A tax is said to be progressive when: MCQ with Answer and Explanation

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A tax is said to be progressive when:

A. It is levied on essential commodities

B. The rate of tax increases as income increases

C. The rate of tax remains constant

D. The rate of tax decreases as income increases

Answer: Option B

Solution (By JKExamLibrary)

Progressive taxation means higher income earners pay a higher percentage of their income as tax, promoting wealth redistribution.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1 Report Error

Under the concept of 'Social Return on Investment' (SROI), a ratio of 3:1 indicates:

A. Taxes are 300% of profit

B. Rs 1 of investment creates Rs 3 of social value

C. Financial profit is 3 times the social profit

D. Rs 3 of investment creates Rs 1 of social value

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Correct Answer: Option B

Explanation:
SROI expresses the social value created for every unit of currency invested. A 3:1 ratio means Rs 3 of value is created per Rs 1 invested.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

A: The Matching Concept requires expenses to be matched with revenues. R: This concept is the basis for the accrual system of accounting. Choose the correct option.

A. Both A and R are true but R is NOT the correct explanation of A

B. A is true but R is false

C. Both A and R are true and R is the correct explanation of A

D. A is false but R is true

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Correct Answer: Option C

Explanation:
The Matching Concept dictates that expenses incurred to earn revenue must be recognized in the same period as the revenue. This necessitates the accrual system, where transactions are recorded when they occur, not when cash changes hands. R correctly explains A.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3 Report Error

When bad debts previously written off are recovered, which account is credited?

A. Debtor's Personal Account

B. Bad Debts Recovered Account

C. Suspense Account

D. Bad Debts Account

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Correct Answer: Option B

Explanation:
Bad debts recovered represent a gain for the business and are credited to a separate nominal account called 'Bad Debts Recovered Account'.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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