What does merit (puṇya/puñña) actually mean? There is a lot of talk in Buddhism about merit. I think the word merit sounds a bit like a good grade in school or some star the teacher puts in the book. 


Is merit something that follows my thoughts and actions as a
consequence?
Or is merit more like an acquired disposition to act and think in certain ways?  
Or perhaps it's both  an acquired disposition and a    consequence?
Are we born with a certain "amount" of merit due to karma?
How does a person know that s/he is accumulating merit?
There is here a 119 pages transcript of a teaching given by Khenrinpoche Geshe Chonyi, in which he answers that exact same question. Search for 'what is merit' and you will find the answer, page 26. Although Khenrinpoche's answer is not extremely precise (it that it might not stand debate) there are greatly illuminating points:


In one way, merit and virtue are the same.  In general,  virtue is 'virtuous karma', for it is a cause of the fruitional effect of happiness [in the aspect of pleasant feelings, and so forth].


Additionally, a collection of merits is:


The virtuous imprint that is left in the  mind
A non-associated composition factor (like karmic imprints, so it stands to say they are the same in general)
A cause of the Form Body [whereas the collection of wisdom results in the Truth Body]


He also adds: 


  I  would  think that, the  meaning  of the word accumulate  in the
  phrase  accumulate the collection of merit would  mean that, doing 
  something  repeatedly such that, a real impression, mark, imprint is
  left on the  mind .  This is  the meaning  of  to accumulate .


Being virtuous karmic imprints, it is produced by every virtuous intention (like for instance the virtuous intention to give, which is generosity) as well as any virtuous bodily or verbal action. Being virtuous karmic imprints, it must also have the same 4 types of result, one of them being the resultant tendency concordant to the cause. It means you will have a seemingly natural tendency, and liking for, say, practicing generosity and so forth.