FUNDAMENTALS OF TAXATION EXAM
QUESTIONS AND ANSWERS
TAXATION---ans-✔✔MEANS-BY-WHICH-THE-SOVEREIGN-STATE-IMPOSES-
CHARGES-UPON-PERONS,-PROPERTIES-OR-RIGHTS-TO-ENABLE-IT-TO-DEFRAY-
THE-NECESSARY-EXPENSES-IN-DISCHARGING-THE-GOVERNMENTS-FUNCTIONS
TAXES---ans-✔✔ENFORCED-PROPORTIONAL-CONTRIBUTIONS-FROM-PERSONS,-
PROPERTIES,-OR-RIGHTS-BY-THE-STATE-IN-ORDER-TO-SUPPORT-THE-
GOVERNMENT-AND-PUBLIC-NEEDS
INCOME---ans-✔✔REFERS-TO-THE-AMOUNT-OF-WEALTH-WHICH-FLOWS-TO-A-
PERSON-OR-CORPORATION-WITHIN-A-SPECIFIED-PERIOD-OF-TIME
TAXABLE-INCOME---ans-✔✔PERTINENT-ITEMS-OF-INCOME-PROVIDED-FOR-IN-
THE-NATIONAL-INTERNAL-REVENUE-CODE,-THE-AMOUNT-OF-INCOME-TAXED
INCOME-TAX---ans-✔✔TAX-ON-ALL-YEARLY-PROFITS
PRIMARY-AND-SECONDARY---ans-✔✔WHAT-ARE-THE-PURPOSES-FOR-TAXATION
PRIMARY---ans-✔✔TAXATION-IS-IMPOSED-IN-ORDER-TO-PROVIDE-FUNDS-AND-
PROPERTY,-PROMOTE-GENERAL-WELFARE,-PROTECTION-OF-THE-COUNTRY'S-
CITIZENS
PROVIDE-INCENTIVE-AND-SUPPORT,-PROTECT-LOCAL-BUSINESSES,-REDUCE-
INEQUALITIES-IN-WEALTH,-PREVENT-INFLATION---ans-✔✔WHAT-ARE-THE-
SECONDARY-PURPOSES-OF-TAXATION?
FISCAL-ADEQUACY,-EQUALITY-OR-THEORETICAL-JUSTICE,-LAW-MUST-BE-
CAPABLE-TO-PROVIDE-CONVENIENT,JUST-AND-AN-EFFECTIVE-
ADMINISTRATION---ans-✔✔THE-BASIC-PRINCIPALS-OF-A-SOUND-TAX-SYSTEM
INCOME-TAX-SYSTEM---ans-✔✔IS-UNDER-THE-PROVISION-OF-THE-NATIONAL-
INTERNAL-REVENUE-CODE-AND-IS-UNDER-SPECIAL-LAWS
QUESTIONS AND ANSWERS
TAXATION---ans-✔✔MEANS-BY-WHICH-THE-SOVEREIGN-STATE-IMPOSES-
CHARGES-UPON-PERONS,-PROPERTIES-OR-RIGHTS-TO-ENABLE-IT-TO-DEFRAY-
THE-NECESSARY-EXPENSES-IN-DISCHARGING-THE-GOVERNMENTS-FUNCTIONS
TAXES---ans-✔✔ENFORCED-PROPORTIONAL-CONTRIBUTIONS-FROM-PERSONS,-
PROPERTIES,-OR-RIGHTS-BY-THE-STATE-IN-ORDER-TO-SUPPORT-THE-
GOVERNMENT-AND-PUBLIC-NEEDS
INCOME---ans-✔✔REFERS-TO-THE-AMOUNT-OF-WEALTH-WHICH-FLOWS-TO-A-
PERSON-OR-CORPORATION-WITHIN-A-SPECIFIED-PERIOD-OF-TIME
TAXABLE-INCOME---ans-✔✔PERTINENT-ITEMS-OF-INCOME-PROVIDED-FOR-IN-
THE-NATIONAL-INTERNAL-REVENUE-CODE,-THE-AMOUNT-OF-INCOME-TAXED
INCOME-TAX---ans-✔✔TAX-ON-ALL-YEARLY-PROFITS
PRIMARY-AND-SECONDARY---ans-✔✔WHAT-ARE-THE-PURPOSES-FOR-TAXATION
PRIMARY---ans-✔✔TAXATION-IS-IMPOSED-IN-ORDER-TO-PROVIDE-FUNDS-AND-
PROPERTY,-PROMOTE-GENERAL-WELFARE,-PROTECTION-OF-THE-COUNTRY'S-
CITIZENS
PROVIDE-INCENTIVE-AND-SUPPORT,-PROTECT-LOCAL-BUSINESSES,-REDUCE-
INEQUALITIES-IN-WEALTH,-PREVENT-INFLATION---ans-✔✔WHAT-ARE-THE-
SECONDARY-PURPOSES-OF-TAXATION?
FISCAL-ADEQUACY,-EQUALITY-OR-THEORETICAL-JUSTICE,-LAW-MUST-BE-
CAPABLE-TO-PROVIDE-CONVENIENT,JUST-AND-AN-EFFECTIVE-
ADMINISTRATION---ans-✔✔THE-BASIC-PRINCIPALS-OF-A-SOUND-TAX-SYSTEM
INCOME-TAX-SYSTEM---ans-✔✔IS-UNDER-THE-PROVISION-OF-THE-NATIONAL-
INTERNAL-REVENUE-CODE-AND-IS-UNDER-SPECIAL-LAWS
