Faculty of Commerce Final Exam: 1st Semester

Accounting Department Principals of Tax Accounting

English Section (3rd Year) Date: 22 Jan. 2022, Time: 3 hours / 4 pages

Question (1): Determine whether each of the following statements is true or false (50 marks)
1. Tax can be collected in a cash form or in-kind form.
2. Tax is obligatory by the state.
3. A taxpayer refers to legal persons (organizations) only.
4. There is an intermediary between the taxpayer and the state in the in-direct tax.
5. The taxable income is the amount subjected to tax after deducting the exempted bracket.
6. The tax base is the amount subjected to tax before deducting the exempted bracket.
7. The tax amount is the amount of taxable income multiplied by tax rate.
8. In the direct taxes, taxpayer bears its burden.
9. Tax on income of natural persons, as well as tax on profits of legal persons are types of direct
taxes.
10. In Value Added Tax the person who bears its burden couldn’t shift it to another party.
11. Any natural person has an exemption amounting to L.E 15,000 annually as minimum cost of
living exemption regardless married or unmarried.
12. The tax period for tax on income of natural persons is the fiscal calendar year or any other
period of 12 months without any exception.
13. A natural person is resident in Egypt if only he stayed in Egypt for a period more than 183
days continuously within 12 months.
14. Net profit (loss) from non-commercial and professional activities is calculated by applying
the accrual basis.
15. Tax on income of natural persons is subject to progressive tax rates according to ascending
slices.
16. For a natural person whose annual taxable income is L.E 14,000 the tax due is L.E 740.
17. For a natural person whose annual taxable income is L.E 20,000 the tax due is L.E 125.
18. For a natural person whose tax base is 20,000, the tax due is L.E 380.
19. For a natural person whose net annual income is exceeding L.E 600,000, there is an exempted
bracket for minimum cost of living amounting to L.E 15,000 annually.
20. If a taxpayer is performing his duties abroad and received his income form a foreign source,
then his income will be subjected to salaries and the like tax in Egypt.
21. A company gave one of its employees a mobile phone which was bought at L.E 1000 to be
used for both personal and work purposes. The monthly phone bill is L.E 300. Then, the
monthly taxable in-kind benefit equals L.E 60.
22. Work must be the main element in practicing the profession or the activity which is included
among revenues from non-commercial professions.
23. Revenue received by intellectual property rights’ holders from selling or using their rights
are non-taxable.
24. Donations paid in building a mosque in the neighborhood are non-deductible from non-
commercial professions net profit.
25. Books produced by teaching staff for distribution mainly among students shall be non-
taxable in case the prices determined by the universities and higher institutes are not met.

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ISO Code: SP00QF140001 Release No. (1) Release Date: 19/7/2022
Question (2): Choose the correct answer (25 marks)
1. Self-employed professions are those professions that require ……….
A. scientific B. practical C. both A & B D. no skills
skills skills

2. Capital element is considered a ………. element in professional and non-commercial

activities
A. main B. secondary C. basic D. dominant

3. If the total net annual income of a taxpayer was L.E 51269. Then the tax due on this taxpayer
will be ……….
E. L.E 5702 F. L.E 2814 G. L.E 2418 H. Zero

4. By the end of December 2021, a company granted one of its employees 50 shares of stock of
par value L.E 100, while the market value is L.E 110. The company prevented the manager
of selling these shares until 2024. The in-kind benefit value of the granted shares for 2021
equals ……….
A. L.E 5,500 B. L.E 5,000 C. Zero D. L.E 500

5. For an employee who receives a 5% loan amounting to L.E 210,000 from his employer at
1/10/2020, his total income from 1/4/2020 to 30/9/2020 was L.E 150,000. Then, the monthly
taxable variable in-kind benefit is ……….
A. L.E 60,000 B. L.E 1,200 C. Zero D. L.E 100

Use the following information to answer questions from 6 to 10

An employee works in a private sector company receives the following monthly amounts during
year 2020. Basic salary L.E 1500, nature of work allowance L.E 350, incentives (75% from his basic
salary), meal allowance L.E 200, transportation allowance L.E 200. He pays L.E 100 monthly as a
premium on a life insurance policy for the benefit of his wife and his independent son equally. In
addition, the company deducts from his salary L.E 250 monthly social insurance contributions.

