Budgeting Test Part 1 (I)

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What is a pay stub?

Back

A pay stub is a document that an employer provides to an employee that outlines the details of their earnings and deductions for a specific pay period.

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What does gross pay mean?

Back

Gross pay is the total amount of money earned by an employee before any deductions are taken out.

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What is net pay?

Back

Net pay is the amount of money an employee takes home after all deductions have been subtracted from gross pay.

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What are fixed expenses?

Back

Fixed expenses are costs that do not change from month to month, such as rent or loan payments.

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What are variable expenses?

Back

Variable expenses are costs that can fluctuate each month, such as groceries or entertainment.

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What is FICA?

Back

FICA stands for the Federal Insurance Contributions Act, which is a U.S. law that mandates a payroll tax to fund Social Security and Medicare.

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What is the purpose of withholding taxes?

Back

Withholding taxes are deducted from an employee's paycheck to cover their estimated tax liability for the year.

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What is a paycheck?

Back

A paycheck is a physical or electronic document that an employer issues to an employee as payment for work performed.

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What is the difference between a paycheck and a pay stub?

Back

A paycheck is the actual payment received, while a pay stub provides a detailed breakdown of earnings and deductions.

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What is the significance of the pay period?

Back

The pay period is the duration of time for which an employee is paid, such as weekly, biweekly, or monthly.