MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR
THIRD YEAR FIRST SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF HUMAN RESOURCE MANAGEMENT
COURSE CODE: BHR 205
COURSE TITLE: TAXATION
DATE:14TH APRIL 2014 TIME: 9.00AM – 12.00PM
INSTRUCTIONS TO CANDIDATES
Question ONE is compulsory
Answer any other THREE questions
This paper consists of 5 printed pages. Please turn over
QUESTION ONE.
Mr. Matura, a farmer constructed a farmhouse in January 1998 for sh. 6,000,000 and incurred the following additional expenditure: –
-2nd January 1998 Cattle dip—————————-1,000,000
-30th June 1998 Irrigation system——————-1,500,000
-30th September 1998 Labour quarters———————2,400,000
-30th October 1998 Milking machinery—————–1,120,000
Matura sold the farm on 2nd January 1999 to his brother Mr. Peter who is also a farmer and sale agreement contained the following particulars: –
-Farmhouse——————————6,700,000
-Cattle dip——————————–1,200,000
-Labour quarters————————-2,800,000
-Irrigation systems———————-1,200,000
-Milking machinery———————980,000
Required; –
Show capital deduction due to Mr. Matura and Mr. Peter for the year 1999, 2000 and 2001.
(25mks)
QUESTION TWO.
Mr. Kimani, an employee of Kenya breweries co. was provided with the following income in the year 2010;
-Salary 60,000£ p.a.
-Provided with the house by the company at 15,000/- per month.
-He contributed 3% of the basic pay towards the house rent.
-He was provided with a car of 2500cc.
-Water 800£
–Electricity 1,200£
-Phone 710£
Required;
Compute Mr. Kimani’s taxable income. (15mks)
QUESTION THREE.
Public revenue is the amount received by the government from different sources.
Required;
Name and explain these main sources of government revenue. (15mks)
QUESTION FOUR.
Government is expected to carry out some activities as part of its services to the public. These activities are generally of universal application, but where applicable, a Kenyan example is given to drive the point home.
Required;
In this note discuss any five of these activities (15mks)
QUESTION FIVE.
Given below were the purchases and sales made by Tough Limited during the month of December 2000. Prices were inclusive of VAT at the standard rate of 18%.
December 2000;
1st – Purchased 400 units at sh. 5,600 per unit
1st – Sold 40 units at sh. 7,200 per unit
5th – Sold 80 units at sh. 7,200 per unit
10th- Sold 200 units at sh. 7,200 per unit
20th- Purchased 300 units at sh. 6,400 per unit
25th- Sold 80 units at sh. 7,200 per unit
30th- Sold 200 unit at sh. 8,000 per unit
There were no inventory at the beginning of the month but 100 units were in stock at the end of the month.
Required:-
a) Prepare VAT account for the month of December 2000 (12mks)
b) On what dates is VAT due payable on instalment? (3mks)
QUESTION SIX.
a) Using descriptive examples explain any five incomes exempted from tax
(10mks)
b) Outline five common causes of tax evasion (5mks)
