Vertical Equity Means That

question 89

Multiple Choice

Vertical equity means that

• A)taxpayers with the same amount of income should pay the same amount of tax.
• B)taxpayers with larger amounts of income should pay more tax than taxpayers with lower amounts of income.
• C)all taxpayers should pay the same tax.
• D)none of the above.

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Definitions:

Internal Rate Of Return Method

A method of calculating the profitability of potential investments where the net present value of all cash flows equals zero.

Capital Budgeting

Capital Budgeting is the process by which organizations evaluate potential major projects or investments to determine their value and allocation of capital.

Allocated Fixed Costs

Fixed costs that are distributed among different departments or products based on prescribed criteria.

Direct Fixed Costs

Costs that relate specifically to a responsibility center and are incurred for the sole benefit of the center.