1. On each transaction below, determine the tax type whether it is subject to Basic Income Tax (BIT), Final Withholding Tax (FWT) or Exempt (E) from income tax. 2. On the tax rate column, write the respective rates of the tax type from 0% to 32% , Exempt or Graduated Tax Rate (GTR). TRANSACTIONS TAX TYPE TAX RATE 1. Royalties, books published in the Philippines 2. Interest from overdue accounts receivable, Philippines 3. Interest from peso bank deposit, BPI, Quezon City 4. Interest from US dollar bank deposit, BDO, Manila 5. Prizes amounting to P30,000, Philippines 6. Prizes amounting to P10,000, Philippines 7. Compensation income, Philippines 8. Gain from sale of car for personal use 9. Dividend income from a domestic corporation by a nonresident alien not engaged in trade or business.. 10. Interest income from long-term bank deposit by a resident alien. 11. Dividend income from a resident foreign corporation. 12. Gain on sale of real properties used in business 13. P15,000 other winnings, Canada 14. P10,000 Philippine Lotto winnings 15. Interest from a foreign currency deposit in Australia by a nonresident citizen.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
INSTRUCTION:
1. On each transaction below, determine the tax type whether it is subject to Basic Income Tax (BIT), Final Withholding Tax (FWT) or Exempt (E) from income tax.
2. On the tax rate column, write the respective rates of the tax type from 0% to 32% , Exempt or Graduated Tax Rate (GTR).
TRANSACTIONS TAX TYPE TAX RATE
1. Royalties, books published in the Philippines
2. Interest from overdue
3. Interest from peso bank deposit, BPI, Quezon City
4. Interest from US dollar bank deposit, BDO, Manila
5. Prizes amounting to P30,000, Philippines
6. Prizes amounting to P10,000, Philippines
7. Compensation income, Philippines
8. Gain from sale of car for personal use
9. Dividend income from a domestic corporation by a nonresident alien not engaged in trade or business..
10. Interest income from long-term bank deposit by a resident alien.
11. Dividend income from a resident foreign corporation.
12. Gain on sale of real properties used in business
13. P15,000 other winnings, Canada
14. P10,000 Philippine Lotto winnings
15. Interest from a foreign currency deposit in Australia by a nonresident citizen.
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