1040 or 1040EZ
A. all of the above
Use the following information to answer the next two questions. Jack has a yearly gross
income of $30,000. His total deductions for the year are $7,300 and expenditures are
$2,250. - Answers--
What is Jack's net income? - Answers-$20,450
What are Jack's total deductions and expenditures for the year? - Answers-$9,550
Which of these are types of income? - Answers-net and passive
earned and unearned
gross and taxable
A. all of the above
net
taxable
gross
all of the above
What is the purpose of the Sixteenth Amendment to the Constitution? - Answers-It
allows Congress to tax citizens.
Why was the FICA law enacted? - Answers-to create a fund for employees' Social
Security taxes that the employee will get back once retired
Which of these would be considered a company perk? - Answers-a fitness center at
work
daycare provided by the employer
massages provided at work
A. all of the above
What is the definition of gross income? - Answers-the amount earned before any taxes
or deductions are taken out
Which statement is not true? - Answers-Some states in the country do not impose
federal income tax.
The Kansas City Royals franchise has lost its pitcher due to a bad injury. It wants to hire
an additional pitcher, but in order to attract the person it desires, it will have to pay the
new pitcher a salary that exceeds the salary cap imposed on professional baseball
teams. The franchise decides to go ahead and hire the new pitcher. The franchise is
subject to which tax? - Answers-luxury tax
, By which date are employers required to give employees their W-2 form? - Answers-
January 31 of each year
Which method is currently used in America to calculate federal taxes? - Answers-
progressive tax
Use the following information about John's income to answer the next two questions:
John's annual taxable income is $9,000; he has a 10% tax rate, and nothing is taken out
except taxes. - Answers--
What is John's tax deduction for the year? - Answers-$900
What is John's net income for the year? - Answers-$8,100
Which term matches this definition: "a tax where everyone pays the same amount
regardless of income"? - Answers-regressive tax
Which statement is correct about taxes? - Answers-An employee needs to complete a
W-4 so an employer knows how much money to deduct for taxes.
An employer needs to provide a W-2 to the employee each year.
An employee needs to use the W-2 to complete the 1040EZ.
A. all of the above
What is the definition of proportional tax? - Answers-Each individual or household pays
a fixed percentage.
What is the definition of net income? - Answers-the amount earned after any taxes or
other deductions are taken out
Which sales taxes are you probably paying when you purchase gasoline? - Answers-
federal taxes
state taxes
local taxes
A. all of the above
Which of the following is the most important skill needed in the workplace, according to
almost all employers? - Answers-communication
Which factor should you consider when thinking about your future income? - Answers-
previous experience
gender
interests and personality type
all of the above
Most Americans will work in different careers for at least how many years? - Answers-
30
