Which of the Following Describes How the Amount of Taxes

question 112

Multiple Choice

Which of the following describes how the amount of taxes collected by the government is impacted by the state of the economy?

• A)When the economy enters a boom tax, receipts automatically fall.
• B)When the economy goes into a recession tax, receipts automatically rise.
• C)When the economy goes into a depression, tax receipts automatically rise.
• D)When the economy goes into a recession tax, receipts automatically fall.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.

Bad Debt Expense

An expense reported on the income statement, representing the amount of receivables that a company does not expect to collect due to customer default.

Current Assets

Resources owned by a company that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

Sales Discounts

A reduction in the price of goods or services offered to customers, usually as an incentive for early payment or bulk purchases.