T.Y B.COM
SEMESTER - 5
MID SEMESTER EXAMINATION
PUBLIC FINANCE - MCQs WITH ANSWERS
1. Taxes are levied to:
A. Penalize people
B. Provide direct benefits to tax payers
C. Provide general benefits for the people
D. To accumulate funds
2. Whom of the following propounded principles of taxation:
A. Keynes
B. Marshall
C. Adam Smith
D. Al Ghazali
3. Taxes on commodities are:
A. Direct taxes
B. Indirect taxes
C. Progressive taxes
D. Proportional taxes
4. Govt. prepares its budget:
A. Weekly
B. Monthly
C. Quarterly
D. Annually
5. One of the following is NOT a feature of private finance:
A. Balancing of income & expenditure
B. Secrecy
C. Saving some part of income
D. Publicity
6. One of the following is NOT a feature of private finance:
A. Publicity
B. Secrecy
C. Efforts to balance income & expenditure
D. Taking steps to increase income
7. It is direct tax:
A. Excise tax
B. Sales tax
C. Income tax
D. Custom duty
8. These are heads of expenditure of the government EXCEPT?
A. Provide social services
B. Defense
C. Improve transport & communication
D. Provide cosmetics
9. The most important source of income of a government is:
A. Foreign loans
B. Taxes
C. Printing of new money
D. Sale of government property
10. Progressive taxes:
A. Increase government revenue
B. Bring equality in distribution of incomes
C. Act as penalty for rich people
D. Both (a) & (b)
11. These are principles of taxation:
A. Principle of equality
B. Principle of certainty
C. Principle of secrecy
D. Both (a) & (b)
12. Which of the following is a union tax?
A. Corporation tax
B. Taxes on agricultural income
C. Capitation taxes
D. Land revenues
13. Which of the following tax is best example of ability to pay principle of taxes:
A. Excise tax on cigarettes
B. Highway toll tax
C. Proportional sales tax
D. Personal income tax
14. Govt. taxing and spending policies are called:
A. Monetary policy
B. Fiscal policy
C. Commercial policy
D. Finance policy
15. Govt. budget is balanced when:
A. Govt. expenditure outstrips tax receipts
B. Govt. tax receipts outstrips expenditure
C. Government expenditure equals tax revenue
D. None of the above.
16. Government finance is called:
A. National finance
B. Public finance
C. Private finance
D. (a) and (b) of above.
17. How the government can meet its expenditure:
A. By taxing people
B. By borrowing from banks & other governments
C. By printing new money
D. By all the three methods
18. The government can collect funds from:
A. Taxes
B. Fees
C. Prices of public goods
D. All the three
19. A direct tax is that which:
A. Is heavy burden on the tax payers
B. Can be directly deposited in the banks
C. Can not be evaded
D. Is paid by the person on whom it is levied
20. The Federal budget is presented in the parliament by:
A. Prime minister
B. President
C. Finance minister
D. Commerce minister
21. Federal government tax revenue collection includes:
A. Divisible taxes with provinces
B. Divisible taxes with district govt.
C. Non-tax revenue
D. All of the above
22. Which tax better conforms to the principle of equality in taxation
A. Progressive tax
B. Regressive tax
C. Proportional tax
D. Fixed tax
23. Which one is not a principle of taxation:
A. Principle of equality
B. Principle of certainty
C. Principle of morality
D. Principle of diversity
24. A country has proportional system of taxation. A person pays Rs 500 tax when his income is 5000, how much tax he will pay if his earning rises to 8000:
A. 200
B. 400
C. 600
D. 800
25. Which source a private company cannot use?
A. A bank loan
B. A bank overdraft
C. Selling new shares in stock exchange
D. Deficit finance (new money)
26. Net taxes are:
A. Domestic taxes minus foreign taxes
B. Business taxes minus personal taxes
C. Total taxes minus govt. transfer payments
D. Total taxes minus govt. purchases
27. Which is not counted as public expenditure?
A. Subsidy given to local city bus service
B. Defense expenditure
C. Investment spending by public companies
D. Interest payment on national debt.
28. If Income tax is assessed as Rs. 100 on an income of Rs. 1000. Compared to this, which one of the following indicts that the income tax rate is progressive?
