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Chapter 3 personal finance quiz

Total questions: 69

Worksheet time: 44mins

Name
Class
Date
1.

How does the tax system work?

a)
The tax system works by using the collected money to fund personal expenses of government officials.
b)

Tax payers pay more tax as they earn more income.

c)
The tax system works by randomly selecting individuals and businesses to pay taxes.
d)
The tax system works by redistributing wealth from the rich to the poor.
2.

What does the IRS do?

a)
The IRS regulates the stock market.
b)
The IRS provides healthcare services.
c)
The IRS manages social security benefits.
d)
The IRS collects taxes and enforces tax laws.
3.

What is a W-2?

a)
A W-2 is a tax form used by employers to report an employee's annual wages and the amount of taxes withheld from their paycheck.
b)
A W-2 is a tax form used by individuals to report their annual income and deductions.
c)
A W-2 is a document used by employers to report an employee's annual salary and benefits.
d)
A W-2 is a form used by employees to report their annual wages and the amount of taxes they owe.
4.

What is Progressive tax?

a)

In the U.S. our income tax is under a "progressive" tax structure.

b)
A tax system in which the tax rate is determined randomly for each taxpayer.
c)
A tax system in which the tax rate remains constant regardless of the taxable amount.
d)
A tax system in which the tax rate decreases as the taxable amount increases.
5.

What are 3 types of tax Americans pay?

a)
federal tax, state tax, local tax
b)
excise tax, import tax, export tax
c)
corporate tax, capital gains tax, inheritance tax
d)
income tax, sales tax, property tax
6.

Where does the money from taxes go?

a)
The money from taxes is used by the government to fund public services and programs.
b)
The money from taxes is distributed among the citizens as cash rewards.
c)
The money from taxes is stored in a secret government vault.
d)
The money from taxes is used to fund private businesses.
7.

What are Expenses?

a)
Assets owned by a person or organization
b)
Money earned by a person or organization
c)
Liabilities owed by a person or organization
d)

Out going money for costs.

8.

What is Income?

a)
Money received for buying goods or services.
b)
Money or earnings received for providing goods or services.
c)
Money received as a gift or inheritance.
d)
Money received from winning a lottery.
9.

Know how to figure sales tax: 8% sales tax; 3 books at $15 each. (Figure the total amount due with sales tax.)

a)
$50.40
b)
$52.80
c)
$45.00
d)
$48.60
10.

What is a W-4?

a)
A W-4 is a form that employees complete to indicate their tax withholding preferences to their employer.
b)
A W-4 is a form that employees complete to indicate their vacation preferences to their employer.
c)
A W-4 is a form that employees complete to indicate their retirement plan to their employer.
d)
A W-4 is a form that employees complete to indicate their work schedule to their employer.
11.

What is a 1040?

a)
Tax form
b)
Credit card
c)
Passport
d)
Driver's license
12.

What is a paycheck?

a)
A paycheck is a type of loan given by a bank to an individual for personal expenses.
b)
A paycheck is a form of payment issued by an employee to an employer for the work performed during a specific pay period.
c)
A paycheck is a document that provides information about an employee's tax deductions.
d)

Wages come with a pay "stub" that shows money withheld.

13.

What is tax withheld?

a)
Amount of money taken out of an employee's paycheck for property taxes
b)
Amount of money taken out of an employee's paycheck for social security
c)
Amount of money taken out of an employee's paycheck for sales taxes
d)
Amount of money taken out of an employee's paycheck for income taxes
14.

Why would you owe money at tax time?

a)
Receiving a tax refund
b)
Filing taxes early
c)
Not paying enough taxes throughout the year or having additional income not subject to withholding.
d)
Not having any income
15.

You receive refund money at tax time if...

a)
You have not filed your taxes.
b)
You have underpaid your taxes throughout the year.
c)
You have received a tax credit.
d)
You have overpaid your taxes throughout the year.
16.

What are 4 reasons "withholdings" need to be adjusted?

a)
Changes in occupation, changes in investment, changes in retirement plans, and changes in education level.
b)
Changes in location, changes in hobbies, changes in social status, and changes in personal goals.
c)
Changes in weather, changes in transportation, changes in technology, and changes in fashion trends.
d)
Changes in income, changes in tax laws, changes in marital status, and changes in dependents.
17.

What is a Deduction?

a)
A deduction is a guess or assumption without any evidence or reasoning.
b)
A deduction is a conclusion or inference that is made based on evidence or reasoning.
c)
A deduction is a type of tax that is subtracted from a person's income.
d)
A deduction is a mathematical operation that involves subtracting one number from another.
18.

What are "Dependents"?

a)
People who are financially independent
b)
Individuals who provide financial support to others
c)
Individuals who are not financially responsible for themselves
d)
Individuals who rely on someone else for financial support
19.

What is a tax table?

a)
A tax table is a chart or table that shows the amount of tax due based on income or other factors.
b)
A tax table is a form that taxpayers fill out to report their income and deductions.
c)
A tax table is a tool used by tax accountants to calculate tax refunds.
d)
A tax table is a document that lists all the tax laws in a country.
20.

