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WorksheetsIncome Taxation Midterm Quiz 2
Total questions: 10
Worksheet time: 5mins
What is the purpose of income taxation?
To encourage regressive sales and consumption taxes
To provide large amounts of revenues
To offset progressive sales and consumption taxes
To mitigate the evils arising from the inequalities in the distribution of income and wealth
How is income defined in tax laws?
A flow of wealth during a definite period of time
A fund or property existing at one distinct point of time
A representation of an interest in the corporate properties
An amount of money coming to a person within a specified time
What is the essential difference between capital and income?
Capital is a fund or property existing at one distinct point of time, while income denotes a flow of wealth during a definite period of time
Capital is wealth or fund whereas income is profit or gain or the flow of wealth
Capital is the tree, and income the fruits
Capital is the right of a person to receive income or profits
What are the sources of income according to tax laws?
Sources within the Philippines
Sources partly within and partly without the Philippines
Sources without (outside of) the Philippines
Sources within the United States
What is the meaning of taxable income?
The right of a person to receive income or profits
Items received which add to the taxpayer’s net worth or redound to his benefit
Items received which do not add to the taxpayer’s net worth or does not redound to his benefit
The pertinent items of gross income specified in the NIRC, less deductions and/or personal and additional exemptions
When is income considered received or realized?
Actual receipt
Constructive receipt
Neither actual nor constructive receipt
Both actual and constructive receipt
What are the requisites for income to be taxable?
There must be gain or profit
The gain must be realized or received
All of the above
The gain must not be excluded by law or treaty from taxation
Under the accrual basis method of accounting, when is income reportable?
When the amount can be determined with reasonable accuracy
When all the events have occurred that fix the taxpayer’s right to receive the income
All of the above
When there is a reasonable expectation that the amount will be paid in due course
What is the substantial alteration of interest test in determining taxable income?
None of the above
Stock dividends are not income subject to tax on the part of the shareholder
Any proceeds from the use of capital, beyond the amount of the capital is considered as income
Income is earned when there is a substantial alteration of the interest of a taxpayer
What is the flow of wealth test in determining taxable income?
Income is reportable when all the events have occurred that fix the taxpayer’s right to receive the income
Income which is credited to the account of a taxpayer which may be drawn upon by him at any time is subject to tax for the year during which so credited or set apart
None of the above
The essential difference between capital and income is that capital is a fund whereas income is the flow of wealth coming from such fund
