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Taxation of Individuals & Business Entities Brian Spilker 11e
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,Taxation of Individuals and Business Entities, 11e (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
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,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 percent 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: Understand
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
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 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
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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