Alabama Financial Literacy Test

The total money one gets to “take home” from a paycheck after taxes and deductions are taken out is known as what?

• Gross pay

• Federal income tax

• State income tax

• Net pay

Which of the following is the form employers use to determine how much tax to deduct from a paycheck?

• W-2

• W-4

• I-9

• W-9

Which of the following is the form an employer provides to an employee to inform them of how much money was deducted from paychecks in a given year?

• W-4

• I-9

• W-2

• W-9

Which of the following statements best describes gross pay?

• Amount of money one receives from insurance after an illness or accident

• Amount of money one receives from their job before taxes or other deductions are taken out

• Amount of money one receives from their job after taxes or other deductions are taken out

• Amount of money one earns from their job by overtime, bonuses, and reimbursements

Which of the following will be paid for as part of the escrow funds included in a mortgage loan?

• Car insurance

• Principal on home loan

• Property tax

• Home warranty

When seeking to open a bank account, which of the following is needed?

• Blank checks

• Government-issued identification

• Recommendation letter

• School transcript

When one is seeking to purchase a product at a store, what additional cost must be paid in addition to the listed price of the product?

• Insurance

• Interest

• Purchasing fee

• Sales tax

Which of the following best describes the concept of APR?

• Summary of all credit card transactions in one month

• The maximum amount one can charge on their credit card

• The fee charged if a credit card payment is late

• The credit card interest rate, calculated on a yearly basis

A certificate of deposit (CD) differs from a traditional savings account in what way?

• CDs are a riskier investment

• CDs include the purchase of stocks

• CDs have a low interest rate

• CDs must remain untouched for a fixed period of time

All of the following are advantages of bundling insurance EXCEPT what?

• Convenience

• Increases insurance options

• Less complicated

• Potential saving of money