EFFECTIVE TAX RATE Definition

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EFFECTIVE TAX RATE is the net rate a taxpayer pays on income that includes all forms of taxes. It is calculated by dividing the total tax paid by taxable income.

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TAKE OR PAY AGREEMENT is where a buyer must pay for the contracted amount of the contracted item(s) delivered whether or not he/she can take delivery.

OVERHEAD ABSORPTION is the term used for describing the transfer of value from a fixed asset such as a building or machine to the final product. In this way the indirect costs of the entity can be assigned to the products or services supplied.

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