Question 1

If you regularly receive more than $30 in tips per month, then federal rules allow for a minimum wage of ________ per hour.

Accepted Answer

Federal rules allow for a minimum wage of $2.13 per hour for employees who regularly receive more than $30 in tips per month, with the expectation that tips plus the hourly wage equal at least the federal minimum wage of $7.25 per hour.

Question 2

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

Accepted Answer

Overtime is defined as the time worked beyond the standard 40-hour workweek, and employees are often compensated at a higher rate for these additional hours.

Question 3

The small business survival rate ________ over time.

Accepted Answer

The small business survival rate typically declines over time, as many new businesses face challenges that can lead to closure within the first few years of operation.

Question 4

What percent of self-employed individuals have one or more employees working for them?

Accepted Answer

25% of self-employed individuals have one or more employees working for them.

Question 5

The most common wage system is based on which of the following?

Accepted Answer

Hourly wage systems are the most common, where employees are paid a set amount for each hour worked.

Question 6

Those on salary typically earn ________ than hourly workers, at least before overtime pay is included.

Accepted Answer

Salary workers typically earn more than hourly workers before considering overtime pay, due to the nature of salaried positions often being higher-level or requiring more specialized skills.

Question 7

How are those who graduate from college and work in a professional field typically paid?

Accepted Answer

Those who graduate from college and work in a professional field are typically paid a salary, which is a fixed regular payment, often expressed on an annual basis but paid monthly or biweekly.

Question 8

Which of the following refers to being totally responsible for paying all liabilities a business incurs?

Accepted Answer

Unlimited liability means that the business owners are personally responsible for all of the business's debts. This is typically the case for sole proprietorships and general partnerships, where the owners' personal assets can be used to satisfy business debts and liabilities.

Question 9

Which of the following is a supplemental payment usually based on performance or meeting certain production or sales requirements?

Accepted Answer

A bonus is a supplemental payment given to employees based on performance or meeting specific targets.

Question 10

Which of the following is the most basic type of partnership?

Accepted Answer

A general partnership is the most basic type of partnership. It involves two or more people going into business together without forming a corporation or a limited liability company (LLC). In a general partnership, all partners share in the profits, managerial responsibilities, and liability for debts equally, unless a different arrangement is documented in a partnership agreement.

Question 11

Those on salary typically have ________ employee benefits than those working for a wage.

Accepted Answer

Typically, salaried positions offer better employee benefits compared to hourly wage positions, including health insurance, retirement benefits, and paid time off.

Question 12

Which of the following is a characteristic of a self-employed individual?

Accepted Answer

All of the listed options are characteristics commonly associated with self-employed individuals. They often want to be their own boss, possess a strong sense of individual responsibility, and place a high emphasis on individual effort.

Question 13

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

Accepted Answer

The default legal structure for a self-employed individual is a sole proprietorship. This is because it is the simplest form of business structure, automatically applied when an individual starts a business without registering as any other form of business entity.

Question 14

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

Self-employed individuals are responsible for paying 100% of their Social Security and Medicare taxes, known as the self-employment tax. This contrasts with salaried employees, where the employer pays half of these taxes.

Question 15

How much will Mia earn per week given the following information: works 45 hours per week at $12 base rate per hour and overtime for any work over 40 hours per week?

Accepted Answer

Mia earns $12 per hour for the first 40 hours, totaling $480. For the 5 hours of overtime, she earns 1.5 times her base rate, which is $18 per hour, totaling $90. Adding both gives $570.

Question 16

Which of the following refers to earning income from a business that you operate?

Accepted Answer

Self-employed individuals earn income directly from the businesses they operate, unlike being employed where one earns a wage or salary from working for someone else.

Question 17

How much is the minimum wage in the United States?

Accepted Answer

The federal minimum wage in the United States is $7.25 per hour, as established by the Fair Labor Standards Act.

Question 18

What percent of all workers in the United States are self-employed?

Accepted Answer

As of my last update in 2023, approximately 10% of all workers in the United States are self-employed. This figure can fluctuate due to economic conditions, policy changes, and societal trends, but it has remained around 10% for some time.

Question 19

Jorge earns $20 per hour. He works 40 hours per week and takes 2 weeks of paid vacation each year. How much does Jorge earn per year, assuming that he does not receive overtime pay?

Accepted Answer

Jorge works 40 hours per week for 50 weeks (52 weeks in a year minus 2 weeks of vacation). Therefore, he works 40 hours/week * 50 weeks = 2000 hours per year. At $20 per hour, he earns 2000 hours * $20/hour = $40,000 per year. However, since he takes 2 weeks of paid vacation, he still earns for those 2 weeks, adding $1,600 (40 hours/week * 2 weeks * $20/hour) to his annual earnings, totaling $41,600.

Question 20

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 is characterized by having at least one general partner who manages the business and assumes personal liability for the partnership's debts, and one or more limited partners who provide capital but do not participate in management and whose liability is limited to the amount of their investment.

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