Which of the Following Statements About Tax Avoidance and Tax

question 12

Multiple Choice

Which of the following statements about tax avoidance and tax evasion is false?

• A) Tax avoidance is legal, while tax evasion is illegal.
• B) The difference between avoidance and evasion is clearly defined in the tax law.
• C) Tax evasion is a federal felony offence.
• D) Taxpayers should not regard tax avoidance as unethical.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Net Income

The total profit of a company after all expenses, including taxes and operational costs, are deducted from revenue.

Variable Expenses

Costs that vary in proportion to the level of activity or volume of goods produced.

Management Accounting

The field of accounting aimed at providing managers within the company with the financial information necessary to make informed business decisions.