#1
Which of the following is NOT a principle of taxation?
Convenience
ExplanationTaxation principles focus on equity, certainty, efficiency, and economy.
#2
Which tax is levied on the transfer of property upon the death of the owner?
Estate tax
ExplanationEstate tax applies to the transfer of assets after an individual's death.
#3
What is the purpose of a cost-benefit analysis in financial decision-making?
To evaluate the potential costs and benefits of a decision
ExplanationCost-benefit analysis assesses the merits of a decision by comparing its costs and benefits.
#4
Which tax is imposed on the transfer of real property, such as land or buildings?
Property tax
ExplanationProperty tax is levied on real estate holdings.
#5
What is the primary objective of a budget in financial decision-making?
To allocate resources effectively
ExplanationBudgeting aims to allocate resources efficiently to achieve financial goals.
#6
Which tax is levied on the income earned by individuals and businesses?
Income tax
ExplanationIncome tax is imposed on earnings from various sources.
#7
What is the primary purpose of financial statements in decision-making?
To provide information about the company's financial performance
ExplanationFinancial statements offer insights into a company's financial health and performance.
#8
What is the primary objective of tax planning?
To minimize tax liability within the boundaries of the law
ExplanationTax planning aims to optimize financial strategies while complying with legal regulations.
#9
Which tax system imposes a higher tax rate as income increases?
Progressive tax
ExplanationProgressive tax systems impose higher rates on higher incomes to promote income redistribution.
#10
What does the term 'tax incidence' refer to?
The distribution of tax burden between buyers and sellers
ExplanationTax incidence examines how taxes are shared between market participants.
#11
Which financial ratio measures a company's ability to meet short-term obligations with its most liquid assets?
Current ratio
ExplanationThe current ratio evaluates a company's liquidity and short-term solvency.
#12
What is the tax deduction available to taxpayers for each eligible dependent?
Child Tax Credit
ExplanationChild Tax Credit provides a reduction in tax liability for each eligible dependent.
#13
What does 'tax avoidance' refer to?
Minimizing tax liability within the boundaries of the law
ExplanationTax avoidance involves legally reducing tax obligations through strategic financial planning.
#14
Which financial metric measures the efficiency of a company's use of its assets to generate revenue?
Asset Turnover Ratio
ExplanationAsset Turnover Ratio indicates how effectively a company utilizes its assets to generate sales.
#15
What does the Laffer curve illustrate in taxation?
The relationship between tax revenue and tax rates
ExplanationThe Laffer curve shows how tax rate changes can affect tax revenue.
#16
Which financial decision-making principle suggests that the costs and benefits of a decision should be evaluated based on future outcomes?
Net present value
ExplanationNet present value assesses the future value of costs and benefits.
#17
What is the key advantage of a regressive tax system?
It imposes lower tax rates on low-income earners
ExplanationRegressive tax systems levy higher rates on lower incomes, offering relief to low earners.