, Name: Class: Date:
Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
3. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle)
of certainty.
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: Pay-as-you-go refers to the withholding provisions applicable to wages and other
types of income and adds convenience to the tax system.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Technology
IA
STATE STANDARDS: AICPA: FN-Reporting
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
4. Because the law is complicated, most individual taxpayers are not comfortable completing their Federal income
tax returns without outside assistance.
a. True
b. False
AP
ANSWER: True
RATIONALE: More than 50% use tax return preparers and about 33% purchase tax return
software.
DIFFICULTY: Moderate
PR
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
STATE STANDARDS: AICPA: FN-Reporting
KEYWORDS: Bloom's: Remember
OV
OTHER: Time: 2 min.
5. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied
tax rates from a low of 1% to a high of 6%.
a. True
b. False
ED
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
??
STATE STANDARDS: AICPA: FN-Research
OTHER: Time: 2 min.
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, Name: Class: Date:
Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
6. The Medicare component of the FICA tax (1.45% on wages) is progressive because the tax due increases as
wages increase.
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: The Medicare component is proportional because the rate is constant regardless
of the wages earned. There is no cap on the application of the 1.45 percent
Medicare tax.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
IA
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
7. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
AP
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
PR
STATE STANDARDS: AICPA: FN-Research
KEYWORDS: Bloom's: Remember
OTHER: Time: 2 min.
8. The Federal estate and gift taxes are examples of progressive rate taxes.
OV
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ED
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
??
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, Name: Class: Date:
Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
9. The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive nor
regressive).
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: Most excise taxes are regressive as lower-income taxpayers commit more of their
income to them than higher-income taxpayers.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
IA
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
10. Currently, the Federal corporate income tax is less progressive than the individual income tax.
a. True
b. False
AP
ANSWER: True
RATIONALE: Currently, the Federal corporate income tax has a flat rate of 21%; the individual
income tax has a progressive rate structure from 10% to 37%.
DIFFICULTY: Easy
PR
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OV
OTHER: Time: 2 min.
ED
??
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Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
3. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle)
of certainty.
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: Pay-as-you-go refers to the withholding provisions applicable to wages and other
types of income and adds convenience to the tax system.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Technology
IA
STATE STANDARDS: AICPA: FN-Reporting
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
4. Because the law is complicated, most individual taxpayers are not comfortable completing their Federal income
tax returns without outside assistance.
a. True
b. False
AP
ANSWER: True
RATIONALE: More than 50% use tax return preparers and about 33% purchase tax return
software.
DIFFICULTY: Moderate
PR
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
STATE STANDARDS: AICPA: FN-Reporting
KEYWORDS: Bloom's: Remember
OV
OTHER: Time: 2 min.
5. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied
tax rates from a low of 1% to a high of 6%.
a. True
b. False
ED
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
??
STATE STANDARDS: AICPA: FN-Research
OTHER: Time: 2 min.
Powered by Cognero
, Name: Class: Date:
Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
6. The Medicare component of the FICA tax (1.45% on wages) is progressive because the tax due increases as
wages increase.
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: The Medicare component is proportional because the rate is constant regardless
of the wages earned. There is no cap on the application of the 1.45 percent
Medicare tax.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
IA
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
7. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
AP
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: BUSPROG: Technology
PR
STATE STANDARDS: AICPA: FN-Research
KEYWORDS: Bloom's: Remember
OTHER: Time: 2 min.
8. The Federal estate and gift taxes are examples of progressive rate taxes.
OV
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
ED
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
??
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, Name: Class: Date:
Ch01: An Introduction to Taxation and Understanding the Federal Tax Law
9. The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive nor
regressive).
ST
a. True
b. False
ANSWER: False
UV
RATIONALE: Most excise taxes are regressive as lower-income taxpayers commit more of their
income to them than higher-income taxpayers.
DIFFICULTY: Easy
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
IA
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OTHER: Time: 2 min.
?_
10. Currently, the Federal corporate income tax is less progressive than the individual income tax.
a. True
b. False
AP
ANSWER: True
RATIONALE: Currently, the Federal corporate income tax has a flat rate of 21%; the individual
income tax has a progressive rate structure from 10% to 37%.
DIFFICULTY: Easy
PR
LEARNING OBJECTIVES: IITX.SWFT.2026.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: BUSPROG: Comprehension
STATE STANDARDS: AICPA: FN-Measurement
KEYWORDS: Bloom's: Understand
OV
OTHER: Time: 2 min.
ED
??
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