FIN623 Midterm 9 Past Papers

1. Economic Policy

Taxes are important instrument of Fiscal Policy. PG#1

Q2. Which of the following canon of taxation suggests that there should not be any arbitrariness or ambiguity in respect of amount of tax paid? (1 marks)

1. Capacity to Pay
2. Certainty
3. Simplicity
4. Convenience

Correct answer: Certainty

P#2Certainty: This cannon suggest that the amount of payment should be certain and there should not be any arbitrariness or ambiguity with respect to the amount of tax to be paid by the tax payer.

Q3. Taxation management is a strategy where by a person manages its business in such a way so as to maximize the utilization of which of the following? (1 marks)

1. All of the given options
2. Tax holidays
3. Exemption, Rebates & Concession
4. Tax credits

Correct answer: All of the given options

Taxation management is a strategy where by a person manages its business and other transactions/activities in such a way so as to make maximum use of tax holidays, exemption, concession, rebates, tax credits, deductible allowances available under law and as a result is able to derive the benefit of minimizing his tax liability. PG#3

Q4. Which of the following tax is paid in relation to how much you earn? (1 marks)

1. Sales Tax
2. Income Tax
3. Inheritance Tax
4. Value added Tax

Correct answer: Income Tax

Income Tax is a tax on a person in respect of his income during a tax yearP#16

Q5. Under which of the following sections of Income Tax Ordinance 2001 vested the powers to CBR in order to formulate the IT rule 2002? (1 marks)

1. Section 206
2. Section 213
3. Section 237
4. Section 238

Correct answer: Section 237

IT rules 2002: These were promulgated by CBR on 1st July 2002 in exercise of powers granted under section 237 of the PG#5

Q6. Law making is the prime responsibility of which of the following authorities? (1 marks)

1. Parliament
2. Supreme Court
3. High Court
4. City Court

Correct answer: Parliament

Q7. Section 2(5A) of Income Tax Ordinance 2001 defined: “assessment year” means In which criteria the above definition falls? (1 marks)

1. Exclusive definition
2. Inclusive definition
3. Both Exclusive and Inclusive definitions
4. Statutory definition

Correct answer: Exclusive definition

PG#8 Exclusive or Exhaustive Definition: 2(5A) “assessment year” means

Q8. Which of the following is the Special Accounting Year of Insurance Companies? (1 marks)

1. 1st January to 31st December
2. 1st July to 30th June
3. 1st October to 30th September
4. 1st September to 31st August

Correct answer: 1st January to 31st December

All Insurance Companies 1st January to 31st December P#11

Q9. Which of the following is the Special Accounting Year of Sugar Companies? (1 marks)

1. 1st July to 30th June
2. 1st October to 30th September
3. 1st September to 31st August
4. 1st January to 31st December

Correct answer: 1st October to 30th September

Companies manufacturing Sugar 1st October to 30th September P#11

Q10. If the accounting year of Mr. Aslam, a rice exporter is started from 01 January 2005 and ending on 31st December 2005. What will be its tax year? (1 marks)

1. Tax year 2003
2. Tax year 2004
3. Tax year 2005
4. Tax year 2006

Correct answer: Tax year 2006