In Terms of the Tax Formula Applicable to Individual Taxpayers

question 24

Multiple Choice

In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?

• A)In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
• B)In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
• C)If a taxpayer has deductions for AGI, the standard deduction is not available.
• D)In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction.
• E)None of the above.

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Definitions:

Finance Charges

The cost of borrowing money, including interest and other fees.

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects cash from its credit sales by comparing net credit sales with the average accounts receivable.

Average Collection Period

The average amount of time it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Net Sales

The total revenue from sales of goods or services, less returns, allowances for damaged or missing goods, and discounts.