Tax Accounting Final Examination

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Microlink Information Technology and Business College

Department of Accounting and Finance


Final Exam (Home-take) for Tax Accounting

Program: Degree Admission: - Regular and Extension

Batch: - 3rd year Semester: II

Academic Year: 2019/2020 Exam Date: /12/2012 E.C

Course Title: - Tax Accounting Course code: Acct -321

Time allowed: 1:15 Total Marks: 30

Full Name ID. No.

Section

Admission: Regular Extension Add & Drop

General Instructions

 Write your answers on the answer sheet provided


 Write your specific department, section and admission properly
 Be sure that your exam booklet contains four parts
 Read each instruction carefully
 Mobile phone should be turned-off
 Any type of cheating will invalid your result
Part I: True or False Items

Instruction: Write “True “if the statement is correct and “False” if the statement is in
correct in the attached answer sheet

1. Tax is forced contribution lived by government to all citizens.


2. The major source of revenue to government is Tax
3. Value Added Tax is an example of Direct Tax
4. Direct tax is Expenditure taxes, but indirect tax are subjected for income.
5. Tax rates imposed by the government for artificial persons are based on tax schedule “C”

Part II: Multiple Choice Items

Instruction: Choose the correct answer from the given alternatives in each question and
write your answer in the answer sheet attached

1. A tax structure that the tax rate decline as the tax base is increased ( the amount increased tax rate
decline)
A. Regressive C. progressive
B. Proportional D. None of the above
2. When individuals relocate their business to region with lower taxes or take advantage of loophole
in tax laws, it is said to be
A. Tax fraud C. Tax evasion
B. Tax reduction D. Tax avoidance
3. Which one of the following is/are not essentially the characteristics of taxation
A. It is a compulsory levy
B. It provides for non-proportionate return or benefit
C. It helps in financing governmental activity
D. It is an illegal collection
4. All are objectives of tax except
A. Diverting resources C. Enhancement of standard of living
B. Common benefit to all D. Reducing regional in balance
5. Which one of the following is indirect tax
A. Excise tax C. Value added tax
B. Turnover tax D. All are true answers
6. Which one of the following is subjected for withholding tax
A. Consultancy C. Advertisement service
B. Construction D. All
7. Which one of the following is acting as a withholding agent
A. Governmental enterprises
B. Private limited company
C. Not for profit organizations (NGO)
D. All
8. Which of the following taxpayers is required to file balance sheet
A. Category B C. Category C
B. Category A D. A and B are answers
9. The standard assessment of tax payment is applied for
A. Category B C. Category C
B. Category A D. A and B are answers
10. Which of the following taxpayers is required to file Income statement
A. Category B C. Category C
B. Category A D. A and B are answers
11. Employee income tax is determine in Ethiopia on the bases of
A. Generally Accepted Accounting principles
B. Tax law
C. Company law
D. International law
12. Which one of the following is not taxable benefit to employees
A. House allowance
B. Acting allowance
C. Medical allowance
D. Position allowance
13. Mr.Alemu earns a basic salary of Birr 4,500, transportation allowance of 500, position allowance of
1,000. What will be the taxable salary and net pay for Mr.Alemu
A. 5,500 and 5,190 C. 4,690 and 5,500
B. 6,000 and 4,690 D. 5,500 and 4,690
14. The total Brackets of employment tax are
A. 5 B. 6 C. 7 D. 1
15. Over time rate at Normal Hours are
A. 2 B. 1.25 C. 2.5 D. 1.5
16. One of the following is not deductible expenses in Ethiopia
A. Cost of maintaining the business
B. Expenses of operating the activities of the business
C. Entertainment
D. Advertising
17. Identify the true statement from the following about record keeping by companies
A. All business organizations are expected to keep book of accounts at least for tax purpose
B. Preparing an income statement is common obligation of category A &B Business
C. Any report prepared by category C taxpayers is always acceptable by the tax authority
D. The tax authority accepts statement in foreign language and will get translated at its cost
18. Under proclamation No 286/2002 business income tax is taxable under
A. Schedule B C. Schedule C
B. Schedule A D. Schedule D
19. Business income tax is determined in Ethiopia on the bases of
A. Tax law C. Company law
B. GAAP D. All
20. All but one is not required to fill an income statement to the tax authority
A. Category “A” tax payers
B. Category “C” tax payers
C. Category “B” tax payers
D. A and C are possible answers
21. One of the following is supplies is exempted from VAT in Ethiopia
A. Transport C. Books
B. Education D. All
22. Which one of the following is correct about VAT in Ethiopia
A. It is an indirect tax
B. The tax is based on Value add
C. The accounting period is three months
D. All
23. Good are purchased at VAT inclusive price of Birr 166,750. The amount of input VAT on
this transaction
A. Birr 25,012.50 C. Birr 21,750.00
B. Birr 21,000.00 D. Birr 19,837.50

24. Ato Meseret Yazachew , owner of Mabi PLC , purchased passengers vehicle for personal use at
Birr 200,000 subject to 15 % VAT which one of the following is true
A. The asset account is debited for Birr 200,000
B. VAT account is debited for Birr 30,000
C. The asset account is debited with 230,000
D. VAT account is debited with 26,087

Based on the following data answer question 30-31

The C.I.F value of the good is imported 15,000

The excise tax rate for these goods is 10%

Custom Tariff is 25%

Withholding tax rate is 3%

25. The value of imported goods for the determination of VAT is


A. Birr 20,700 C. Birr 16,500
B. Birr 20,250 D. Birr 15,000
26. The amount paid (Input Tax) at customs station at the time of custom clearance is
A. Birr 3,105.00 C. Birr 2,475.00
B. Birr 3,037.50 D. Birr 2,250.00
27. A party who leases a building from the owners for its use is said
A. Lessor
C. Sub-lesser
B. Lessee
D. Sub-lessee
28. Which one of the following belongs to the group
A. Divided income to shareholders
B. Income from casual rental of property
C. Income from rendering technical service
D. Income from rental of building
29. One of the following is not tax on income
A. Business income tax
B. Rental income tax
C. Royalty income tax
D. Value added tax
30. Ato Alemu receives dividend income of Birr 30,000 from ABC Company. What is the amount
of income tax to be paid by Ato Alemu
A. Birr 9,000 C. Birr 4,500
B. Birr 3,000 D. Birr 1,500
31. Ato Solomon has paid annual rental income is Birr 250,000. If Ato Solomon does not maintain the
book of account what will be the tax paid
A. 52,000 C. 50,000
B. 69,500 D. 60,000

Part III: - Write short answer

Instruction: Answer the following questions clearly in the attached answer sheet

1. Write the two major classifications of tax’s


2. Write three examples of Indirect tax’s
MicroLink Information Technology and Business College
Department of Accounting and Finance
Final Exam for Tax Accounting
2019/20 Academic Year
Answer Sheet

Name: Department:
ID. No: Sec: Year:
Program: Enrollment: Semester:
ADD: Drop: DD/MM/YYYY:

Part I: True False Part IV: Multiple Choice Questions (1 Short Answer
Questions point each)

1. 1. 11. 21. 1.

2. 2. 12. 22.
3. 3. 13.
23.
4. 4. 14. 2.
24.
5. 5. 15.
25.
16.
6. 26.
17.
7. 27.
18.
8. 28.
19.
9. 29.
20.
10.
30.

31.

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