Give 3 examples of Deductions

a)

Home mortgage interest, Med. expenses, and Charity gifts.

b)

Charity gifts, Withholdings, and Home mortgage interest.

c)

Med. expenses, Withholdings, and Income payroll.

21.

What is the top tax rate a married couple filing jointly (together) have to pay on a taxable income of $152,700?

a)
10%
b)

24%

c)
30%
d)

23%

22.

What is the highest tax rate a single person has to pay on a taxable income of $41,250?

a)
25%
b)

16%

c)

17%

d)
15%
23.

Why would the married couple have a higher tax rate than the single person?

a)

Married couples have combined income

b)
Married couples have more exemptions
c)
Married couples have higher tax brackets
d)
Married couples have more deductions
24.

A business is taxed on its

(a)  

25.

What is Revenue?

a)
The total amount of money borrowed by a business from banks.
b)
The total amount of money generated by a business through its sales of goods or services.
c)
The total amount of money spent by a business on its expenses.
d)
The total amount of money earned by a business from investments.
26.

What are Expenses?

a)
Liabilities owed by a person or organization
b)
Assets owned by a person or organization
c)
Costs incurred by a person or organization
d)
Money earned by a person or organization
27.

What is Profit?

a)
The amount of money invested in a business
b)
The total revenue generated from business activity
c)
Financial gain from business activity exceeding expenses
d)
Loss incurred from business activity
28.

What equation does a business use to determine "profit"?

a)
Revenue / Expenses
b)
Revenue - Expenses
c)

Revenue x Expenses

d)
Revenue + Expenses
29.

What are 2 ways a business can increase profit?

a)
Decreasing sales and increasing expenses
b)

Reducing sales and decrease expenses

c)

Increasing sales and decrease expenses

d)
Increasing sales and increasing expenses
30.

What are 4 ways a business can net a lower profit in order to pay fewer taxes?

a)
Decreasing expenses, avoiding tax deductions, accelerating income, no tax planning
b)

Spend more on ads, Hire more workers, Re-invest by adding inventory, Pay for training/give bonus

c)
Reducing expenses, ignoring tax deductions, delaying income, no tax planning
d)
Cutting expenses, neglecting tax deductions, postponing income, no tax planning
31.

What does insurance help?

a)
Cause financial loss
b)
Increase risk of damage
c)

Helps protect against financial loss or damage

d)
Provide free money
32.

I choose to purchase insurance because...

a)
I want to live dangerously and take my chances
b)
I want to waste money on something unnecessary
c)
I want to increase my chances of having to deal with paperwork and bureaucracy
d)

I can afford the monthly fees, but I cannot afford the higher cost of a catastrophe all at once.

33.

What does Insurance protect?

a)
Ensuring good luck
b)
Preventing car accidents
c)

Myself and everything I value from the cost of an unexpected emergency situation.

34.

You can Insure...

a)

Home, health, life, pets valuables.

b)
your favorite food
c)
your pet's happiness
d)
your ability to time travel
35.

Insurance Policy is...

a)
a type of investment in the stock market
b)
a form of gambling
c)
a government-issued identification card
d)

a contract that lays out your insurance plan with what's covered and how much you'll be paid in the event of a clame

36.

Insurance Premium is...

a)
the cost of repairing a damaged vehicle
b)

Amount you pay for the policy to be in effect

c)
the price of a new insurance policy
d)
the amount of money saved in a bank account
37.

a Beneficiary is...

a)
A person who gives benefits to others
b)
A type of financial investment
c)
A government agency that provides assistance
d)

A person who receives the money for life insurance. Often the spouse or children.

38.

A Term is a...

a)

Time period that the policy covers.

b)

A long period of time

c)

Time that you get money out of

39.

a Deductible is...

a)
the amount of money that a policyholder receives from the insurance company
b)
the maximum amount of money that an insurance company will pay for a claim
c)

a specific amount your policy makes you pay BEFORE the insurance company gives money

d)
the fee paid to the insurance company for coverage
40.

Coverage is...

a)
the extent to which something is covered or included
b)
the process of hiding something
c)
the amount of money paid by an individual for insurance
d)
the act of uncovering something
41.

Risk is...

a)

probability of an insured situation actually occering

b)
the likelihood of achieving goals without any obstacles
c)
the absence of danger or harm
d)
the certainty of success and gain
42.

Claim is...

a)

an official request made to the insurance company to notify them that a covered event has occurred and you want money

b)
A well-researched conclusion
c)
An unverified hypothesis
d)
A proven fact
43.

an ADD-ON clause you tack on to a policy to add more than basic package offers

(a)  

44.

Life and health insurance policies protect people from...

a)
protecting against car accidents
b)
protecting against financial loss or medical expenses
c)
protecting against home repairs
d)
protecting against job promotions
45.

