W!SE Financial Literacy Certification Test Questions With Correct Updates

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.