Multiple Choice
Which two types of accounting are most similar in their focus on recording and reporting financial transactions for external users?
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1. Introduction to Accounting
Types of Accounting
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Which type of tax system applies the same tax rate to all income levels?
A
Regressive tax system
B
Value-added tax system
C
Proportional tax system
D
Progressive tax system
Verified step by step guidance1
Understand the concept of a proportional tax system: A proportional tax system applies the same tax rate to all income levels, meaning the percentage of income paid as tax remains constant regardless of how much income is earned.
Compare the proportional tax system to other tax systems: For example, a progressive tax system imposes higher tax rates as income increases, while a regressive tax system imposes lower tax rates as income increases.
Recognize that the proportional tax system is also known as a flat tax system because the tax rate does not change with income levels.
Identify examples of proportional tax systems in practice: These systems are often used for certain types of taxes, such as sales taxes or specific state income taxes, where the rate is fixed.
Conclude that the proportional tax system is the correct answer to the question, as it aligns with the definition of applying the same tax rate to all income levels.
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