Taxation Pre-Test

Which type of tax is levied on the consumption of specific goods and services?

• corporate tax

• excise tax

• progressive tax

• property tax

Federal, state, and local governments spend money collected from taxes to fund specific programs and services. Which item is supported through taxes?

• movie theaters

• parking garages

• public schools

• shopping malls

Personal income tax and corporate tax are examples of what kind of taxes?

• deferred taxes

• direct taxes

• exempt taxes

• indirect taxes

Which agency is responsible for administering and enforcing the Treasury Department’s revenue laws?

• Internal Revenue Service

• International Monetary Fund

• New York Stock Exchange

• Social Security Administration

The same bedroom furniture set costs $1,500 in both Florida and Alabama. The table gives a breakdown of the taxes someone would pay when purchasing the furniture set in either state. Which statement is true?

• The furniture set is cheaper in Alabama, because the amount of sales tax will be lower by about $8.

• The furniture set is cheaper in Florida, because the amount of sales tax will be lower by about $10.

• The furniture set is cheaper in Alabama, because the amount of sales tax will be lower by $10.

• The furniture set costs the same in either state, because the amount of sales tax will be the same for the two locations.

Federal, state, and local governments tax their citizens to___________for various programs and services. The federal government’s main income sources include _______ taxes, while state and local governments rely heavily on__________taxes.

• Provide Revenue, income and payroll, sales and property

• Collect Donations, income and gift, corporate and excise

• Provide Revenue, income and payroll, payroll and gift

• Collect Donations, income and payroll, sales and property

Kayla wants to purchase some new clothes for the school year and has a budget of $200. The sales tax rate that will apply when she makes her purchases is 7%. Here are the items she wants to purchase:

2 T-shirts, $9.98 each

1 pair of pants, $25.99

3 dresses, $24.99 each

1 pair of shoes, $89.99

• Kayla’s budget will not be enough to purchase all of the clothing items listed after sales tax is applied because the total will be $225.67.

• Kayla’s budget will be enough to purchase all of the clothing items listed after sales tax is applied because the total will be $161.52.

• Kayla’s budget will not be enough to purchase all of the clothing items listed after sales tax is applied because the total will be $225.67.

Celina wants to purchase an album on an online music streaming platform. The price listed on the streaming platform doesn’t include sales tax. The total sales tax rate that will apply is 7%.

• When Celina purchases the $12.99 album, she will be charged $1.29 in sales tax.

• When Celina purchases the $12.99cent album, she will be charged $0.91 in sales tax.

• When Celina purchases the $12.99 album, she will be charged $0.29 in sales tax.

• When Celina purchases the $12.99 album, she will be charged $1.33 in sales tax.

Determine whether each scenario is an example of tax avoidance or tax evasion:

Andrea keeps a record of all her business-related expenses

• Tax Avoidance

• Tax Evasion

Determine whether each scenario is an example of tax avoidance or tax evasion:

Christian did not report the tips he earned on his tax return.

• Tax Avoidance

• Tax Evasion