Chapter 1 Final Exam Questions With All
Solved Solutions.
Which of the following common decisions would most likely NOT be influenced by the United
States income tax laws? - Answer Choosing a public school for your children
True or false: The general purpose of a tax is to provide incentives that will stimulate and
improve the economy. - Answer False
Is it true that a "tax" is essentially the same as a fine or penalty? - Answer No
A tax imposed on a legal product or service that may be addictive in nature is known as a(n): -
Answer sin tax
The formula to calculate the amount of tax is the tax (1) multiplied by the tax (2). - Answer 1.
base
2. rate
Which of the following decisions would most likely NOT be influenced by our tax system? -
Answer Choosing a vacation destination
Which of the following terms describes the level of taxes imposed on the tax base and is usually
expressed as a percentage? - Answer Tax rate
The general purpose of a tax is to raise (1) to fund the operations of the (2). - Answer 1. funds
2. government
True or false: A tax can be defined as a fine or penalty. - Answer false
Arlene is single and has taxable income of $34,000. Her tax liability is currently $4,636. She has
the opportunity to earn an additional $6,000 this year. Her tax liability will grow to $5,771 if she
receives the additional income. What is Arlene's marginal tax rate for the additional $6,000? -
Answer 18.92%
, Marcus and Lydia Brown are married and filing jointly and have $155,000 in taxable income.
Lydia has been offered a job promotion which will increase their taxable income to $174,000 in
2019. This additional income will move them into the next graduated tax bracket (24%). Which
of the following statements is correct? - Answer A portion of the additional $19,000 will be
taxed at 22% and a portion will be taxed at 24%.
Shelby bought a dress costing $200 from Arlene's Dress Shop in a state where there is a sales
tax rate of 5%. Shelby had to pay (1) dollars in sales tax. - Answer 1. $10
Which of the following sentences describes the marginal tax rate? - Answer The tax rate
applied to the next additional increment of a taxpayer's taxable income (or deductions)
The tax (1) determines the level of taxes imposed on the tax base and is usually expressed as a
percentage. - Answer 1. rate
A(n) ______ tax structure applies the same tax rate to all levels of income, while a(n) ______ tax
structure applies higher tax rates as the tax base increases and a(n) ______ tax structure applies
lower tax rates as the tax base increases. - Answer proportional, progressive, regressive
What is the general purpose of a tax? - Answer To fund the operations of the government
A sales tax is an example of a tax that uses a(n) (1) tax rate structure when compared to its tax
base. - Answer 1. proportional
Arlene is single and has taxable income of $18,000. Her tax liability is currently $2,236. She has
the opportunity to earn an additional $5,000 if she accepts and completes a special project at
work. There are no additional expenses to offset the $5,000 income. Consequently, Arlene will
have a tax liability of $2,986 if she accepts the special project. Arlene has a marginal tax rate of
(1)%. - Answer 1. 15%
Jose has been offered a new job. The new job will pay more than his current job. Jose is hesitant
to take the new job because it will cause his income to exceed the maximum amount in his
current tax bracket. He is concerned that the increase in taxes will exceed his increased income
from the new job. - Answer This is not possible. Only the portion of income that exceeds Jose's
current bracket will be taxed at the higher rate, not his total taxable income.
Which of the following sentences describes the average tax rate? - Answer The average level
Solved Solutions.
Which of the following common decisions would most likely NOT be influenced by the United
States income tax laws? - Answer Choosing a public school for your children
True or false: The general purpose of a tax is to provide incentives that will stimulate and
improve the economy. - Answer False
Is it true that a "tax" is essentially the same as a fine or penalty? - Answer No
A tax imposed on a legal product or service that may be addictive in nature is known as a(n): -
Answer sin tax
The formula to calculate the amount of tax is the tax (1) multiplied by the tax (2). - Answer 1.
base
2. rate
Which of the following decisions would most likely NOT be influenced by our tax system? -
Answer Choosing a vacation destination
Which of the following terms describes the level of taxes imposed on the tax base and is usually
expressed as a percentage? - Answer Tax rate
The general purpose of a tax is to raise (1) to fund the operations of the (2). - Answer 1. funds
2. government
True or false: A tax can be defined as a fine or penalty. - Answer false
Arlene is single and has taxable income of $34,000. Her tax liability is currently $4,636. She has
the opportunity to earn an additional $6,000 this year. Her tax liability will grow to $5,771 if she
receives the additional income. What is Arlene's marginal tax rate for the additional $6,000? -
Answer 18.92%
, Marcus and Lydia Brown are married and filing jointly and have $155,000 in taxable income.
Lydia has been offered a job promotion which will increase their taxable income to $174,000 in
2019. This additional income will move them into the next graduated tax bracket (24%). Which
of the following statements is correct? - Answer A portion of the additional $19,000 will be
taxed at 22% and a portion will be taxed at 24%.
Shelby bought a dress costing $200 from Arlene's Dress Shop in a state where there is a sales
tax rate of 5%. Shelby had to pay (1) dollars in sales tax. - Answer 1. $10
Which of the following sentences describes the marginal tax rate? - Answer The tax rate
applied to the next additional increment of a taxpayer's taxable income (or deductions)
The tax (1) determines the level of taxes imposed on the tax base and is usually expressed as a
percentage. - Answer 1. rate
A(n) ______ tax structure applies the same tax rate to all levels of income, while a(n) ______ tax
structure applies higher tax rates as the tax base increases and a(n) ______ tax structure applies
lower tax rates as the tax base increases. - Answer proportional, progressive, regressive
What is the general purpose of a tax? - Answer To fund the operations of the government
A sales tax is an example of a tax that uses a(n) (1) tax rate structure when compared to its tax
base. - Answer 1. proportional
Arlene is single and has taxable income of $18,000. Her tax liability is currently $2,236. She has
the opportunity to earn an additional $5,000 if she accepts and completes a special project at
work. There are no additional expenses to offset the $5,000 income. Consequently, Arlene will
have a tax liability of $2,986 if she accepts the special project. Arlene has a marginal tax rate of
(1)%. - Answer 1. 15%
Jose has been offered a new job. The new job will pay more than his current job. Jose is hesitant
to take the new job because it will cause his income to exceed the maximum amount in his
current tax bracket. He is concerned that the increase in taxes will exceed his increased income
from the new job. - Answer This is not possible. Only the portion of income that exceeds Jose's
current bracket will be taxed at the higher rate, not his total taxable income.
Which of the following sentences describes the average tax rate? - Answer The average level
