Stephanie and Mitch Are Married and They File a Joint

question 148

Multiple Choice

Stephanie and Mitch are married and they file a joint tax return. Mitch received a slightly higher salary than Stephanie did during the year. They both make very high salaries. Which of the following statements is True?

• A) Stephanie and Mitch likely pay no tax marriage penalty nor receive a tax marriage benefit.
• B) Stephanie and Mitch likely pay a tax marriage penalty.
• C) Stephanie and Mitch likely receive a tax marriage benefit.
• D) Stephanie and Mitch likely will pay a tax marriage penalty and receive a tax marriage benefit.

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Direct Method

The Direct Method in accounting refers to a way of reporting cash flows from operating activities by directly listing major classes of gross cash receipts and payments.

Operating Activities

The primary revenue-generating activities of a business which include production, sales, and delivery of the company’s main goods and services.

Accrual Basis

An accounting method where transactions are recorded when they are earned or incurred, regardless of when cash is exchanged, offering a more accurate financial picture.