Multiple Choice
When paying for higher education, scholarships and grants can be considered:
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1. Introduction to Accounting
Types of Accounting
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Every American who earns an income must file a _________ each year.
A
tax return
B
balance sheet
C
bank statement
D
payroll report
Verified step by step guidance1
Understand the context of the question: The problem is asking about a document that every American who earns an income must file each year. This relates to compliance with financial and legal obligations.
Identify the purpose of each option provided: A 'tax return' is a document filed with the IRS to report income, deductions, and taxes owed or refunded. A 'balance sheet' is a financial statement showing assets, liabilities, and equity, typically used by businesses. A 'bank statement' is a summary of transactions in a bank account. A 'payroll report' details employee wages and deductions.
Determine which option aligns with the requirement to file annually: Filing a tax return is a legal obligation for individuals earning income in the U.S., whereas the other options are not mandatory annual filings for individuals.
Recognize the correct answer based on the context: The correct answer is 'tax return,' as it is the document required by law to report income and taxes each year.
Conclude the reasoning: Filing a tax return ensures compliance with tax laws and allows individuals to claim refunds or pay any taxes owed.
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