Accounting Certification Practice Test 2026 – Complete Online Preparation

Question: 1 / 400

What happens to taxable income if additional deductions are claimed?

It remains the same

It decreases

When additional deductions are claimed, taxable income decreases because deductions directly reduce the amount of income that is subject to tax. Taxable income represents the portion of income used to calculate how much tax is owed. By increasing the total deductions you claim on your tax return, you lower your overall taxable income, which can lead to a smaller tax liability. This is a fundamental principle in accounting and taxation: the more allowable deductions you take, the less income you ultimately pay taxes on, thus decreasing your taxable income effectively.

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It increases

It becomes non-taxable

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