Generally Speaking, Which of the Following Would Not Directly Affect

question 5

Multiple Choice

Generally speaking, which of the following would not directly affect a company's income tax payments?

• A) Advertising expense.
• B) Gain on sale of machinery.
• C) Sales revenue.
• D) Land owned by the firm.
• E) Loss on sale of building.

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Definitions:

Excess Burden

The excess burden of a tax is the cost to society in economic welfare that exceeds the revenue raised by the government, often due to distorted market behaviors.

Perfectly Inelastic

A market condition where demand or supply does not change in response to price changes, represented by a vertical line on a graph.

Tax

A financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.

Tax Revenue

Money collected by governments through the imposition of taxes.