A Limitation of Using Past Performance as a Basis for Judging

question 175

Multiple Choice

A limitation of using past performance as a basis for judging actual results is that ________.

• A) future conditions can be different from the past
• B) any undervaluation of profits in the past period is likely to continue
• C) any subsequent change in accounting treatment will distort performance evaluation
• D) they tend to distort results when current and past conditions are similar

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Definitions:

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to tax, meaning everyone pays the same percentage of their income.

Progressive Tax

A tax system where the tax rate increases as the taxable amount increases, burdening wealthier individuals more.

Progressive Tax

A tax system in which tax rates increase as the taxable amount increases, placing a higher tax burden on individuals with higher incomes.