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Quizzes > Quizzes for Business > Finance

Take the Employee Financial Knowledge Quiz

Sharpen Your Workplace Finance Skills Today

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art illustrating a quiz on Employee Financial Knowledge

Ready to gauge your understanding of employee financial concepts? This employee financial quiz features 15 multiple-choice questions to help staff and managers improve budgeting, benefits, and compensation knowledge. Joanna Weib invites individuals seeking a fun yet educational test to explore workplace finance skills with the Financial Literacy Quiz and the Employee Knowledge Quiz . The interactive format is fully editable in our quizzes editor, allowing customisation to fit any training goal. Take the challenge now to discover strengths and uncover new insights.

What is the difference between gross pay and net pay?
Gross pay is what you take home, net pay includes taxes.
Net pay is before deductions, gross pay is after.
Net pay includes bonuses, gross pay does not.
Gross pay is the amount before deductions, net pay is the amount after deductions.
Gross pay refers to total earnings before any taxes or deductions, while net pay is the remaining amount after all deductions. Net pay is the actual amount received in your paycheck.
Contributions to a traditional 401(k) retirement plan are typically:
Made with pre-tax dollars, reducing taxable income.
Only tax-deductible if you itemize deductions.
Taxed at the capital gains rate.
Made with after-tax dollars, not affecting current taxes.
Traditional 401(k) contributions are made before federal income taxes are calculated, lowering your taxable income for the year. This pre-tax treatment reduces current tax liability.
Which benefit requires you to pay a fixed amount each time you visit a healthcare provider?
Out-of-pocket maximum
Deductible
Copayment (copay)
Premium
A copayment is a set fee you pay at each doctor's visit or prescription. It remains the same regardless of the total cost of the service.
Which account allows pre-tax contributions for qualified medical expenses and rolls over unused funds year to year?
Health Savings Account (HSA)
Flexible Spending Account (FSA)
Dependent Care FSA
Health Reimbursement Arrangement (HRA)
Contributions to an HSA are made pre-tax, and any unused balance rolls over indefinitely. FSAs typically have a use-it-or-lose-it policy, while HSAs build over time.
According to the 50/30/20 budgeting rule, what percentage of your net income should go toward savings?
20%
30%
10%
50%
The 50/30/20 rule allocates 50% of income to needs, 30% to wants, and 20% to savings or debt repayment. Savings receives the 20% portion.
An employee earns $5,000 per month. They contribute 5% pre-tax to retirement. If their effective tax rate is 20%, what is their approximate monthly net pay?
$4,200
$3,750
$4,000
$3,800
First, 5% of $5,000 is $250, leaving $4,750 taxable income. Applying a 20% tax rate results in $3,800 net pay.
If you expect $2,000 in annual medical expenses, which health plan is more cost-effective? Plan A: $200 monthly premium and $2,000 deductible; Plan B: $400 monthly premium and $500 deductible.
Plan B, because you pay less deductible overall.
Plan A, because total annual cost is $4,400 versus $5,300 for Plan B.
Plan A, because it has a higher deductible.
Plan B, because premiums are higher.
Plan A costs $200Ã - 12 + $2,000 = $4,400, while Plan B costs $400Ã - 12 + $500 = $5,300. Therefore, Plan A is more cost-effective if expenses reach $2,000.
What is a key difference between a Health FSA and an HSA?
HSAs allow funds to roll over and grow tax-free, while FSAs generally have a use-it-or-lose-it rule.
HSA contributions are taxed immediately, FSA contributions are tax-deferred.
FSAs require high deductibles, HSAs do not.
FSAs roll over unused funds indefinitely, but HSAs expire annually.
HSAs permit unused balances to roll over and earn interest over time. FSAs typically require you to spend the balance by year-end or forfeit unused funds.
An employer offers a 50% match on employee 401(k) contributions up to 6% of salary. If you earn $50,000 and contribute 4%, how much does the employer contribute?
$1,500
$2,000
$500
$1,000
You contribute 4% of $50,000, which is $2,000. A 50% match of $2,000 is $1,000.
What is the marginal tax rate?
The flat rate applied to capital gains.
The rate applied to the last dollar of income earned, influencing additional earnings.
The total tax paid divided by gross income.
The average rate paid on all taxable income.
The marginal tax rate is the percentage of tax applied to your next dollar of income and affects decisions about earning more.
Which budgeting method assigns every dollar of income to a specific expense, saving, or debt payment?
Envelope method
50/30/20 rule
Zero-based budgeting
Incremental budgeting
Zero-based budgeting requires you to allocate every dollar of income to a category until no money remains unassigned.
How do pre-tax benefits like health insurance premiums affect taxable income?
They reduce taxable income, lowering overall tax liability.
They are taxed as ordinary income.
They have no effect on taxable income.
They increase taxable income because they're added back.
Pre-tax benefit contributions are deducted from gross pay before taxes, which lowers the amount of income subject to taxation.
A retirement plan has a 5-year vesting schedule with 20% vesting each year. If you leave after two years, what percentage of employer contributions do you keep?
60%
20%
0%
40%
With 20% vesting per year, after two years you are vested in 40% of the employer's contributions.
If your federal marginal tax bracket is 24% but your effective tax rate is 18%, which statement explains this difference?
Marginal rate accounts for credits, effective does not.
Effective rate is lower due to progressive brackets and deductions, averaging less than the top rate.
Effective rate applies only to investment income.
Effective rate excludes state taxes.
The effective tax rate averages your total tax paid over all taxable income, which is lower than the highest marginal rate due to progressive brackets and deductions.
Your employer pays 75% of your $600 monthly health insurance premium. How much does the employer pay each month?
$150
$450
$300
$600
Seventy-five percent of a $600 premium is $450, which is the employer's share.
An employee has a base salary of $100,000, a $10,000 non-taxable housing allowance, and contributes $10,000 pre-tax to a retirement plan. What is their taxable income?
$90,000
$100,000
$110,000
$80,000
The $10,000 housing allowance is non-taxable, and the $10,000 pre-tax retirement contribution reduces taxable income from $100,000 to $90,000.
Company A offers a salary of $80,000 with benefits valued at $12,000. Company B offers $90,000 salary with benefits valued at $3,000. Which has the higher total compensation?
Company A with $80,000 total compensation.
Company B with $93,000 total compensation.
Company A with $92,000 total compensation.
Both are equal at $90,000.
Company A's total is $80,000 + $12,000 = $92,000, while Company B's total is $90,000 + $3,000 = $93,000, making Company B higher.
Choosing between maxing out a 401(k) at $22,500 vs. an IRA at $6,500, which option yields greater immediate tax savings for a 24% tax bracket?
Maxing the IRA, saving $6,500 in taxes.
Maxing the IRA, saving $1,560 in taxes.
Maxing the 401(k), saving $5,400 in taxes.
Both save the same amount.
A $22,500 contribution at 24% saves $22,500 Ã - 0.24 = $5,400 in immediate federal taxes, more than the IRA contribution.
An employee receives a $10,000 bonus. If they defer 50% into a pre-tax retirement plan, how much of the bonus is taxed immediately?
$10,000
$2,500
$0
$5,000
Deferring 50% means $5,000 goes into retirement pre-tax and the remaining $5,000 is subject to immediate taxation.
Which budgeting technique is best suited for someone with variable monthly income and essential fixed expenses?
Fixed allowance budgeting, giving each category a set dollar amount regardless of income.
Incremental budgeting, increasing last month's expenses.
Planning from past averages without adjustments.
Percentage-based budgeting, allocating income categories by fixed percentages each month.
Percentage-based budgeting adapts to income fluctuations by allocating a consistent percentage to each category, matching variable income to fixed expense proportions.
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Learning Outcomes

