#1
Which of the following is a direct tax?
Income Tax
ExplanationDirect taxes are imposed directly on individuals and organizations by the government.
#2
In the context of personal finance, what does the term '401(k)' refer to?
A retirement savings plan sponsored by an employer
Explanation401(k) plans are retirement savings plans offered by employers, allowing employees to contribute a portion of their salary before taxes.
#3
What is the primary purpose of the Internal Revenue Service (IRS) in the United States?
To collect taxes and enforce tax laws
ExplanationThe IRS is responsible for collecting taxes and enforcing tax laws to ensure compliance.
#4
What is the role of the Securities and Exchange Commission (SEC) in the United States?
To regulate and oversee the securities industry and protect investors
ExplanationSEC monitors and regulates the securities industry to ensure fair and transparent markets and protect investors.
#5
What is the purpose of the Federal Reserve in the United States?
To control the money supply and promote economic stability
ExplanationThe Federal Reserve regulates monetary policy to achieve stable prices, maximum employment, and moderate long-term interest rates.
#6
What is the purpose of a W-4 form in the United States tax system?
To report employment income and withholdings
ExplanationW-4 forms are used by employers to withhold the correct amount of federal income tax from employees' paychecks.
#7
What is the difference between tax evasion and tax avoidance?
Tax evasion is illegal, while tax avoidance is legal
ExplanationTax evasion involves illegal methods to avoid paying taxes, while tax avoidance involves legal strategies to reduce tax liability.
#8
What is the difference between a tax credit and a tax deduction?
A tax deduction reduces taxable income, while a tax credit directly reduces the amount of tax owed
ExplanationTax deductions reduce taxable income, while tax credits directly reduce the amount of tax owed, often dollar-for-dollar.
#9
In accounting, what does the term 'ROI' stand for?
Return on Investment
ExplanationROI measures the profitability of an investment relative to its cost.
#10
What is the purpose of the Goods and Services Tax (GST) in India?
To simplify and unify indirect taxes across the country
ExplanationGST streamlines indirect taxes by replacing multiple taxes with a single levy, aiming for uniformity and efficiency.
#11
What is the concept of a progressive tax system?
Tax rates increase as income increases
ExplanationIn a progressive tax system, higher income earners are taxed at higher rates.
#12
What is the purpose of the Financial Accounting Standards Board (FASB)?
To develop and improve accounting standards for private companies
ExplanationFASB sets accounting standards to ensure transparency and accuracy in financial reporting for private companies.
#13
What is the concept of a regressive tax?
Everyone pays the same amount of tax
ExplanationRegressive taxes impose a higher burden on low-income earners as a percentage of their income.
#14
In the context of corporate finance, what does the term 'EBITDA' stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationEBITDA represents a company's earnings before accounting for interest, taxes, depreciation, and amortization.
#15
What is the purpose of the Financial Stability Oversight Council (FSOC) in the United States?
To monitor and address risks to the U.S. financial system
ExplanationFSOC identifies and responds to systemic risks that could threaten the stability of the U.S. financial system.