Personal Finance Chapter 2-Income, Benefits, and Taxes

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

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