Banker: by Transferring Income to a Retirement Account at Our Bank, People Can Save Money by Delaying Payment of Taxes. Which One of the Following Best Explains the Conflict Between the Banker and the - Logical Reasoning

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MCQ

Read the following short passages and answer the questions that follow each passage.
Banker: By transferring income to a retirement account at our bank, people can save money by delaying payment of taxes.
Accountant: That plan won't actually save money because the taxes will have to be paid sometime in the future when the money is withdrawn.
Which one of the following best explains the conflict between the Banker and the Accountant?

Options

  • The Banker is primarily concerned with recruiting new customers for the bank but the Accountant is not.

  • The Accountant misunderstands the application of the tax laws.

  • The Banker and the Accountant disagree on the application of the term "save"

  • Retirement accounts are nothing more than a tax shelter, which the Parliament intends to cut out of next year's tax amendment.

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Solution

The Banker and the Accountant disagree on the application of the term "save"

Explanation:

The passage presents a conflict over tax savings. A banker says that by transferring money to retirement account, people can save money as it will delay payment of tax. On the other hand an accountant says that this is not actually saving money as one will have to pay tax when one withdraws money from account. Clearly, the disagreement is over the application of the term ‘save’. Hence, 'The Banker and the Accountant disagree on the  application of the term “save”.' is the correct answer.

Concept: Statement and Assumption (Entrance Exam)
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