Discounting Is a Procedure Used to

question 68

Multiple Choice

Discounting is a procedure used to

• A) determine the present value of income or costs expected in the future.
• B) adjust future income for the effects of inflation.
• C) adjust the money interest rates for the effects of inflation.
• D) compare the value of income after taxes with its value prior to taxes.

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Definitions:

Simplified Tax Formula

A streamlined method for calculating taxable income, starting with adjusted gross income, subtracting either standard or itemized deductions, and personal exemptions.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or expenditure), revealing the percentage of income paid in taxes.

Tax Liability

The total amount of tax owed to the government by an individual, corporation, or other entity in a given tax period.

Taxable Income

The amount of income that is used to calculate an individual or a corporation's income tax due, after all deductions and exemptions.