Unit 3 Test Review Consumer Math

Front

What are payroll deductions?

Back

Payroll deductions are amounts withheld from an employee's gross pay, which can be mandatory (like taxes) or voluntary (like retirement savings).

Front

What is the difference between gross pay and net pay?

Back

Gross pay is the total earnings before any deductions, while net pay is the amount received after all deductions are taken out.

Front

What is FICA?

Back

FICA stands for the Federal Insurance Contributions Act, which mandates payroll taxes for Social Security and Medicare.

Front

What is a budget surplus?

Back

A budget surplus occurs when income exceeds expenses.

Front

What is a budget deficit?

Back

A budget deficit occurs when expenses exceed income.

Front

What are mandatory deductions?

Back

Mandatory deductions are required by law, such as federal income tax and FICA.

Front

What are voluntary deductions?

Back

Voluntary deductions are not required by law and can include contributions to retirement plans or health insurance.

Front

How do you calculate discretionary income?

Back

Discretionary income is calculated by subtracting fixed expenses from net pay.

Front

What is the formula for calculating net pay?

Back

Net pay = Gross pay - Total deductions.

Front

What is the significance of understanding payroll deductions?

Back

Understanding payroll deductions helps individuals manage their finances and plan for taxes and savings.