Financial Literacy PRE Quiz

What is a 401(k)?

• A type of savings account for education

• An employer-sponsored retirement plan, sometimes with matching funds

• A government bond investment

• A health insurance plan

How is adjusted gross income calculated?

• By adding all expenses to total income

• By taking your total income and subtracting the adjustments

• By multiplying total income by tax rate

• By dividing total income by number of dependents

What does cash flow refer to?

• The amount of cash in a savings account

• Managing the inflow and outflow of cash

• The total income after taxes

• The interest earned on investments

What is a deficit?

• A positive cash flow

• A balanced budget

• A negative cash flow or spending more money than is coming in

• An increase in savings

What does federal income tax refer to?

• A tax on property ownership

• The amount of federal tax on earnings imposed by the IRS based on tax tables

• A tax on imported goods

• A tax on sales transactions

What is the purpose of the Federal Insurance Contributions Act (FICA)?

• To fund public service programs Social Security and Medicare

• To provide unemployment benefits

• To support educational grants

• To finance infrastructure projects

What is Form 1040 used for?

• To report annual wages and taxes withheld

• To show income earned and taxes paid over the year

• To verify employment eligibility

• To determine income tax deductions

Which form catalogs income earned outside of a job?

• Form W-2

• Form 1040

• Form 1099

• Form I-9

What is the purpose of Form I-9?

• To report annual wages and taxes withheld

• To verify employment eligibility

• To determine income tax deductions

• To show income earned and taxes paid

What information does Form W-2 report?

• Employee’s annual wages and taxes withheld

• Income earned outside of a job

• Employment eligibility

• Income tax deductions