When Items of Income Are Omitted Because the Cost of the Time

question 81

Multiple Choice

When items of income are omitted because the cost of the time and effort of the taxpayer to accumulate the information, it is an application of the

• A)Ability to Pay Concept.
• B)Administrative Convenience Concept.
• C)Arm's-Length Transaction Concept.
• D)Capital Recovery Concept.
• E)Pay-as-You-Go Concept.

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Definitions:

Deposits

Funds placed into an account at a banking institution for safekeeping and possible interest accrual.

Reserves

Reserves refer to funds or other assets that banks or financial institutions hold to meet unexpected demands or regulatory requirements.

Required Reserve Ratio

A regulation set by central banks determining the minimum amount of reserves that banks must hold against deposits, affecting money supply.

Excess Reserves

The reserves that banks hold over and above the legal requirement; these are not loaned out and do not earn interest for the bank.