Which one of the following accounting identities is TRUE?
A) Disposable personal income plus indirect business taxes equals personal income.
B) Disposable personal income plus non-income expense items equals personal income.
C) Disposable personal income plus personal income taxes equals personal income.
D) National income plus profit equals personal income.

Question

Quizplus · Accepted Answer

Disposable personal income is the amount of money that households have available for spending and saving after income taxes have been accounted for. Therefore, adding personal income taxes back to disposable personal income gives the total personal income before taxes.

Which One of the Following Accounting Identities Is TRUE