  1. Analyze an employee's salary structure to optimize take-home pay
  2. Evaluate different benefits options for cost-effectiveness
  3. Identify key factors of retirement plan contributions
  4. Demonstrate understanding of taxation impacts on earnings
  5. Apply budgeting techniques to improve financial wellness

Cheat Sheet

  1. Analyze Your Salary Structure - Dive into your pay stub like a detective by breaking down gross salary, deductions, and perks to maximize your take-home pay. Spot hidden fees and tax-saving opportunities to keep more cash in your pocket each month. Benefits of setting up a retirement plan
  2. Evaluate Benefit Options - Put on your economist hat and compare healthcare, retirement contributions, and other perks for the best bang for your buck. Understanding cost vs. value ensures you pick benefits that align with your long-term goals - and maybe even save you money. Small Employers' Economics of Offering Retirement Savings Plans
  3. Master Retirement Contributions - Learn the ins and outs of contribution limits, employer matches, and tax breaks to supercharge your retirement fund. Making the most of these rules can grow your nest egg faster than you think. Effective Retirement Savings Programs: Design Features and Financial Education
  4. Understand Taxation on Earnings - Taxes can feel like a mystery maze, but knowing how federal, state, and payroll taxes interact with your income helps you plan smarter. Employ strategies to minimize liabilities and keep more of what you earn. Tax Policy and Retirement Savings
  5. Apply Budgeting Techniques - Treat your finances like a game: set clear goals, allocate funds for essentials, and track every dollar with flair. A solid budget keeps you on track for both day-to-day fun and future milestones. How to Budget for Employee Benefits? A Step-by-Step Guide
  6. Leverage Employer Matching - Don't leave free money on the table! Understanding how your company's match works can instantly boost your retirement savings without extra effort. It's like getting a bonus for simply contributing. Effective Retirement Savings Programs: Design Features and Financial Education
  7. Use Tax Incentives - Tax perks aren't just adulting headaches - they're secret weapons to grow your savings. Discover which accounts offer upfront deductions or tax-free growth to plan for a comfortable future. Tax Policy and Retirement Savings
  8. Assess Retirement Plan Costs & Benefits - For employers, offering retirement plans can be a game-changer in attracting talent. Weigh setup expenses against the retention and morale boost you get in return. Small Employers' Economics of Offering Retirement Savings Plans
  9. Promote Financial Education - Knowledge is power - equip yourself or your team with workshops and tools that demystify investing, budgeting, and retirement planning. Better-informed choices lead to healthier finances and less stress. Effective Retirement Savings Programs: Design Features and Financial Education
  10. Explore Automatic Enrollment - Automatically enrolling employees in retirement plans can skyrocket participation rates and kickstart savings habits. A small nudge today can translate into big gains down the road. Tax Policy and Retirement Savings
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