Many People Choose to Submit Payroll Forms to Their Employers

question 11

Multiple Choice

Many people choose to submit payroll forms to their employers that result in more income taxes being withheld than these employees actually will owe in income taxes.According to behavioral scientists,the most likely explanation for this behavior is that:

• A) The IRS, in paying tax refunds, pays generous interest rates on excess amounts withheld from taxpayers' earnings during the year
• B) Over-withheld taxes are viewed favorably by credit reporting agencies, which enhances taxpayers' self-esteem
• C) The principle of loss aversion
• D) The principle of moral reminders

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents.

Loans Receivable

Financial assets representing money lent by an entity to a third party, for which the lender expects repayment.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.