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Intermediate Accounting: Reporting and Analysis
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Chapter 18 / Exercise 18-6
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
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1 Week Three Textbook Assignment Name ACC/497 date Professor
We have textbook solutions for you!
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Intermediate Accounting: Reporting and Analysis
The document you are viewing contains questions related to this textbook.
Chapter 18 / Exercise 18-6
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified
2 Week Three Textbook Assignment 1. [LO 1.1] What are consumption taxes? 1. Consumption taxes are taxes that consumers pay for goods or services. There are many different types of consumption taxes with the most popular being sales tax, use tax and excise taxes. Some necessities are exempt from these taxes, or have special lower tax rates like prescriptions, and some services like auto repair and dry-cleaning are not taxed either. 2. [LO 1.4] Differentiate horizontal from vertical equity. 1. Equity on the matter of taxation is really a matter of perspective according to our reading. Horizontal equity is the belief that regardless of how the income was achieved it should be taxed the same across the board. So, if one person made $100k in one year based on their salary alone, and then another person sold a home for $50k and has a salary of $50k then horizontal beliefs equate that both people will have the same tax liability. The vertical equity belief is what we use in the US, which is based on the higher the income of a person, the better chance they can afford to pay more than those who make less. 3. [LO 1.4] When was the constitutional amendment permitting an income tax ratified? 1. In 1913 the 16 th Amendment was ratified to give Congress the power to tax any and all types of income without previous stipulations that income tax be based on population.
3 4. [LO 1.4] What is a sin tax? 1. A six tax is the slang name for excise taxes. These excise taxes are prevalent in the US and are a type of sales tax that is placed on items that either have a low elasticity for demand, or are items the government want to discourage, i.e. tobacco.

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