Personal Finance Chapter 2-Income, Benefits, and Taxes – Flashcards
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benefits
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forms of pay other than salary or wages
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commission
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a set fee or percentage of a sale paid to an employee instead of an addition to salary or wages
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disposable income
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money available to spend or save after taxes have been paid
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dividends
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a portion of a corporation's profits distributed to stockholders
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entrepreneur
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a person who takes the risks of being self-employed and owning a business
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excise taxes
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taxes charged on the purchase of specific goods and services
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exemption
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a person claimed as a dependent on a tax return
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Form W-2
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a from used to report taxable income a worker received during the calendar year
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gross pay
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total salary or wages earned during the pay period
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in-cash payments
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money in the form of check, debit card, or other direct payment given to a person needing assistance
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in-kind payments
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payments made indirectly on a person's behalf or in a form other than money
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Medicare tax
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a tax that pays for medical care for retired persons
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minimum wage
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lowest pay rate allowed by law for each hour or work
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net pay
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the amount of your paycheck after deductions
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overtime pay
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pay received for hours worked in addition to regular time pay
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personal leave
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paid time away from work for personal reasons
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profit-sharing plan
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a benefit whereby employees may share in the profits of the business
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public goods
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government-provided goods and services paid for by taxes
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retirement plans
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an account into which employees contribute a portion of their earnings for their retirement
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sales taxes
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taxes levied on consumer purchases of goods and services
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sick leave
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paid time away from work due to illness
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social security tax
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a withholding tax to provide old-age, survivors, and disability insurance
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transfer payments
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money and benefits received from local, state, or federal governments
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unearned income
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money received from sources other than working
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use taxes
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taxes based on the use of goods and services provided by the government
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Self-employed income is a form of unearned income.
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False
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All states have the same minimum wage rate.
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False
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Overtime is generally 1 1/2 times the regular rate of pay.
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True
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Tips are not subject to federal or state income tax.
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False
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Commission income is earned only when a sale is made.
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True
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An entrepreneur is a person who owns his or her own business.
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True
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Owning a business is usually considered less risky than working as an employee.
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False
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A lifestyle business is one that will not go on to become a publicly held corporation.
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True
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People whose parents own a business are more likely to start a business than people whose parents are employees.
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True
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A business plan clearly describes the steps that will be taken to open and operate a business.
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True
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Most benefits received by employees are not taxable.
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True
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Disposable income refers to the amount of money a worker has to spend or save.
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True
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Pay without work includes vacations, holidays, and sick pay.
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True
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Employer-provided health insurance is considered a perk for employees.
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True
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Group life insurance is usually more expensive than an individual policy.
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False
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Which of the following is a retirement plan in which employees set aside pretax earnings? a) profit-sharing plan b) 401(k) c) Flex 125 d) HSA
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B
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Which of the following is a form of unearned income? a) wages b) salaries c) interest earnings d) tips
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C
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Which of the following is an example of variable income? a) interest earnings b) dividends c) commissions d) rent
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D
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Which of the following is an in-cash transfer payment? a) unemployment compensation b) food stamps c) rent subsidies d) vouchers
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A
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Which of following is considered an "entitlement" program? a) unemployment compensation b) social security c) workers' compensation d) veterans' benefits
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B
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Which of the following is considered a "use" tax? a) gasoline tax b) sales tax c) income tax d) property tax
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A
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Income taxes are an example of which kind of tax? a) regressive b) proportional c) progressive d) ad valorem
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C
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An inheritance tax is an example of which kind of tax? a) income tax b) sales tax c) wealth tax d) luxury tax
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C
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Which of the following forms is used to verify eligibility to work in the United States? a) Form W-2 b) Form I-9 c) Form W-4 d) Form 1099
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B
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Which of the following is not a public good? a) roads b) public education c) national parks d) church buildings
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D
