Which of the Following Statements Is True

question 51

Multiple Choice

Which of the following statements is true?

• A) The profit of an entity is always represented by an increase in cash.
• B) A withdrawal of cash for private use by the owner is shown in the income statement as an expense.
• C) Equity can be thought of as the owner's claim to the assets of the entity after deducting all liabilities.
• D) Profit can be calculated as net assets at the end of the year less net assets at the beginning of the year less drawings.

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Definitions:

Personal Income

The total amount of income received by an individual or household from all sources before taxes and deductions.

Marginal Tax Rate

The rate at which the last dollar of a person's income is taxed.

Personal Income

The total amount of income earned by individuals, including wages, salaries, investments, and other sources before taxes.

Excise Tax

A tax applied to specific goods, services, or activities, often with the intention of reducing consumptions, such as taxes on tobacco or alcohol.