Why are companies required to perform payroll withholding?

Question

A.
To make sure employees are being paid fairly
B.
To make sure employees can pay their taxes
C.
To help employees save for retirement
D.
To help the company pay its share of taxes

Answer 1

B. To make sure employees can pay their taxes

Companies are required to perform payroll withholding primarily to ensure that employees are setting aside the appropriate amount of money for their taxes, which includes federal, state, and local taxes. This helps to ensure compliance with tax laws and prevents employees from facing a large tax bill when they file their returns.

Answer 2

When you receive a loan, the money the lender gives you is called the ____________.
A.
Interest
B.
Line of credit
C.
Principal
D.
Collateral

Answer 3

C. Principal

When you receive a loan, the money that the lender provides to you is called the principal. Interest is the cost of borrowing that principal, while a line of credit is a flexible loan option, and collateral is an asset used to secure the loan.

Answer 4

Which of the following is an example of revolving credit?
A.
A loan that uses collateral
B.
A loan that doesn't use collateral
C.
A credit card
D.
A single-payment loan

Answer 5

C. A credit card

A credit card is an example of revolving credit because it allows the borrower to spend up to a certain limit, repay it, and borrow again, making it a flexible form of credit. The borrower can carry a balance from month to month, making minimum payments or paying in full.

Answer 6

______________ is the amount an employee earns before payroll withholding is performed.
A.
Net pay
B.
Gross pay
C.
Taxable interest
D.
An estate

Answer 7

B. Gross pay

Gross pay is the amount an employee earns before any payroll withholding (such as taxes and other deductions) is performed. Net pay, on the other hand, is the amount the employee takes home after all deductions have been made.

Answer 8

Which of the following things can help you get a lower interest rate when you receive a loan?
A.
A low credit score
B.
A history of defaulting
C.
Using all of your available credit
D.
Collateral

Answer 9

D. Collateral

Using collateral can help you secure a lower interest rate when receiving a loan. Lenders often view collateral (an asset that can be seized if the loan is not repaid) as a lower risk, which can lead to more favorable lending terms, including lower interest rates. Conversely, having a low credit score, a history of defaulting, or using all available credit would generally lead to higher interest rates, as they indicate higher risk to lenders.

Answer 10

Which of the following is a strategy for using credit wisely while improving your credit score?
A.
Pay off your credit card in full each month.
B.
Use as much of your total available credit as you can.
C.
Pay exactly the minimum payment on your credit cards each month.
D.
Avoid using your credit card.

Answer 11

A. Pay off your credit card in full each month.

Paying off your credit card in full each month is a key strategy for using credit wisely while also improving your credit score. This practice helps you avoid interest charges, maintains a low credit utilization ratio, and demonstrates responsible credit management to lenders. The other options either contribute to debt accumulation or do not effectively support a good credit score.