JANAK COLLEGE (b) Expenses the expenses which are not allowed for deduction while computing

Final Examination – 2073 taxable income under Income Tax Act.

Level: BBS 3rd year Time: 3 Hours Full Marks: 100 8. Mr. Rabin disclose the following income and the expenditures for the previous
Sub: Taxation and auditing Pass Marks: 35 year:
Royalty income Rs.1,70,000 (Net)
Brief answer questions: (5 x 2 = 10) Dividend from resident company Rs.13,000
Attempt ALL Questions: Natural resource income Rs.75,000
1. What are the objectives of tax? Interest from private money lending Rs.25,500 (Net)
2. What is value added tax? Agricultural income Rs.45,000
3. Mr. Ram is working in a government office with monthly salary of Rs.25,000. Interest from saving deposit (Net) Rs.42,500
Office provided him accommodation facility too. Gift related to investment Rs.9,000
Required: Total income from employment Lottery income Rs.75,000
4. If a disable woman working at remote area “C” has only employment income, Pension from previous employer Rs.7,000 p.m.
what exemptions and rebate can she get under income tax act? Royalty from writing articles Rs.25,000
5. If a assets having depreciation basis of Rs.2,00,000 , spent Rs.23,000 on repair Rent received by letting machinery Rs.36,000 (Net)
expenses. Calculate allowable repair expenses under ITA. He claimed following expenses for deduction:
Dividend collection charge Rs.1000
Short answer questions: (4 x 10 = 40) Royalty collection charge Rs.2,000
Attempt all questions: Donation to a public hospital Rs.25,000
6. (a) A costumer purchased a television on Rs.32,544 from a retailer. The Taxi fare Rs.3,000 spent for collecting pension income
television was imported by Mr. Ram and sold to retailer. Both importer and retailer Required: (a)Assessable income (b) Taxable income (c) Tax liability
charged 20% profit on cost price.
Required: (a) Imported price of the television (b) Total vat payable to government 9. Mr. Basnet , an employee of a government owned organization, had submitted
the following income and expenditures for the previous year:
(b) Mr. Sharma, a permanent officer of Government of Nepal was Appointed as a Net salary , after deducting provident fund and income tax at source including
secretary at the Embassy of Nepal in Qatar. He is drawing Rs.30,000 p.m. as salary. dashain allowance Rs.2,28,000
He left Nepal on 1st Chaitra. He was paid US$ 1,000 as dearness allowance and Contribution to provident fund Rs 24,000 and equal contribution by employer.
US$ 200 as outstation allowance. Dollar exchange rate applicable was Rs.85 for Income tax paid in advance Rs.8,000
one US dollar. House rent allowance Rs.2,000 p.m.
Required: (a) His residential status (b) His taxable income Car facility provided by the employer for both private and official use.
Life insurance premium paid by employer Rs. 12,000 for his policy and Rs.5,000
7. (a) Mr. Pradhan furnished the following particulars of his income for the for his wife’s policy.
previous year: Donation to Lumbini Area Development Trust Rs.20,000.
Assessable income from employment Rs.1,50,000
Income received from natural resources Rs.60,000.
Assessable income from investment Rs.80,000
Employer provided him a guard facility with monthly salary of Rs.7,000 where
Assessable income from business Rs.2,50,000
his contribution was 30% only.
He has claimed the following expenses for deduction:
* Contribution to Provident fund Rs.10,000 Dearness allowance Rs.40,000
* Donation to public school Rs.8,000 His office is located on Remote area “B”
* Life insurance premium Rs.6,000 Interest received on saving deposit Rs.85,000
Required: (a) Total taxable income (b) Tax liability Required: (a) Assessable income from employment (b) Taxable income
(c) Tax liability
 To Telephone charge 30,000
Comprehensive Questions: (2 x 15 = 30) To Depreciation 28,000
10. (a) The following information are provided by a special industry , ABC (machinery)
Company, about its fixed assets under block “C”: To Legal expenses 16,000
Book value of the assets at the beginning of the year Rs.6,00,000 To Net profit c/d 21,000
Purchased during the year:
On Ashwin Rs.2,00,000
On Chaitra Rs.4,50,000
On Baishakh, a part of the assets costing Rs.80,000 was sold on Rs.1,00,000
Actual repair expenses charged during the year was Rs.65,000 5,70,000 5,70,000
Required: (a)Allowable depreciation (b)Opening WDV for the next year
Additional information:
(b)The following are the operating results of a company for the 6 years: -Office expenses included Rs.5,000 spent by proprietor for his personal use.
Year 1 2 3 4 5 6 -Opening stock was over valued by Rs.30,000
-40% of bad debt recovered was allowed by ITO previously.
Profit/Loss (50,000) 70,000 (40,000) (1,00,000) 60,000 1,60,000 -Purchase included Rs.1,00,000 for purchase of machinery. Opening depreciation
Company paid donation of Rs.15,000 in year 3. Interest expenses Rs.5,000 was not basis for the year was Rs.50,000.
deducted in above profit of 6th year. -Legal expenses included Rs.3,000 paid for penalty paid against violation of traffic
Required: Statement of carry forward of loss rules.
-Advertisement expenses included Rs.16,000 paid for his life insurance premium.
11. Given below is the trading and profit and loss account of Mr. Tamrakar, a -20% telephone expenses are related to personal work.
trader for the previous year. Required: (a) Assessable income from Business (b) Total taxable income
(c) Tax liabilities
Particulars Amount Particulars Amount
Part II : Auditing
To Opening stock 1,00,000 By Sales 7,20,000 Brief answer questions: (5 x 2 = 10)
To Purchase 4,00,000 By Closing stock 1,80,000 12. Briefly explain the objectives of audit note book.
To wages 20,000 13. Point out any two qualities required in a successful auditor.
To Custom duty 30,000 14. Differenciate between cash audit and cost audit.
To Gross profit c/d 3,50,000 15. Mention any two advantages of internal check.
9,00,000 9,00,000 16. Write a note on ‘Continuous Auditing’.

Short answer questions: (1 x 10 = 10)

To Salary 70,000 By Gross profit b/d 3,50,000 17. Rectify the following transactions with explaining impact on profit:
To Office expenses 80,000 By Sales of old newspaper 10,000 (a) Purchase from ABC traders Rs. 25,000 was entered in sales book.
To Bad debt 18,000 By Royalty received 1,00,000 (b) Wages paid Rs.6,000 for installation of machinery was debited to wages
To Discount 40,000 By Commission received 15,000 account.
To Bonus to staff 25,000 By Bad debt recovered 40,000 (c) Sales book was overcastted by Rs.5,000.
To Provision for tax 30,000 By Gift from debtors 8,000 (d) Salary paid Rs.4,000 to Shyam was debited to his personal account.
To Donation 22,000 By Interest from bank 17,000 (e) Withdraw Rs.2,000 for personal use by proprietor was debited to rent account.
To Pollution control cost 1,20,000 By House rent 30,000
To Advertisement expense 70,000
“Best Of Luck”