Under Which Taxation Principle Does the Percentage of Income Paid

question 184

Multiple Choice

Under which taxation principle does the percentage of income paid in taxes increases as income increases?

• A)The ability-to-pay principle
• B)The progressive tax principle
• C)The proportional tax principle
• D)The regressive tax principle
• E)The benefits-received principle.

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Definitions:

Absorption Costing

A method of accounting that incorporates both variable and fixed manufacturing expenses into the pricing of a product.

Variable Costing

A costing method in which only variable production costs are assigned to inventory and cost of goods sold, excluding fixed manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, culminating in net income or loss.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted.