Infolink University Collage Dilla campus

Department of Accounting and Finance Final Exam Developing Understanding

of Taxationfor1st Year Accounting TVET Regular students
Part I Write if The statement is Correct “True” if write the statement is incorrect “False
1. Category “B” taxpayers includes, unless already classified in Category “A” Taxpayer
2. share company, PLC and public enterprise taxpayers are Category “C” Taxpayers
3. Every person deriving income from interest on deposits shall pay tax at the rate of 5%.
4. Business that have separate legal personality regardless of their annual sales revenue.
5. Turnover tax is payable on goods supplied and services rendered by persons not registered for VAT

Part II Choose the correct answer for the following given alternatives

1. Basic salary/hours*rate* duration of overtime worked A. Calculated Allowance

B. Calculated Income tax C. Calculated overtime D. All
2. Income Tax =Taxable Income x tax rate – Deduction is known as A. Calculated allowance
B. Calculated Income tax Calculated overtime D. calculated Gross income
3. Any company incorporated under the laws of Ethiopia having annual turnover of more than
Br500, 000. A. Category “A”. B Category “C” C. Category “B” D A%B
4. Building held for business, factory, and office at the rate of A 15% B. 10% C 5% D 20%
5. TOT is charged at on goods locally sold and on services is A. 10% &2% B. 2% & 10%
C. 15% & 2% D 2% &15 %
6. tax is charged on ad valorem rate on certain consumer goods on importation and on similar
products locally produced. A. TOT B VAT C. Custom Duty D. Excise Tax
7. has 6 bands or groups of rates which are applied to imported goods
A. Turnover B. Excise Tax C. Customs duty D. Value Added
8. All traders or businesses whose taxable turnover exceeds Birr ………………….. per year are
A. 200,000 Birr B. 1,000,000 C. 500,000 D, 300,000
9. …………..is a VAT that is calculated and charged on the sale of goods or services from your
business A. input Tax B. Vat Payable C. output Tax D. Vat Payable
10. Taxes on imported goods are collected by the Ministry of Revenue & custom Commission A
surtax B. Excise Tax Stamp Duty D. Custom duty

A. Part III Match The following with Column A to Column B

A. B.
1. CIF A. is charged at 2% on goods locally sold and
10% on services,
2. VAT refund:- B. 0%, 5%, 10% 20%, 30% and 35%.
3. TOT Rates C. Cost + Insurance + Freight
 4. 601 – 1,650*10% D if your VAT on purchase exceed the VAT on
Sales in a given period
5. These bands of rates are Tax E. Deduction of Birr 60

Workout
1. During the VAT period, Jupiter shop (which is vat registered person purchase goods worth
of birr 120,000, including VAT with a 15% VAT rate and sales goods at birr 138,000 excluding
VAT with a 15% VAT rate.
Find the VAT payable/refund
2. An importer brought in an electronic. Duty paying value of the imported item is birr
102,000. Custom duty rate is 30% and excise tax rate is 75%. The imported item is subject to
VAT at the rate of 15%.(4point)
Require:
Calculate
A, custom duty tax
B, Excise tax
C, VAT

Answer sheet
Name Section UID

True of False
1 2 3 4 5

Choose
1 2 3 4 5 6 7 8 9 10

Matching
1 2 3 4 5
 Infolink University Collage Dilla campus
Department of Accounting and Finance Final Exam Developing
Understanding of Taxationfor1st Year Accounting TVET students

B. Part I Match The following with Column A to Column B

A. B.
1. Category “C” Taxpayer A 0(zero) while the maximum is 35
2. 2.50 B. 15% of the annual gross income
3. VAT payable: C. annual turnover is estimated at
Br 500,000 or less
4. Customs duty the minimum rate is D. If your VAT on sales exceed VAT on
purchase in Given period
5. Tax on Income from Rental of Property E. of normal hourly rate for work on
public holyday
Part II Write if The statement is Correct “True” if write the statement is incorrect “False
1. All type of income like Basic salary, allowance, overtime, bonus and other.
2. Transportation allowance (if it fulfill the criteria for tax exemption) 25% of basic salary or
not more than Br 1,200
3. business profit tax is not the tax imposed on taxable business income
4. Every businessman (except Category “C”) is required to preserve all books of accounts and
other records and documents
5. lotteries, tombola, and other similar activities an example of income from game of chance

Part II Choose the correct answer for the following given alternatives

1. of normal hourly rate for overtime work b/n10 pm to 06 am

A. 1.25 B. 1.50 C. 2.00 D. 2.50
2. All are allowance types of Allowance Except A. Desert D. Position C. hardship D. Salary
3. for July 2011 E.C. that pays payroll to its employees according to Ethiopian payroll system.
Abel Tena Basic salary Br.5,500 Allowance 1,900 Overtime 900 Employment income tax is
known as A. 935 B. 1,035 C. 810 D. 1,535
4. Corporate businesses are required to pay -------% flat rate of business income tax
A. 35% B 25% C. 30% D. 10%
5. Royalties income shall be liable to tax at a flat rate is …A 15% B.5% C. 10% D. 20%
6. The first of the five taxes levied on import items is A. Excise Tax B. customs duty
C. Value Added Tax D. Turnover Tax E. All
7. Registered traders on all taxable goods and services at a standard rate of 15%. A.
Value Added Tax B Custom Duty C, Turnover Tax D. Excise Tax
 8. It is believed that this tax should be imposed on luxury goods and basic goods
A. Excise Tax B. Value Added Tax C.Custom Duty D. All
9. if your VAT on purchase exceed the VAT on sales in a given period, the difference will
negative A. Out put Tax B. input Tax C. Vat Refund D. None
10. if your VAT on sales exceed VAT on purchase in a given period difference will positive
C. input Tax B. Vat Refund C. VAT Payable

Workout
1. During the VAT period, shop X (which is vat registered person purchase goods worth of birr
58,000, including VAT with a 15% VAT rate and sales goods at birr 95,000, excluding VAT
with a 15% VAT rate.
Find the VAT payable/refund
2. An importer brought in an Tobacco. Duty paying value of the imported item is birr 70,000.
Custom duty rate is 95% and excise tax rate is 100%. The imported item is subject to VAT at
the rate of 15%.(4point)
Require
Calculate
A, custom duty tax
B, Excise tax
C, VAT

Answer sheet
Name Section UID

Matching
1 2 3 4 5

True of False
1 2 3 4 5

Choose
1 2 3 4 5 6 7 8 9 10