A Theory of Taxation That States That Citizens Should Bear

question 52

Multiple Choice

A theory of taxation that states that citizens should bear tax burdens in line with their ability to pay taxes is the

• A) ability-to-pay principle.
• B) equity principle.
• C) benefits-received principle.
• D) equal payment principle.

---

Definitions:

Merchandise on Credit

Goods that have been sold but not yet paid for, implying that the buyer owes the seller money.

Gross Amount

The gross amount is the total figure before any deductions are made, such as expenses, taxes, or discounts.

Journal Entries

Recorded transactions in the accounting journals that represent the financial activities of a company, detailing debits and credits for account adjustments.

Average Cost

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items.