6. The monthly taxable basic salary for this employee is ……….

A. L.E 1,500 B. L.E 1,600 C. L.E 1,850 D. L.E 2,975

7. The monthly taxable variable salary for this employee is ………. (A)
A. L.E 1,475 B. L.E 2,975 C. L.E 5,175 D. L.E 1,000

8. The total monthly deduction for this employee is ……….

A. L.E 1,000 B. L.E 1,100 C. L.E 1,050 D. L.E 1,005

9. The lowest amount to be deducted for private, life, and health insurance contributions for
this employee is ……….

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ISO Code: SP00QF140001 Release No. (1) Release Date: 19/7/2022
 A. L.E 833.3 B. L.E 100 C. L.E 150 D. L.E 50

10. The net monthly taxable income for this employee is ……….
A. L.E 1,925 B. L.E 1,175 C. L.E 1,075 D. L.E 1,975

Use the following information to answer questions from 11 to 18

A taxpayer bought a plot of land sized 2,500 m2 at the total price of L.E. 500,000. The
commission and the brokerage are 2% of the total price, registration expenses reached L.E
25,000 and the attorney fees were L.E 5,000. After completing the registration procedures,
the taxpayer divided the plot of land, after excluding 20% of its size for roads, into five
equal plots. It costs L.E 100,000 to clear, level and pave the by-roads and the expenses of
installing electricity, water and sanitary drainage to the parceled lands cost L.E 60,000.
If you know that the taxpayer sold, during the same tax period, 4 plots of land at the
price of L.E 500 per m2 after spending L.E 40,000 on advertisements and L.E 20,000 as
interests on financing loans.

11. The total cost of parceling the land equals L.E …………
A. L.E 2,400,000 B. L.E 1,200,000 C. L.E 700,000 D. Zero

12. The total size of the area suitable for sale equals ……….
A. 1,250 m2 B. 2,000 m2 C. 3,000 m2 D. 750 m2

13. The cost of square meter equals L. E ………

A. L.E 350 B. L.E 700 C. L.E 250 D. Zero

14. The size of each plot of land equals ……….

A. 200 m2 B. 160 m2 C. 400 m2 D. 450 m2

15. The revenue of selling the plots equals L.E ………

A. L.E 3,130,000 B. L.E 800,000 C. L.E 1,490,000 D. Zero

16. The cost of sold plots equals L.E ……….

A. L.E 560,000 B. L.E 1,640,000 C. L.E 1,490,000 D. Zero

17. The gross profit equals L.E ……….

A. L.E 3,130,000 B. L.E 1,640,000 C. L.E 240,000 D. Zero

18. The taxable net profit (loss) equals L.E ……….

A. L.E 1,490,000 B. L.E 1,450,000 C. L.E 180,000 D. Zero

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ISO Code: SP00QF140001 Release No. (1) Release Date: 19/7/2022
Use the following information to answer questions from 19 to 25

An Engineer has an engineering office of which revenues and expenses during 2017 were as
follows:
(1) Revenues: L.E. 15,000 Fees of engineering designs, L.E. 7,000 Fees of engineering
consultancies, L.E. 17,000 Selling price of engineering instruments on 1st of Jan. 2017, it had
bought on 1st July. 2014, its historical cost L.E. 40,000 (25% annual depreciation), L.E.
15,000 Fees of designing a villa in Saudi Arabia, L.E. 6,000 Shared designing fees with
another engineer, 50% each.
(2) Expenses: L.E 500 depreciation of engineering instruments, L.E 300 customs duties on
personal baggage, L.E 2,400 salaries of the office staff, L.E 1,500 office rent, L.E 600 car
expenses and depreciation, L.E 200 general & out of pocket expenses, L.E 100 subscription
to the engineer syndicate, L.E 1,000 donations to ambulance association. Noted that the
taxpayer has achieved a loss of L.E 2000 in the last year and that the taxpayer keeps
appropriate accounts and books.

19. The taxable revenue equals L.E …………

A. L.E 57,000 B. L.E 42,000 C. L.E 40,000 D. Zero

20. The capital gain of selling engineering instruments ……….

A. L.E 17,000 B. L.E 2,000 C. L.E 13,000 D. Zero

21. The deductible expense not supported by documents equals L.E ……….
A. L.E 5,300 B. L.E 5,000 C. L.E 5,100 D. Zero

22. The net profit before deducting the donations equals L.E ……….
A. L.E 36,900 B. L.E 36,000 C. L.E 40,000 D. Zero

23. The deductible donations equal L.E ……….

A. L.E 1,000 B. L.E 3,690 C. L.E 3,000 D. Zero

24. The net profit after deducting the donations equals L.E ………
A. L.E 36,900 B. L.E 35,900 C. L.E 37,900 D. Zero

25. The taxable profit from non-commercial profession equals L.E …………
A. L.E 35,900 B. L.E 33,900 C. L.E 30,900 D. Zero

Good Luck Instructor: Yousra Obiedallah

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ISO Code: SP00QF140001 Release No. (1) Release Date: 19/7/2022