Question

The American Institute of Certified Public Accountants (AICPA) has issued 12 principles that are commonly used as indicators of desirable tax policy. The first four principles are adapted from Adam Smith's The Wealth of Nations and are:

a.Equity and fairness, certainty, convenience of payment, and effective tax administration.
b.Transparency and visibility, neutrality, economic growth and efficiency, and effective tax administration.
c.Equity and fairness, neutrality, convenience of payment, and effective tax administration.
d.Transparency and visibility, certainty, convenience of payment, and effective tax administration.
e.Equity and fairness, certainty, economic growth and efficiency, and effective tax administration.

Answer 1

The first four principles of tax policy by the AICPA, reflecting Adam Smith's ideas, are equity and fairness, certainty, convenience of payment, and effective tax administration. Correct option is a)

Step-by-step explanation:

The first four principles of desirable tax policy issued by the American Institute of Certified Public Accountants (AICPA) and adapted from Adam Smith's The Wealth of Nations are: equity and fairness, certainty, convenience of payment, and effective tax administration.

Equity and fairness ensure that the tax system is just and reasonable, distributing the tax burden in a way that reflects individuals' ability to pay and the benefits they receive from public services. Certainty means that taxpayers should be able to determine when, how, and how much tax should be paid without ambiguity. Convenience of payment stipulates that the method and timing of tax collection should be convenient for the taxpayer. Lastly, effective tax administration emphasizes the need for tax systems to be administratively simple, cost-effective, and capable of enforcing compliance.