McGraw-Hill’s Taxation of Individuals and Business Entities, 2018 Edition, 9e
(Spilker)
Chapter 1 An Introduction to Tax
1) Taxes influence many types of business decisions but generally do not influence
personal decisions.
Answer: FALSE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
2) Taxes influence business decisions such as where a business should locate or how a
business should be structured.
Answer: TRUE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
3) Tax policy rarely plays an important part in presidential campaigns.
Answer: FALSE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
4) Margaret recently received a parking ticket. This is a common example of a local tax.
Answer: FALSE
Difficulty: 1 Easy
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
,Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
5) George recently paid $50 to renew his driver's license. The $50 payment is considered
a tax.
Answer: FALSE
Explanation: A tax is a payment required by a government that is unrelated to any
specific benefit or service received by the government.
Difficulty: 1 Easy
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
6) A 1% charge imposed by a local government on football tickets sold is not considered
a tax if all proceeds are earmarked to fund local schools.
Answer: FALSE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
7) One key characteristic of a tax is that it is a required payment to a governmental
agency.
Answer: TRUE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
8) Common examples of sin taxes include the taxes imposed on airline tickets and
gasoline.
Answer: FALSE
Difficulty: 2 Medium
,Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
, 9) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand
for the products being taxed.
Answer: FALSE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
10) In addition to raising revenues, specific U.S. taxes may have other objectives (e.g.,
economic or social objectives).
Answer: TRUE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
11) The two components of the tax calculation are the tax rate and the taxpayer's status.
Answer: FALSE
Explanation: Tax equals the tax base multiplied by the tax rate.
Difficulty: 2 Medium
Topic: How to Calculate a Tax?
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
12) The tax base for the federal income tax is taxable income.
Answer: TRUE
Difficulty: 1 Easy
Topic: How to Calculate a Tax?
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
(Spilker)
Chapter 1 An Introduction to Tax
1) Taxes influence many types of business decisions but generally do not influence
personal decisions.
Answer: FALSE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
2) Taxes influence business decisions such as where a business should locate or how a
business should be structured.
Answer: TRUE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
3) Tax policy rarely plays an important part in presidential campaigns.
Answer: FALSE
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
4) Margaret recently received a parking ticket. This is a common example of a local tax.
Answer: FALSE
Difficulty: 1 Easy
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
,Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
5) George recently paid $50 to renew his driver's license. The $50 payment is considered
a tax.
Answer: FALSE
Explanation: A tax is a payment required by a government that is unrelated to any
specific benefit or service received by the government.
Difficulty: 1 Easy
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
6) A 1% charge imposed by a local government on football tickets sold is not considered
a tax if all proceeds are earmarked to fund local schools.
Answer: FALSE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
7) One key characteristic of a tax is that it is a required payment to a governmental
agency.
Answer: TRUE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
8) Common examples of sin taxes include the taxes imposed on airline tickets and
gasoline.
Answer: FALSE
Difficulty: 2 Medium
,Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
, 9) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand
for the products being taxed.
Answer: FALSE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
10) In addition to raising revenues, specific U.S. taxes may have other objectives (e.g.,
economic or social objectives).
Answer: TRUE
Difficulty: 2 Medium
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of
taxes.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
11) The two components of the tax calculation are the tax rate and the taxpayer's status.
Answer: FALSE
Explanation: Tax equals the tax base multiplied by the tax rate.
Difficulty: 2 Medium
Topic: How to Calculate a Tax?
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
12) The tax base for the federal income tax is taxable income.
Answer: TRUE
Difficulty: 1 Easy
Topic: How to Calculate a Tax?
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.
Bloom's: Analyze
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
