ESSAY:

Direction: Explain the following statements/question in not less than 5

sentences. DO NOT USE THE COPY-PASTE METHOD.

Explain the ordinary assets and capital assets

Revenue is the gross inflow of economic benefits, during the period,

arising in the course of the ordinary activities of an entity, provided that such
inflow results in an increase in equity that is not related to contributions from
owners of that heritage. Example a revenue itself arises in the course of the
entity's ordinary activities and goes by a variety of names, such as sales,
commissions, interest, dividends, and royalties. Otherwise Capital goods
are considered to be those physical assets available to be used in the
current or future production of other goods and services. In this way, they
are not intended to directly satisfy present or future consumption needs.

Discuss the deductions from the gross income

Gross income refers to the total earnings a person receives before

paying for taxes and other deductions. The amount that remains after taxes
are deducted is called net income. When looking at a pay stub, net income
is what’s shown after taxes and deductions. Net income is always lower
than gross income unless the person is exempt from paying taxes and has
no deductions. In addition, many payments, both direct and indirect, are in
the nature of personal expenditures while others are closely related to the
taxpayer's trade or business and the payments in the latter category may be
either current expenses or capital charges. In all of these situations, With
more than one fifth of the national income being absorbed by some 175,000
federal, state, and local taxing units, the manner in which this problem is
solved will appreciably affect not only the fiscal adequacy of the income tax,
but also its effectiveness in equitably distributing a large part of the national
tax burden. It may be argued that allowance should be made in the tax base
for all payments which contribute to the support of government. Irrespective
of whether the payment is made directly or indirectly, as long as the
taxpayer is able to demonstrate the extent of his contribution to the public
treasury his taxable income should be reduced by that amount. In addition
to the advantage of avoiding the specious but prevalent objection to paying
a tax on a tax, this plan has the very real virtue of disregarding the purely
formal distinctions resulting from the phrasing of a particular tax statute.
Both the name given the exaction and the person upon whom it is
technically imposed would be ignored; its incidence would determine its
deductibility.