Get premium membership and access revision papers, questions with answers as well as video lessons.
Introductions To Taxation (Day Class) Question Paper
Introductions To Taxation (Day Class)
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2009
UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR STAGE 2EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CFM 100: INTRODUCTIONS TO TAXATION (DAY CLASS)
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL Questions
QUESTION ONE
Explain the canons of an optimum tax system. (15 Marks)
QUESTION TWO
The following details were extracted from the books of Salama traders for the month of August 2009.
The transactions are inclusive of VAT at the rate of 16% where appropriate.
August 1 Opening stock: 45 units valued at Ksh 67,500
2 Purchased 300 units at Ksh. 1,800 per unit
3 Sold 60 units at Ksh 2,400 per unit
5 Sold 80 units at Ksh 2,500 per unit
8 Purchased 180 units at Ksh 2,000 per unit
10 Returned 40 units which had been purchased on 2nd August
14 Sold 120 units at Ksh 2,400 per unit
19 Sold 80 units at Ksh 2,200 per unit
27 Exported 60 units at Ksh 3,000 per unit
2
Required
A VAT account for the month of August 2009 clearly showing the VAT payable or refundable.
(15 Marks)
QUESTION THREE
Mr. Mbaye, a Kenyan, migrated to Canada in 2001; he was offered a job by a company based in
Nairobi, Kenya which he accepted. The employment commenced on 1st January 2008.
The following details relate to his salary and benefits for the year ended 31st December 2008:
1. Monthly salary Ksh 250,000 (PAYE Ksh 27,000)
2. Passage allowance of Ksh 400,000 per annum for visiting his family in Canada.
3. A fully furnished house. The house rent of Ksh 30,000 per month was paid by the employer.
The cost of furnishing the house amounted to Ksh 200,000
4. A life insurance cover whose annual premium was Ksh 30,000 was paid by the employer.
5. A motor vehicle (1750 cc) whose initial cost was Ksh 1,200,000
6. His tuition fees amounting to Ksh 65,000 per annum were paid by the employer.
7. He was provided with mobile phone airtime worth Ksh 3,000 per month by the employer.
Approximately 30% of his mobile phone calls were for private purpose.
8. His salary was increased by Ksh 50,000 on 1st October 2008 and backdated to 1st July 2008.
9. He received a lumpsum pension of Ksh 360,000 during the year from his previous employer.
Required:
a) Compute the total taxable income of Mr. Mbaye for the year 2008.
(12 Marks)
b) Compute the tax payable from this income (8 Marks)
3
QUESTION FOUR
The management of Mali Limited has presented the following income statement for the year ended 31
December 2008
Mali Limited
Income Statement for the year ended 31 December 2008
Sh Sh
Gross profit 5,292,000
Other incomes
Dividend from a subsidiary company 200,000
Interest from foreign bank accounts 4,000
Discount received 28,000
Refund of VAT 12,000
Gain on sale of motor vehicle 14,000
258,000
5,550,000
Expenditure
Salaries and wages 800,000
NHIF contributions 30,000
Subscriptions to a trade association 50,000
Hire purchase interest 15,000
Bad debts written off 60,000
General expenses 80,000
Depreciation 25,000
Legal expenses 40,000
Insurance premiums 124,000
Rent 66,000
Electricity 34,000
Purchase of furniture 26,000 1,350,000
Net profit 4,200,000
4
Additional information:
1. Capital allowances were agreed with the Revenue Authority at Sh 75,000
2. Included in bad debts is a loan of Sh 15,000 due from a former employee of the company who
was dismissed in October 2008.
3. Legal experts include Sh 20,000 incurred in defending a manager against a traffic offence
4. Insurance premiums include Sh 24,000 paid to the National Hospital Insurance Fund
(NHIF) as a penalty for late submission of contributions.
5. The company paid stamp duty of Sh 6,000 relating to a piece of land purchased in August
2004. The payment is included in the rent expense for the year ended 31 December 2008.
Required:
a) Compute the adjusted taxable profit or loss of Mali Limited for the year ended 31 December
2008 (18 Marks)
b) Calculate the tax liability (if any) of the company for the year ended 31 December 2008.
(2 Marks)
More Question Papers
Popular Exams
Return to Question Papers