TAXATION EXAMINATION QUESTIONS AND CORRECT
ANSWER WITH EXPLANATION GRADED A+ STUDY GUIDE
SOUTHERN NEW HHAMPSHIRE UNIVERSITY
1. Taxation is:
A. Compulsory contribution to government revenue
B. Voluntary donation
C. Investment income
D. Loan repayment
Answer: A
Rationale: Taxes are mandatory payments to the state.
2. The main purpose of taxation is to:
A. Raise government revenue
B. Increase private profit
C. Eliminate trade
D. Reduce population
Answer: A
Rationale: Taxes fund public services.
3. Direct tax is:
A. Paid directly to government by taxpayer
B. Paid through intermediaries
C. Paid only on goods
D. Optional payment
Answer: A
Rationale: Example includes income tax.
4. Indirect tax is:
A. Paid through goods and services
B. Paid directly to government
C. Not mandatory
D. Only corporate tax
Answer: A
Rationale: Included in prices of goods.
5. Example of direct tax:
A. Income tax
, B. VAT
C. Excise duty
D. Sales tax
Answer: A
Rationale: Paid on income earned.
6. Example of indirect tax:
A. Value Added Tax (VAT)
B. Corporate income tax
C. Property tax
D. Wealth tax
Answer: A
Rationale: Applied on consumption.
7. Progressive tax means:
A. Tax rate increases with income
B. Tax rate decreases with income
C. Flat rate for all
D. No tax variation
Answer: A
Rationale: Higher earners pay more percentage.
8. Regressive tax means:
A. Lower-income earners pay higher burden proportionally
B. Rich pay more always
C. Flat tax rate
D. No tax burden
Answer: A
Rationale: Burden decreases with income.
9. Proportional tax means:
A. Same tax rate for all incomes
B. Different rates
C. No tax
D. Only indirect tax
Answer: A
Rationale: Flat taxation system.
10. Tax base is:
A. Amount on which tax is calculated
, B. Tax rate
C. Government budget
D. Income only
Answer: A
Rationale: Subject of taxation.
11. Tax rate is:
A. Percentage applied to tax base
B. Total tax collected
C. Income level
D. Expense level
Answer: A
Rationale: Determines tax amount.
12. Tax incidence refers to:
A. Who bears the burden of tax
B. Tax collection method
C. Tax rate
D. Tax refund
Answer: A
Rationale: Economic burden distribution.
13. VAT stands for:
A. Value Added Tax
B. Variable Asset Tax
C. Verified Annual Tax
D. Value Allocation Tax
Answer: A
Rationale: Consumption tax.
14. Excise duty is levied on:
A. Specific goods like alcohol and fuel
B. Income
C. Property
D. Imports only
Answer: A
Rationale: Selective consumption tax.
15. Customs duty is charged on:
A. Imported goods
ANSWER WITH EXPLANATION GRADED A+ STUDY GUIDE
SOUTHERN NEW HHAMPSHIRE UNIVERSITY
1. Taxation is:
A. Compulsory contribution to government revenue
B. Voluntary donation
C. Investment income
D. Loan repayment
Answer: A
Rationale: Taxes are mandatory payments to the state.
2. The main purpose of taxation is to:
A. Raise government revenue
B. Increase private profit
C. Eliminate trade
D. Reduce population
Answer: A
Rationale: Taxes fund public services.
3. Direct tax is:
A. Paid directly to government by taxpayer
B. Paid through intermediaries
C. Paid only on goods
D. Optional payment
Answer: A
Rationale: Example includes income tax.
4. Indirect tax is:
A. Paid through goods and services
B. Paid directly to government
C. Not mandatory
D. Only corporate tax
Answer: A
Rationale: Included in prices of goods.
5. Example of direct tax:
A. Income tax
, B. VAT
C. Excise duty
D. Sales tax
Answer: A
Rationale: Paid on income earned.
6. Example of indirect tax:
A. Value Added Tax (VAT)
B. Corporate income tax
C. Property tax
D. Wealth tax
Answer: A
Rationale: Applied on consumption.
7. Progressive tax means:
A. Tax rate increases with income
B. Tax rate decreases with income
C. Flat rate for all
D. No tax variation
Answer: A
Rationale: Higher earners pay more percentage.
8. Regressive tax means:
A. Lower-income earners pay higher burden proportionally
B. Rich pay more always
C. Flat tax rate
D. No tax burden
Answer: A
Rationale: Burden decreases with income.
9. Proportional tax means:
A. Same tax rate for all incomes
B. Different rates
C. No tax
D. Only indirect tax
Answer: A
Rationale: Flat taxation system.
10. Tax base is:
A. Amount on which tax is calculated
, B. Tax rate
C. Government budget
D. Income only
Answer: A
Rationale: Subject of taxation.
11. Tax rate is:
A. Percentage applied to tax base
B. Total tax collected
C. Income level
D. Expense level
Answer: A
Rationale: Determines tax amount.
12. Tax incidence refers to:
A. Who bears the burden of tax
B. Tax collection method
C. Tax rate
D. Tax refund
Answer: A
Rationale: Economic burden distribution.
13. VAT stands for:
A. Value Added Tax
B. Variable Asset Tax
C. Verified Annual Tax
D. Value Allocation Tax
Answer: A
Rationale: Consumption tax.
14. Excise duty is levied on:
A. Specific goods like alcohol and fuel
B. Income
C. Property
D. Imports only
Answer: A
Rationale: Selective consumption tax.
15. Customs duty is charged on:
A. Imported goods