What types of Insurance are there?

a)

Life insurance, health insurance, auto insurance, home insurance, disaster insurance, misc. insurance and property insurance

b)
Pet insurance, travel insurance, and rental insurance
c)
Dental insurance, vision insurance, and earthquake insurance
d)
Flood insurance, liability insurance, and disability insurance
46.

Casualty Insurance protects you from..

a)

liability claims

b)
injuries resulting from illness
c)
loss of personal belongings
d)
damage caused by natural disasters
47.

buy a policy and pay into it consistently in case of a loss of home, property, or any liability claim related to the home

(a)  

48.

What are three subcategories for homeowners insurance?

a)

Structure, belongings, liability

b)
Auto insurance, travel insurance, renters insurance
c)
Flood insurance, earthquake insurance, pet insurance
d)
Car insurance, health insurance, life insurance
49.

Types of car insurance coverage

a)
Accidental death insurance, travel insurance, disability insurance
b)
Liability, collision, comprehensive, uninsured/underinsured motorist, personal injury protection
c)
Property damage insurance, rental car insurance, pet insurance
d)
Health insurance, life insurance, home insurance
50.

It is legally required of you to have

(a)  

51.

Ways to keep auto insurance costs low...

a)
Never compare rates and stick with the first option
b)
Comparison shop for the best rates, maintain a good driving record, consider a higher deductible, and take advantage of discounts
c)
Drive recklessly to get more discounts
d)
Ignore insurance coverage altogether
52.

How does Life Insurance work?

a)
Life insurance covers medical expenses
b)
Life insurance provides financial protection to beneficiaries in the event of the policyholder's death.
c)
Life insurance guarantees a return on investment
d)
Life insurance is only for wealthy individuals
53.

Term life insurance...

a)
is only available to individuals over 65 years old
b)
provides coverage for a specific period of time
c)
provides coverage for the insured's entire lifetime
d)
requires a medical exam for approval
54.

Whole life insurance...

a)
provides coverage for the entire life of the insured and includes a cash value component
b)
is only available to individuals under 50 years old
c)
does not include a cash value component
d)
only provides coverage for a limited time period
55.

Health insurance

a)
Car insurance
b)

you pay regular premiums and in return the insurance company will give money to your beneficiary when/if you die during the term

c)
Life insurance
d)
Home insurance
56.

Health insurance covers?

a)
Car repairs and maintenance
b)

Sickness, injury, and preventative care.

c)
Grocery shopping and household expenses
d)
Entertainment and leisure activities
57.

Medical bills are...

a)
Cost of groceries
b)

The #1 cause of U.S. bankruptcies

c)
Price of movie tickets
d)
Expense for clothing
58.

Insurance Fraud is...

a)
the act of helping an insurance company for financial gain
b)
the act of investing in an insurance company for financial gain
c)
the act of reporting a legitimate claim to an insurance company
d)
the act of deceiving an insurance company for financial gain
59.

Americans take on debt to pay for

a)
vacations
b)
charity
c)
investments
d)

homes, vehicles, and other large expenses

60.

Bad Debt is

a)

Start as fine debt and are mismanaged or they have high/variable interest rates

b)
Valuable asset
c)
Fully paid debt
d)
Profitable investment
61.

Credit is...

a)
a form of payment
b)
a contractual agreement
c)
a legal document
d)
a type of currency
62.

Lenders look at the three "Cs" of credit

a)

Character, capacity, and capital

b)
Capital, credibility, and currency
c)
Credibility, cash flow, and credit score
d)
Cash, credit, and currency
63.

How can you build credit?

a)
By maxing out credit cards and making minimum payments
b)
By using a credit card responsibly, making on-time payments, and keeping credit card balances low.
c)
By ignoring credit card bills and not making any payments
d)
By applying for multiple credit cards at once and using them all at once
64.

Pros and Cons of renting a home

a)
Renting a home is always better than buying
b)
There are no cons to renting a home
c)
It's not important to evaluate the pros and cons of renting a home
d)
Pros and cons of renting a home should be carefully evaluated based on individual circumstances
65.

Pros and cons of buying a home

a)
Evaluate the quality of the local restaurants
b)
Consider the color of the walls
c)
Think about the weather in the area
d)
Evaluate the financial investment, stability, and potential maintenance costs.
66.

Appreciation is...

a)
ignoring and devaluing the good qualities or actions of someone or something
b)
recognizing and valuing the good qualities or actions of someone or something
c)
criticizing and degrading the good qualities or actions of someone or something
d)
overlooking and dismissing the good qualities or actions of someone or something
67.

Depreciation is...

a)
the cost of purchasing a new asset
b)
the total value of an asset at a given point in time
c)
the increase in the value of an asset over time
d)
the decrease in the value of an asset over time
68.

Subsidized student loans

a)
Loans with flexible repayment options
b)
Loans with no interest
c)
Loans with government-paid interest
d)
Loans with high interest rates
69.

Unsubsidized student loans

a)
Loans that require immediate repayment
b)
Loans that are forgiven after graduation
c)
Loans with no interest rate
d)
Loans that accrue interest while the student is in school

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