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- [Second Item] The following statements are correct, except: a. The amount of percentage tax is based on the gross receipts. b. The amount of gross receipts is derived by deducting the cost of services rendered from the service revenue. c. Receivables, although treated as income under the accrual concept, do not form part of gross receipts. d.Percentage tax is generally imposed on services rendered.Since the corporate OSD is based on gross income, it is deemed to replace all except: Regular Allowable itemized deductions Special Allowable Itemized deductions NOLCO Cost of ServicesMa3. ABC Laundry uses the income tax basis of accounting, a special purpose framework to prepare its financial statement. Its assets are subject to cost recovery deductions and thus ABC Laundry uses the Modified Accelerated Cost Recovery System to compute these deductions. In its financial statements, ABC Laundry, who does not elect to omit substiantially all disclosures a. Must provide, in its footnotes, information disclosures about MACRS similar to those required by GAAP for depreciation. b. Need not identify the special purpose frameworks that it uses. c. Need only disclose the asset base, cost recovery deductions taken in the current year, and the asset base remaining after all costs recovery deductions have been taken in prior years.
- 1. Indicate whether the following expenditures are trade or business deductions (T), production of income deductions (PI), personal deductions (P), or are not deductible (X). Also indicate if the deductible expenditures are deductible “for” or “from” AGI. a. Interest expense on business loan b. Expenses incurred in an activity lacking a true profit motive (i.e., a hobby activity) c. Commuting expenses of individual taxpayer d. Rent payments paid by an illegal gambling business e. Payment by a business to bribe a government officialIdentify which statement is incorrect: * a. Sale of goods or services by any person or entity may result to the payment of income tax. b. Sale of goods or services by any person or entity may result to the payment of business tax. c. Sale of goods or services by any person or entity may result to the payment of donor's tax. d. All statements are correct. e. All statements are incorrect.3. The following are deductions from input taxes, except a. Input tax claimed as tax credit b. Input tax attributed to Vat exempt sales С. Input tax attributed to sales to government d. Input tax on zero-rated sales
- True (t) or False (f) ______ The LIFO conformity rule requires that if a company uses LIFO for tax purposes, it must also use LIFO for financial accounting purposes.7. Which of the following creates a temporary difference between financial income and taxable income? A. premiums paid for officer's life insurance (company is the beneficiary). B. accelerated cost recovery on plant and equipment. C. interest on municipal bonds D. fines and violation of law. 8. An example of deductible temporary difference occurs when A. the completed contract method in revenue recognition is used for tax purposes but percentage of completion method is used for financial purposes. B. warranty expenses are recognized on the accrual basis for financial reporting purposes but recognized as the warranty conditions are met for tax purposes. C. the installment sales method is used for tax purposes but accrual method for financial accounting.Which of the following is not a sale and therefore is not subject to the value-added tax? Transfer, use or consumption not in the ordinary course of business of goods or properties ordinarily intended for sale or use in the course of business. Distribution or transfer to shareholders or investors of share in the profits of a VAT-registered person. Distribution or transfer to creditors in payment of debt. Consignment sales.
- The crucial reason for determining whether an item is deductible as an expense under § 162 or under § 212 is that:(Which option is correct) A.§ 162 business expenses usually are deductions for AGI, while § 212 production-of-income expenses usually are deductions from AGI. B.Production-of-income expenses are not deductible. C.It resolves certain ownership questions. D.§ 162 business expenses are deductions from AGI, while § 212 production-of-income expenses are deductions for AGI.8. Income is: a. An amount for payment of services, interest, or profit from investment b. The gain derived from capital or labor c. Any material gain, not otherwise excluded by law, realized out of a closed and completed transaction, where there is an exchange of economic value for economic value, with a specified taxable period, under the method of accounting employed. d. A flow of service rendered by capital by the payment of money from it or any other benefit rendered by a fund of capital in relation to such fund through a period of time.Which of the following may not be an effect of VAT on the accounting records of a company? i. The formation of a payable under the current liabilities ii. An addition to the cost of a purchase iii. The formation of a tax asset arising from a sale iv. A receivable from the government arising from a sale v. All of the other choices may be an effect of VAT.