A. Rs. 150 tax on Rs. 2000 income
B. Rs. 350 tax on Rs. 3000 income
C. Rs. 400 tax on Rs. 4000 income
D. Rs. 450 tax on Rs. 5000 income
29. The most important source of income of a government is:
A. Foreign loans
B. Sprinting of new money
C. Sale of government property
D. Taxes
30. Progressive taxes:
A. Increase government revenue
B. Bring equality in distribution of incomes
C. Compel rich people to be honest
D. (a) & (b) of above
31. This is NOT a principle of taxation:
A. Principle of equality
B. Principle of certainty
C. Principle of secrecy
D. Principle of economy
32. This is principle of taxation
A. Principle of honesty
B. Principle of morality
C. Principle of secrecy
D. Principle of economy
33. Which is true:
A. Federal govt. collects taxes and shares with provinces
B. Provincial govt. collects taxes and shares with federal govt.
C. Federal govt. collects taxes and shares with local govts.
D. Local govts. Collects, taxes and shares with federal govt.
34. This tax is a good example of ability to pay principle of taxes:
A. Excise tax on cigarettes
B. Highway toll tax
C. Proportional sales tax
D. Personal income tax
35. Govt. taxing and spending policies are called:
A. Monetary policy
B. Fiscal policy
C. Commercial policy
D. Finance policy
36. Govt. budget is balanced when:
A. Govt. expenditure is kept to the minimum
B. Govt. income consists of both tax and non-tax income
C. Government expenditure equals tax revenue
D. None of the above
37. Government finance is called:
A. National finance
B. Public finance
C. Official finance
D. (a) & (b) of above
38. The government can meet its expenditure:
A. By taxing people
B. By printing new money
C. By borrowing from banks & foreign countries
D. By all the three methods
39. It is direct tax:
A. Property tax
B. Income tax
C. Import tax
D. All are indirect taxes
40. Mansoor Software Co imported computers and paid import tax. Burden of tax will be on:
A. Importer
B. Wholesaler
C. Last buyer
D. Retailer
41. If a person who is tax-payer can shift the burden of tax to someone else, the tax is called:
A. Movable tax
B. Indirect tax
C. Transfer tax
D. Undesirable tax
42. Which of the following is not a union tax?
A. Taxes on railway freights and fares
B. Stamp duties on financial documents
C. Tolls
D. A and B only
43. To bring equitable distribution of income in the country taxes should be
A. Direct
B. Indirect
C. Proportional
D. Progressive
44. These are principles of taxation:
A. Equality and certainty
B. Certainty and morality
C. Flexibility and durability
D. Durability and rigidity
45. It is better way to finance the govt. budget:
A. By taxing people
B. By printing new money
C. By borrowing from banks
D. By fining people doing illegal activities
46. Consider the following statements and identify the right ones.
i. Central government does not have exclusive power to impose tax which is notmentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax revenues from union list to states.
A. i only
B. ii only
C. both
D. none
47. Which of the following should NOT be the aim of a government:
A. Economic growth
B. Full employment
C. Inequality of incomes
D. Price stability
48. The tax levied by the union government on income of individuals is known as
A. Personal income tax
B. Interest tax
C. Wealth tax
D. Corporation tax
49. It is easy and convenient to pay:
A. Direct tax
B. Indirect tax
C. Proportional tax
D. Progressive tax
50. It is difficult to evade:
A. Direct tax
B. Indirect
C. Proportional
D. Progressive tax
51. The tax on net income of companies is
A. Personal income tax
B. Interest tax
C. Wealth tax
D. Corporation tax
52. Consider the following statements and identify the right ones.
i. Wealth tax is collected from productive as well as unproductive assets
ii. Estate duty was a type of inheritance tax of large estates
A. i only
B. ii only
C. both
D. none
53. It is a source of revenue for the Local government bodies:
A. Corporation tax
B. Value added tax
C. Excise tax
D. Property tax
54. Federal government transfers to provinces as their share in tax collection:
A. Less than 40%
B. More than 40% but less than 60%
C. More than 60%
D. More than 90%
55. Which tax is not shared between central and provincial governments?
A. Excise tax
B. Sales tax
C. Custom duty
D. Property tax
56. To control inflation the government should increase:
A. Budget deficit
B. Consumer spending
C. Income tax
D. Pensions
57. Tax is a payment:
A. Compulsory
B. Voluntary
C. Unnecessary
D. Temporary
58. The main source of revenue of federal government is:
A. Property taxes
B. Token tax
C. Custom duties
D. Sales tax
59. Which of the following would cause incomes to become more unequal:
A. Increased employment
B. Increased unemployment allowance
C. More progressive taxes
D. More regressive taxes
60. What is the benefit of tariffs:
A. Increased choice
B. Increased government revenue
C. More competition
D. More trade
61. The budget estimate prepared by ministry of finance is finally approved by:
A. State Bank
B. President
C. Senate
D. National Assembly
62. Which is true?
A. Federal govt. has the right to collect taxes
B. Provincial govt. has the right to collect taxes
C. Local govt. has the right to collect taxes
D. All of the above is true
63. According to total amount collected the taxes fall in this order:
A. Custom, excise, sales
B. Sales, custom, excise
C. Custom, sales, excise
D. Excise, sales, custom
64. Which of the following taxes is/are withdrawn or abolished?
A. Interest tax
B. Estate duty
C. Gift tax
D. All the above
65. The most important source of revenue to the states is ___
A. Sales tax
B. Service tax
C. Excise duty
D. None of the above
66. The tax levied on the interstate trade of goods is __
A. Sales tax
B. Excise tax
C. Service tax
D. Central sales tax
67. Consider the following statements and identify the right ones.
i. The 14th finance commission is headed by C. Rangarajan
ii. The recommendations of the commission will come into effect from April, 1, 2015
A. i only
B. ii only
C. both
D. none
68. The difference between revenue expenditure and revenue receipts is
A. Revenue deficit
B. Fiscal deficit
C. Budget deficit
D. Primary deficit
69. The difference between revenue deficit and grants for creation of capital assets is called___
A. Fiscal deficit
B. Budget deficit
C. Effective revenue deficit
D. Primary deficit
70. The difference between total expenditure and total receipts is
A. Fiscal deficit
B. Budget deficit
C. Primary deficit
D. Revenue deficit
71. The difference between total expenditure and total receipts except loans and other liabilities is called
A. Fiscal deficit
B. Budget deficit
C. Primary deficit
D. Revenue deficit
72. The difference between fiscal deficit and interest payment during the year is called
A. Fiscal deficit
B. Budget deficit
C. Primary deficit
D. Revenue deficit
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