MCVSD Business & Finance Fundamentals 2

Question 1

What is 'gross income' in personal finance?

Accepted Answer

Income before any taxes or deductions

Answer

Gross income is the total income earned before any taxes, deductions, or withholdings are applied.

Question 2

Which financial concept describes spreading investments across different assets to reduce risk?

Accepted Answer

Diversification

Answer

Diversification reduces financial risk by spreading investments across multiple asset types or sectors.

Question 3

What is the purpose of a W-2 form in the United States?

Accepted Answer

To report annual wages and taxes withheld from employees

Answer

A W-2 form reports an employee's annual wages and the amount of taxes withheld by their employer.

Question 4

In business, what does ROI stand for?

Accepted Answer

Return on Investment

Answer

ROI stands for Return on Investment, measuring the profitability of an investment relative to its cost.

Question 5

Which type of business structure offers personal liability protection to its owners while allowing pass-through taxation?

Accepted Answer

Limited Liability Company (LLC)

Answer

An LLC provides personal liability protection while allowing profits and losses to pass through to the owners' personal tax returns.

MCVSD - Monmouth County Vocational School District Practice Test