- 20 Marks
Question
Below is the Profit or Loss Accounts of Osu Mart Ltd, a manufacturing company in Accra for the year ended 31st December 2014, submitted to the Commissioner of Domestic Tax Revenue Division of the Ghana Revenue Authority on 30th April 2015.
a) Compute the chargeable income of the company for the 2014 Year of Assessment. (18 marks)
b) State the significance of the Auditor’s Certificate to the Examination of Accounts. (2 marks)
Answer
| Computation of Chargeable Income | GH¢ | GH¢ |
|---|---|---|
| Net Profit per Accounts | 242,350 | |
| Deduct Profit on Sale of Asset | 95,000 | |
| Adjusted Profit | 147,950 | |
| Add Back Non-Allowable Expenses | ||
| Acquisition of Trade Mark | 30,000 | |
| Acquisition of New Machinery | 28,500 | |
| Loans to Staff written off | 53,850 | |
| Cost of Neon Sign | 20,500 | |
| Cost of Canteen Equipment | 33,800 | |
| Goods given gratis | 13,200 | |
| General Provision for Bad Debt | 25,000 | |
| Depreciation | 81,500 | |
| Total Non-Allowable Expenses | 286,350 | |
| Adjusted Income Before Allowances | 434,300 | |
| Less Capital Allowance | (65,240) | |
| Chargeable Income | 369,060 |
(Total Marks: 18)
b)
The Auditor’s Certificate is significant because it:
- Indicates the quality of the accounts to the examiner, affirming whether proper books have been kept and that the accounts are acceptable.
- Serves as a required document on a tax return, certifying that all information provided to the Commissioner-General is complete and accurate, and can be used as evidence in court if necessary.
(Total Marks: 2)
- Topic: Business income - Corporate income tax
- Series: MAY 2016
- Uploader: Dotse