The Accounting Entry to Record the Payment of a Liability

question 20

Multiple Choice

The accounting entry to record the payment of a liability is which of the following?

• A) Debit an asset account and credit a liability account
• B) Debit a liability account and credit an asset account
• C) Debit an equity account and credit a liability account
• D) Debit a liability account and credit an equity account

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Definitions:

Average Tax Rate

The ratio of the total amount of taxes paid to the taxpayer's total income, representing the percentage of income paid in taxes.

Marginal Tax Rate

The tax rate applied to the last dollar of income, representing the percentage of tax paid on any additional dollar of income.

Taxable Income

The portion of an individual's or entity's income used to calculate how much tax they owe to the government, after deductions and exemptions.

Regressive

Relating to a tax system in which the tax rate decreases as the taxable amount increases, often considered less fair to lower-income individuals.