Bezone Corp

question 44

Multiple Choice

Bezone Corp.is being alleged of tax fraud for the financial year 2015-2016.The ending net worth for the period was $2.285m and beginning net worth was $1.595m.Expenditures (consumption) during the period amounted to $0.725m.The reported income in Bezone's tax return amounted to $0.69.Other legitimate sources of funds in the tax return reported an income of $0.31.Which of the following statements is true of Bezone?

• A) Bezone has committed tax fraud as its reported other income is less than the expenditures during the period.
• B) Bezone has not committed tax fraud as its reported income and expenditures during the period are the same.
• C) Bezone has committed tax fraud even though its reported income and change in net worth during the period are the same.
• D) Bezone has committed tax fraud as its reported income is less than the expenditures during the period.

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Income Distribution

The way in which total income is shared among the members of an economy.

Insolvent

A financial state where an individual or organization cannot meet its debt obligations as they come due.

Liabilities

Financial obligations or debts that a company owes to outside parties, which are recorded on the right-hand side of the balance sheet.