YANET COLLEGE

YANET COLLEGE

DEPARTMENTS OF ACCOUNTING AND FINANCE time allowed 1hr

COURSE TITEL:-develop understanding of taxation Level II. mid exam 30%

Name id no program .

Part I choose the best answer from the given alternative

1) The best instrument which the governments can use as a source of revenue.

a) Direct tax c) A&B

b) Indirect tax d) NONE

2) Means the amount of income subject to tax after allowable deduction were deducted.

a) Gross earning c) Income tax

b) Taxable income d) all

3) is charged on the profit of business enterprises on their activities arising each accounting
period or tax year.

a) Rental income tax c) Game of chance

b) Business profit tax d) Employment income tax

4) Which one is good character sticks of tax system in Ethiopia?

(a) Taxes are levied by the (c) Common Benefits to All

Government (d) all
(b) Direct Benefit

5) Which one is differ from other?

a) Employment income tax c) Turnover tax

b) Rental income tax d) none

6) is borne by the person on whom it is levied and cannot be passed on to others.

a) Direct tax c) Dividend income tax

b) Employment income tax d) all

7) A Tax payer those enterprises having annual income of more than Br 100,000 and less than Br
500,000 categorize under

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a) Category A c) Schedule A
b) Category B d) Schedule B

Part II if the statement is correct write true if the statement is incorrect write false.
1. Tax is one of the most important sources of revenue to Ethiopian government. T
2. Financing government activity is not purposes of taxation in Ethiopia. F
3. Creation of employment opportunities is not general objective of taxation. F
4. Role of ERCA is establish and implement modern revenue assessment and collection system. T

Part III work out

8) If you are an employee of zagol company at the position of accountant. And ato gebeyew is an
employee of zagol company he was earn basic salary of birr 7,850. And he was also earn over time
birr 952 and nontaxable allowance is birr 2500. Calculate:-
I. Gross earning of ato gebeyew?
II. Taxable income?
III. Employment income tax deducted from ato gebeyew?
9) Suppose markon PLC is a merchandise company. The company were earn a revenue from sales of
goods of birr 3,158,252 the total cost of goods/purchase amount of birr 1,800,000. The comp0any
was incurred general and administrative expenses of birr 250,000 during the year of 2014E.C.
calculate business profit tax of markon company during the year.
10) Ato kebede works an overtime worked for 8hr after 10pm-6am and his basic salary is 8,000.
 Calculate total overtime earning of ato kebede a?
 Calculate total gross earnings of ato kebede.
 Calculate employment income tax.
Answer
8, given I, gross earning = BASIC SALERY+ OVER TIME+ ALLOWANC
Basic salary= 7850 =7,850+952+2,500= 11,302
Over time = 952
Allowance = 2500 II, taxable income = gross earning - nontaxable income
=11,302 - 2,500=8,802
III, EIT= TI * TR – D
=8,802*30%-955
= 1,685.6

9, MARKON PLC
INCOME STATMMENT
2014
SALE…………………………………………………………….…….3,158,252
LESS (CGS)……………………………….(1,800,000)
GROS PROFIT…………………………………………………1,358,252

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LESS G &A EXPENSSES …………………………….(250,000)
NIBT……………………………………………………………1,108,252
LESS BPT…(1,108,252*30%)……………(332,475.6)
NET PROFIT………………………………………………………775,776.4

10, GIVEN

BASIC SALERY =8,000

OTworked hr= 8

duration of OT= 10pm-6am (1.5 rate)

1, OT earning = BS/160*OT rate *OT hr

=8000/160*1.5*8 = 600 Birr

2, Gross earning = BS + OT

= 8000+600= 8600 BIRR

3, EIT= TI*TR-D

=8600*30%-955 = 1625 Birr

P/B A.H