Question 1

Which of the following is defined as working more than 40 hours in one week?

Accepted Answer

A)   Income.
B)   Bonus.
C)   Commission.
D)   Overtime.

Question 2

Which of the following refers to a partnership where there is a general partner who manages the business and one or more limited partners who simply invest money into the partnership and are not involved in the day-to-day management?

Accepted Answer

A)   Limited partnership.
B)   Limited liability partnership.
C)   General partnership.
D)   Sole proprietorship.

Question 3

If an individual is self-employed and considered an independent contractor, what percent of Social Security and Medicare taxes is he or she required to pay relative to salaried individuals?

Accepted Answer

A)   10%.
B)   20%.
C)   50%.
D)   100%.

Question 4

Which of the following is a payment for a set period of time, typically a year?

Accepted Answer

A)   Income.
B)   Earnings.
C)   Salary.
D)   Wage.

Question 5

What is Catherine's total income if she has the following sources of income: $3,500 from her job, $600 in interest from investments, and $1,000 bonus?

Accepted Answer

A)   $3,500.
B)   $4,100.
C)   $4,500.
D)   $5,100.

Question 6

Which of the following is an example of earned income?

Accepted Answer

A)   Tips.
B)   Loans to others.
C)   Dividends from ownership of a business.
D)   Deposits in a bank.

Question 7

To increase your investment income, you should do which of the following?

Accepted Answer

A)   Buy assets that have the potential to go up in value.
B)   Hold assets over the long term.
C)   Let the power of compounding generate unearned income.
D)   All of these answer choices are correct.

Question 8

Which of the following can be measured using probabilities and can often be quite high?

Accepted Answer

A)   Subjective risk.
B)   Objective risk.
C)   Risk.
D)   Dividends.

Question 9

Which of the following is a capital asset?

Accepted Answer

A)   Your home.
B)   Your car.
C)   Your investments.
D)   All of these answer choices are correct.

Question 10

Which of the following refers to compensation received for services performed for an employer?

Accepted Answer

A)   Income.
B)   Earnings.
C)   Allowance.
D)   Dividends.

Question 11

Which of the following is what employers pay for an employee to work, typically on an hourly basis?

Accepted Answer

A)   Income.
B)   Earnings.
C)   Salary.
D)   Wage.

Question 12

What is the default legal structure of a self-employed individual?

Accepted Answer

A)   Corporation.
B)   Partnership.
C)   Sole proprietorship.
D)   Employer.

Question 13

Which of the following types of partnership is often used by doctors, attorneys, and accountants?

Accepted Answer

A)   Limited partnership.
B)   Limited liability partnership.
C)   General partnership.
D)   Sole proprietorship.

Question 14

Which of the following are sources of earned income?

Accepted Answer

A)   Lottery winnings.
B)   Proceeds from a savings bond.
C)   Government benefits.
D)   Wages.

Question 15

Which of the following refers to personally developed probabilities of potential losses based on expectations, fear, worry, and other factors?

Accepted Answer

A)   Subjective risk.
B)   Objective risk.
C)   Risk.
D)   Dividends.

Question 16

Samuel is starting a delivery business with one delivery truck in which he is the delivery driver. Samuel is using his own money to purchase the truck and does not want to do a lot of paperwork to start his business. Which business structure would best fit his situation?

Accepted Answer

A)   Corporation.
B)   Limited liability company.
C)   Sole proprietorship.
D)   Partnership.

Question 17

Which of the following refers to the money you receive from the investments that you have made?

Accepted Answer

A)   Earned income.
B)   Unearned income.
C)   Interest.
D)   Government benefits.

Question 18

Dominic is attending his second year of college and has paid $3,500 in tuition and fees. How much can he claim for his American Opportunity Tax Credit?

Accepted Answer

A)   $0.
B)   $1,000.
C)   $2,500.
D)   $3,500.

Question 19

Which of the following is the recommended targeted savings rate if you are under age 30?

Accepted Answer

A)   10%.
B)   12%.
C)   15%.
D)   20%.

Question 20

Which of the following refers to having your employer take money automatically from your paycheck and contribute it directly to a retirement savings plan or a savings account?

Accepted Answer

A)   Payroll deduction.
B)   Total debt-to-income ratio.
C)   Targeted savings ratio.
D)   Savings ratio.

Exam 3: Earnings and Income: the Building Blocks of Your Financial Journey

Samuel is starting a delivery business with one delivery truck in which he is the delivery driver. Samuel is using his own money to purchase the truck and does not want to do a lot of paperwork to start his business. Which business structure would best fit his situation?

Correct AnswerverifiedShow Answer

Which of the following is a payment for a set period of time, typically a year?

Correct AnswerverifiedShow Answer

Which of the following refers to having your employer take money automatically from your paycheck and contribute it directly to a retirement savings plan or a savings account?

Correct AnswerverifiedShow Answer

Dominic is attending his second year of college and has paid $3,500 in tuition and fees. How much can he claim for his American Opportunity Tax Credit?

Correct AnswerverifiedShow Answer

Which of the following refers to the money you receive from the investments that you have made?

Correct AnswerverifiedShow Answer

What is the default legal structure of a self-employed individual?

Correct AnswerverifiedShow Answer

Which of the following can be measured using probabilities and can often be quite high?

Correct AnswerverifiedShow Answer

Which of the following refers to compensation received for services performed for an employer?

Correct AnswerverifiedShow Answer

Which of the following refers to personally developed probabilities of potential losses based on expectations, fear, worry, and other factors?

Correct AnswerverifiedShow Answer

Which of the following types of partnership is often used by doctors, attorneys, and accountants?

Correct AnswerverifiedShow Answer

Which of the following is an example of earned income?

Correct AnswerverifiedShow Answer

Which of the following refers to a partnership where there is a general partner who manages the business and one or more limited partners who simply invest money into the partnership and are not involved in the day-to-day management?

Correct AnswerverifiedShow Answer

Which of the following is the recommended targeted savings rate if you are under age 30?

Correct AnswerverifiedShow Answer

Which of the following is a capital asset?

Correct AnswerverifiedShow Answer

Which of the following are sources of earned income?

Correct AnswerverifiedShow Answer

If an individual is self-employed and considered an independent contractor, what percent of Social Security and Medicare taxes is he or she required to pay relative to salaried individuals?

Correct AnswerverifiedShow Answer

Which of the following is defined as working more than 40 hours in one week?

Correct AnswerverifiedShow Answer

What is Catherine's total income if she has the following sources of income: $3,500 from her job, $600 in interest from investments, and $1,000 bonus?

Correct AnswerverifiedShow Answer

Which of the following is what employers pay for an employee to work, typically on an hourly basis?

Correct AnswerverifiedShow Answer

To increase your investment income, you should do which of the following?

Correct AnswerverifiedShow Answer

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