What Is the Effect on the Statement of Financial Position

question 49

Multiple Choice

What is the effect on the statement of financial position when the business has cash sales of $15,000 of goods that were originally purchased for $10,000?

• A)Increase asset bank $12,000; increase equity $12,000.
• B)Increase asset bank $15,000; decrease asset inventory $10,000; increase equity $5,000.
• C)Increase asset bank $4,000; increase equity $4,000.
• D)None of the above.

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Definitions:

Corporate Income Tax

A tax imposed by a government on the income earned by companies.

Horizontal Equity

The principle that individuals with similar income or resources should be treated equally by the tax system.

Incentives

Refers to stimuli, rewards, or payments that motivate individuals or entities to perform certain actions or behaviors.

Proportional Tax

A tax system where the rate remains constant regardless of the amount to which the tax base is applied.