WISE Financial Literacy Exam Study Guide
UPDATED ACTUAL Questions and
CORRECT Answers
Cash - CORRECT ANSWER - Also known as 'green back'.
Check - CORRECT ANSWER - A written promise to pay money from your bank account.
Money Order - CORRECT ANSWER - A printed order for payment of a specified sum,
issued by a bank or post office. It is a guarenteed check, backed by the bank or post office that
issued it.
Debit/ATM Card - CORRECT ANSWER - A card that requires a pin number to withdraw
money from your checking account. You may pay a fee to use your Debit card at certain ATM
machines that are not aligned with your bank.
Credit Card - CORRECT ANSWER - A card used to borrow money from a company,
charged interest on unpaid balance. You will have a limit, you can spend up to that limit, pay it
down, and spend again = REVOLVING CREDIT.
Gift Card - CORRECT ANSWER - A card bought to spend at a certain store, which may
charge a fee after 12 months.
Pay Card - CORRECT ANSWER - A prepaid card used by employers to pay employees,
functioning like a debit card.
Liquidity - CORRECT ANSWER - The degree to which an asset can be quickly converted
to cash; cash is the most liquid asset. A home that you own is not very liquid- because it will take
time to sell it in order to turn it into cash.
,Earned Income - CORRECT ANSWER - Income derived from employment wages and
salaries.
Unearned Income - CORRECT ANSWER - Income from sources other than employment,
such as investments and gifts.
Windfall Income - CORRECT ANSWER - Unexpected additional income over expenses.
Fringe Benefits - CORRECT ANSWER - Additional benefits provided by employers, such
as health insurance and educational assistance.
Barter - CORRECT ANSWER - The exchange of goods without involving money.
Trading goods or services.
Gross Pay - CORRECT ANSWER - Total earnings before any deductions are subtracted.
Net Pay - CORRECT ANSWER - The amount of a paycheck after deductions, also known
as take-home pay.
Sales Tax - CORRECT ANSWER - A tax levied on goods and services purchased, going
to the state government.
Property Tax - CORRECT ANSWER - A tax levied on homes and cars, funding local
government.
Income Tax - CORRECT ANSWER - A tax assessed on earnings, going to federal and
state governments.
IRS - CORRECT ANSWER - Internal Revenue Service, the agency that collects taxes for
the federal government.
, Capital Gains Tax - CORRECT ANSWER - A tax paid on the sale of assets like homes or
stocks.
Social Security - CORRECT ANSWER - A federal insurance program for retired,
unemployed, or disabled individuals. Part of FICA taxes. 6.2% of your paycheck will go to
Social Security.
Medicare - CORRECT ANSWER - A federal health insurance program for people aged 65
or older and those with disabilities. Part of FICA taxes. 1.45% of your paycheck goes to
Medicare.
FICA Taxes - CORRECT ANSWER - Taxes that fund Social Security and Medicare,
deducted from paychecks.
W4 - CORRECT ANSWER - A form completed on the first day of a job to select how
much tax will be deducted from paychecks. W-4 is 4 you!
Exemption - CORRECT ANSWER - An amount of money taken out of taxable income to
reduce it, making it nontaxable.
Exemption - CORRECT ANSWER - An amount of money taken out of one's taxable
income so that it becomes nontaxable.
W2 - CORRECT ANSWER - This form comes to you from your employer in January and
shows total money you earned and total taxes you paid for the previous year. (W-2 comes 2
you!)
1099 - CORRECT ANSWER - This comes to you from your bank in January and shows
how much interest you earned from your savings account for the year. If you have "other
income" like earnings from YouTube, you will get a 1099K in January.
UPDATED ACTUAL Questions and
CORRECT Answers
Cash - CORRECT ANSWER - Also known as 'green back'.
Check - CORRECT ANSWER - A written promise to pay money from your bank account.
Money Order - CORRECT ANSWER - A printed order for payment of a specified sum,
issued by a bank or post office. It is a guarenteed check, backed by the bank or post office that
issued it.
Debit/ATM Card - CORRECT ANSWER - A card that requires a pin number to withdraw
money from your checking account. You may pay a fee to use your Debit card at certain ATM
machines that are not aligned with your bank.
Credit Card - CORRECT ANSWER - A card used to borrow money from a company,
charged interest on unpaid balance. You will have a limit, you can spend up to that limit, pay it
down, and spend again = REVOLVING CREDIT.
Gift Card - CORRECT ANSWER - A card bought to spend at a certain store, which may
charge a fee after 12 months.
Pay Card - CORRECT ANSWER - A prepaid card used by employers to pay employees,
functioning like a debit card.
Liquidity - CORRECT ANSWER - The degree to which an asset can be quickly converted
to cash; cash is the most liquid asset. A home that you own is not very liquid- because it will take
time to sell it in order to turn it into cash.
,Earned Income - CORRECT ANSWER - Income derived from employment wages and
salaries.
Unearned Income - CORRECT ANSWER - Income from sources other than employment,
such as investments and gifts.
Windfall Income - CORRECT ANSWER - Unexpected additional income over expenses.
Fringe Benefits - CORRECT ANSWER - Additional benefits provided by employers, such
as health insurance and educational assistance.
Barter - CORRECT ANSWER - The exchange of goods without involving money.
Trading goods or services.
Gross Pay - CORRECT ANSWER - Total earnings before any deductions are subtracted.
Net Pay - CORRECT ANSWER - The amount of a paycheck after deductions, also known
as take-home pay.
Sales Tax - CORRECT ANSWER - A tax levied on goods and services purchased, going
to the state government.
Property Tax - CORRECT ANSWER - A tax levied on homes and cars, funding local
government.
Income Tax - CORRECT ANSWER - A tax assessed on earnings, going to federal and
state governments.
IRS - CORRECT ANSWER - Internal Revenue Service, the agency that collects taxes for
the federal government.
, Capital Gains Tax - CORRECT ANSWER - A tax paid on the sale of assets like homes or
stocks.
Social Security - CORRECT ANSWER - A federal insurance program for retired,
unemployed, or disabled individuals. Part of FICA taxes. 6.2% of your paycheck will go to
Social Security.
Medicare - CORRECT ANSWER - A federal health insurance program for people aged 65
or older and those with disabilities. Part of FICA taxes. 1.45% of your paycheck goes to
Medicare.
FICA Taxes - CORRECT ANSWER - Taxes that fund Social Security and Medicare,
deducted from paychecks.
W4 - CORRECT ANSWER - A form completed on the first day of a job to select how
much tax will be deducted from paychecks. W-4 is 4 you!
Exemption - CORRECT ANSWER - An amount of money taken out of taxable income to
reduce it, making it nontaxable.
Exemption - CORRECT ANSWER - An amount of money taken out of one's taxable
income so that it becomes nontaxable.
W2 - CORRECT ANSWER - This form comes to you from your employer in January and
shows total money you earned and total taxes you paid for the previous year. (W-2 comes 2
you!)
1099 - CORRECT ANSWER - This comes to you from your bank in January and shows
how much interest you earned from your savings account for the year. If you have "other
income" like earnings from YouTube, you will get a 1099K in January.
