If a $500 Tax Is Placed Legally (Statutorily) on the Sellers

question 105

Multiple Choice

If a $500 tax is placed legally (statutorily) on the sellers of new violins and as a result the price of violins to consumers rises by $400, then the actual burden of the tax

• A) falls completely on violin buyers.
• B) falls completely on violin sellers.
• C) is $400 on violin buyers and $100 on sellers.
• D) is $100 on violin buyers and $400 on sellers.

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Definitions:

Cash Collections

The process of gathering all payments or receivables from customers over a specific period.

Accounts Receivable

Money owed to a business by its customers for products or services that have been delivered or used but not yet paid for.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Collection Period

The average number of days it takes a company to collect payments from its credit sales, reflecting the efficiency of its credit and collection policies.