If All Variable Taxes in the United States Were Removed

question 88

Multiple Choice

If all variable taxes in the United States were removed and only fixed taxes remained, what would be the effect on the expenditures schedule?

• A)The expenditure schedule will shift upward and become steeper.
• B)The expenditure schedule will shift upward and become less steep.
• C)The expenditure schedule will shift downward and become less steep.
• D)The expenditure schedule will shift downward and become steeper.

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Definitions:

Closing Entry Process

The procedure used at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, clearing the temporary accounts for the next period.

Permanent Accounts

Permanent Accounts are balance sheet accounts whose balances are carried forward from one accounting period to the next, including assets, liabilities, and equity accounts.

Owner's Capital Account

An equity account on the balance sheet representing the owner's total investment in the business minus any withdrawals.

Temporary Accounts

Accounts that are closed at the end of each accounting period; examples include revenue, expense, and dividend accounts.