Net Income Is Reported on the Income Statement at $75,000

question 109

Multiple Choice

Net income is reported on the income statement at $75,000. Adjusting entries for accrued revenues of $6,000 and unearned revenue earned during the current period of $2,500 were accidentally omitted. The correct net income is:

• A)$83,500.
• B)$81,000.
• C)$77,500.
• D)$78,500.

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Definitions:

Ability-To-Pay

A tax principle that holds that taxes should be levied on individuals based on their capacity to pay, typically reflected in their income or wealth levels.

Ability-To-Pay Principle

The principle of tax fairness by which those with greater ability to pay a tax should pay more tax.

Ability-To-Pay

A concept in taxation that taxes should be levied according to an individual or entity’s ability to shoulder the tax burden.

Lump-Sum Tax

A tax that is the same for everyone, regardless of any actions people take.