FHCE 3200 Test 2

Assume that Lisa earns $10 per hour working in a clothing store. She gets one and one-half times her wage if she works over 40 hours. In addition, she can earn a 20% commission on the sale of clothes sold during her time at work. How much can Lisa earn this week if she works 50 hours and sells $3,000 worth of clothing?

$1,150

Burt makes $3,300 per month. He pays $800 in taxes, $700 in rent, $450 on food (which includes eating out), $225 for a car payment, $150 in gas and maintenance, and $700 in recreation every month. What is Burt's surplus or deficit?

$275

Ernest works for a cookie company downtown. He earns $9.00 per hour. In a typical week, he works 20 hours. His employer provides overtime pay equal to two times his normal wage if he works past 40 hours. The company also provides a 10% commission on all cookies sold. How much can Ernest make this week if he works 30 hours and sells $1,000 worth of cookies?

$370

Let's say you make $22 per hour and work 40 hours per week. If you receive two weeks of unpaid vacation time per year, how much will you earn, before taxes, for the year?

$44,000

Ben delivers pizza to earn some extra money to pay for college. If Ben's self-employment tax is $1,500, how much of it can he deduct as a FOR AGI deduction? 1) $750. 2) $0. 3) $1,000. 4) $1,500.

1) $750.

The total self-employment tax rate is: 1) 15.3%. 2) 12.4%. 3) 7.65%. 4) 2.90%.

1) 15.3%.

If you are self-employed, one way to avoid a penalty from the IRS is to: 1) Both owe less than $1,000 when you file your federal income tax return and make correct and on-time estimated payments. 2) Be sure to pay all taxes owed by April 15 of the following year. 3) Make correct and on-time estimated tax payments. 4) Owe less than $1,000 when you file your federal income tax return.

1) Both owe less than $1,000 when you file your federal income tax return and make correct and on-time estimated payments.

Which of the following individuals are required to pay taxes to fund Social Security and Medicare? 1) Employees, employers, and self-employed individuals are required to pay taxes to support Social Security and Medicare. 2) Self-employed individuals. 3) Employers. 4) Employees.

1) Employees, employers, and self-employed individuals are required to pay taxes to support Social Security and Medicare.

Social Security and Medicare taxes are paid by 1) Employers, employees, and self-employed individuals. 2) Employers. 3) Employees. 4) Self-employed individuals.

1) Employers, employees, and self-employed individuals.

Self-employed individuals should do which of the following every three months? 1) Make an estimated tax payment. 2) Both determine their net earnings and make an estimated tax payment are correct. 3) Find new sales opportunities. 4) Determine their net earnings.

1) Make an estimated tax payment.

The United States has one of the most ___________ income tax systems in the world. 1) Progressive. 2) Regressive. 3) Unfair. 4) Proportional.

1) Progressive.

The basic tax formula is: 1) Tax Base X Tax Rate = Tax. 2) Income X Tax Rate = Tax. 3) Purchase Price X Tax Rate = Tax. 4) Wages X Tax Rate = Tax.

1) Tax Base X Tax Rate = Tax.

When you are an employee and get paid by your employer, taxes are automatically withheld from your paycheck. Some individuals are not paid as employees, but rather they are paid as independent contractors and are paid a set price for doing the job, or their income may come in different forms, such as royalties on music or movies, in which case no taxes are withheld. If no taxes are withheld when you get paid, do you still owe taxes? 1) Yes, you still owe taxes. 2) No, if tax was not withheld, you do not owe tax.

1) Yes, you still owe taxes.

Shaquita, age 28, earns $4,750 per month. Every month she saves $525. Additionally, she has $3,000 in outstanding credit cards and makes a $250 monthly payment of these cards. What is Shaquita's approximate savings ratio?

11.05%

Jose earns $7,000 per month. His monthly expenses include: $1,000 in rent, $1,000 in recreational expenses, $500 in food, $400 in auto payments, $300 in gas and maintenance, $700 in student loan repayments, $300 in credit card payments, and $2,000 in miscellaneous expenses. Assuming Jose saves his monthly surplus, what is his approximate savings rate?

11.40%

Higher-income households pay a proportionately larger share of total taxes in a: 1) Flat tax system. 2) Progressive tax system. 3) None of the other answer choices are correct. 4) Regressive tax system.

2) Progressive tax system.

If you purchase a normally priced $30 shirt on sale and pay only $10 for the shirt, what will the sales tax be on the shirt you purchased be if the sales tax rate in your community is 7 percent? 1) $2.10. 2) $1.40. 3) $0.70. 4) $0.00.

3) $0.70.

Estimated self-employment taxes should be paid: 1) Monthly. 2) Annually. 3) Quarterly. 4) Semiannually.

3) Quarterly.

Which of the following best describes the consensus opinion about taxes? 1) There are no good taxes. 2) Paying taxes is a privilege. 3) There is not one consensus opinion about taxes. 4) Paying taxes is the price for a civilized society.

3) There is not one consensus opinion about taxes.

Much of the debate in Congress and in society about taxes focuses on: 1) The total amount of tax revenue to be collected. 2) Reducing the national debt. 3) Who should pay taxes. 4) Whether individuals should pay taxes.

3) Who should pay taxes.

If federal tax revenues are less than federal expenditures in a given year, then there is a _________ for that year. 1) Federal surplus. 2) Federal debt. 3) Federal debt payoff. 4) Federal deficit.

4) Federal deficit.

Which of the following taxes are most often paid through paycheck withholdings: I. FICA old age, survivor, and disability insurance. II. Federal income tax. III. State income tax. 1) I only. 2) I and III only. 3) II and III only. 4) I, II, and III.

4) I, II, and III.

Compared with other developed countries in the world, the US has a ___________ tax system: 1) Flat. 2) Regressive. 3) Equally distributed. 4) Progressive.

4) Progressive.

Sales tax on food is commonly referred to as a: Question options: 1) Pay-as-you-earn tax. 2) Progressive tax. 3) Proportional tax. 4) Regressive tax.

4) Regressive tax.

If Zelda has a surplus of $3,000 per year and chooses to save that surplus for her future, needs, how much wealth will her surplus savings be worth after 25 years if she can earn a 9% rate of return?

Approximately $254,000

Who is more likely to receive overtime pay?

Bonnie who works in an automobile assembly plant.

An administrative worker who does not generally receive overtime pay is likely paid a:

Salary

The best way to accumulate wealth over your life is to:

Spend less than you earn