Some Discontented Taxpayers Have Suggested That Complexity Be Removed from the Income

question 64

Multiple Choice

Some discontented taxpayers have suggested that complexity be removed from the income tax structure by applying a flat tax rate to the gross income of all taxpayers. This approach violates which concept?

• A)Ability to Pay Concept.
• B)All-inclusive Income Concept.
• C)Entity Concept.
• D)Pay-as-You-Go Concept.
• E)Wherewithal to Pay Concept.

---

Definitions:

Compensating Balance

A minimum account balance that a firm agrees to maintain in a bank account, often used to secure a loan or line of credit.

Accounts Payable

Short-term liabilities representing amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Factoring

A financial transaction and a type of debtor finance where a business sells its accounts receivable to a third party (the factor) at a discount.

Net Working Capital

measures a company's short-term financial health by subtracting its current liabilities from its current assets, indicating the liquidity available to fund day-to-day operations.