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Hbc2123:Introduction To Taxation Question Paper
Hbc2123:Introduction To Taxation
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2011
QUESTION ONE (30 MARKS)
a) Discuss the terms tax incidence and tax impact. (6 Marks) b) What do you understand by Resident and non-resident person s? (6 Marks) c) Distinguish between regressive and digressive taxes. (5 Marks) d) Explain the reasons why a country might prefer a multiple tax systems over a single tax system. (6 Marks) e) Compare the tax systems of PAYE and withholding tax. (4 Marks) f) Define a direct tax and give at least three advantages of a direct tax. (3 Marks)
QUESTION TWO (20 MARKS)
a) Pesa mingi and company is a partnership enterprise owned by three partners X,Y and Z. They share their profits and losses in the ration of 2:2:1. In the year 2010, they reported a profit of Sh100,000 after charging the following.
Shs. Depreciation 200,000 Salaries X 300,000 Y 200,000 Z 100,000 Interest on capital X 200,000 Y 100,000 Z 200,000
General expenses 150,000
Required: a) Calculate the adjusted partnership profit/loss and its distribution among the partners. (4 Marks) b) Explain tax evasion and tax avoidance. (6 Marks)
QUESTION THREE (20 MARKS)
hey run an enterprise in town dealing with foods. He submitted his returns of income for the year 2009 showing a profit of Sh.1,234,000. The following receipts and expenditure accounts and other information were submitted.
Receipts Sh.000 Expenses Sh. 000 Sales of food 15,645 Wages to staff 3,900 Entertainment 1,903 Gas & Electricity 613 Sales of furniture)old) 211 NSSF and PAYE 360 Charity winnings 650 New cooker 216 Profit 1,234 Purchases 6,215 Salary to wife 900 Rent & Rates 1,200 Cleaning Materials 319 Utensils 216 Insurance 430 Repairs and renewals 816 Household expenses 2,215 Car running expenses 915 Total 19,643 Total 19,643
id is apportioned in the ratio of 3:2 ie business premises to the living house. Insurance include Mr. Kimanga that personal use of the car is about 40% of the total mileage. Analysis of repairs and renewals.
Painting and Decoration. Sh216,000 New furniture Sh418,000 Repairs to toilets Sh182,000 There was at the beginning of the year stock of Sh115,000 and at the end Sh96,000.
Required: a) Calculate the adjusted profit/loss for the year for income tax purposes. (ignore any second schedule deductions that may be due) (15 Marks) b) Explain all the assumptions made in arriving at the adjusted profit. (5 Marks)
QUESTION FOUR (20 MARKS)
a) Discuss why taxable profits may be different from net business profit as shown in the account. (8 Marks) b) Write short notes on. (i) VAT (4 Marks) (ii) Wear and tear deductions (4 Marks) (iii) Investment deductions. (4 Marks)
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