The "Ability-To-Pay" Principle of Taxation Is the Normative Idea That

question 28

Multiple Choice

The "ability-to-pay" principle of taxation is the normative idea that

• A)an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals.
• B)each individual should voluntarily contribute according to her ability to pay taxes.
• C)progressive taxes are more equitable than regressive taxes.
• D)two individuals earning the same income should have equal ability to pay, all else constant.

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Definitions:

Analyze Transactions

The process of examining financial transactions to understand their nature, how they affect the accounts, and how they should be recorded in the accounting system.

Correcting Entries

Journal entries made to amend previously recorded transactions or entries that were made incorrectly.

Balance Sheet Account

A financial statement line item that represents the assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement Account

An account found on the income statement that records business transactions affecting the company's revenue, expenses, gains, and losses.