In Its First Year of Operations Acme Corp

question 30

Multiple Choice

In its first year of operations Acme Corp. had income before tax of $400,000. Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%. What is the balance in income tax payable at the end of the year?

• A) $160,000 credit.
• B) $150,000 credit.
• C) $10,000 credit.
• D) $10,000 debit.

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Definitions:

Aggregate Demand

Aggregate demand is the total demand for all goods and services within an economy at a given overall price level and within a given time period.

Aggregate Supply

The sum total of products and services that corporate entities in an economic environment plan to market over a fixed period.

Expected Price Level

The anticipated average price of goods and services in the economy over a future period.

Short-Run Aggregate Supply Curve

It depicts the relationship between the price level and the quantity of goods and services that firms are willing and able to produce in the short run, while some production costs are fixed.