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Question
The government budgets must distinguish between …
A. current and capital expenditure.
B. different sources of taxes.
C. government institutions.
D. None of the above-mentioned
The correct answer is: A. current and capital expenditure.
Government budgets are structured to separate current (day-to-day) and capital (long-term investment) expenditures to ensure proper financial planning and monitoring of government activities.
Question
The budget of a department can be regarded as a/an …
A. financial plan.
B. policy statement.
C. operational plan.
D. All of the above-mentioned
The correct answer is: D. All of the above-mentioned
A departmental budget outlines financial goals, supports policy decisions, and guides daily operations, making it simultaneously a financial plan, policy guide, and operational tool.
Question
Levies on imported products are … levies.
A. income
B. consumption
C. value added
D. transfer
The correct answer is: B. consumption
Import levies are a form of consumption tax because they are charged on goods brought into the country and consumed locally, raising prices to protect local industries.
Question
Absence of the ‘quid pro quo’ principle means …
A. people or legal entities.
B. something for something.
C. household.
D. recreation.
The correct answer is: B. something for something.
“Quid pro quo” is a Latin term meaning an exchange of goods or services. Its absence implies that taxes are paid without a direct exchange or benefit returned to the taxpayer.
Question
Mining rights and licences of various kinds are classified under …
A. user charge.
B. consumer tariffs
C. nominal levies
D. import duty
The correct answer is: C. nominal levies
Nominal levies refer to small fixed payments for government-issued rights such as mining licences, often unrelated to the actual value or usage of the right granted.
Question
The budget is a financial statement of revenue and expenditure for a …
A. one-year period.
B. two-year period.
C. six-month period.
D. none of the above.
The correct answer is: B. two-year period.
While some budgets may focus on a single year, many government departments work within a two-year planning framework to accommodate medium-term expenditure and policy continuity.
Question
Import duty may serve important functions, such as …
A. discouraging importation of goods.
B. halting ‘dumping’.
C. adding value.
D. A and B.
The correct answer is: D. A and B.
Import duties discourage excessive foreign imports and protect local markets by making imported goods more expensive, thus preventing unfair practices like dumping.
Question
Excise duty is …
A. tax on petrol.
B. sin tax.
C. luxury tax.
D. A, B and C.
The correct answer is: D. A, B and C.
Excise duty is levied on specific goods like fuel, tobacco, and luxury items. These taxes are often aimed at curbing consumption and generating revenue from non-essential goods.
Question
The government of the day might decide to use fiscal policy to stimulate economic growth. It can be achieved through …
A. incentives.
B. deductions.
C. exemptions.
D. income.
The correct answer is: A. incentives.
Incentives such as tax breaks or subsidies encourage investment, production, and employment, thereby stimulating overall economic activity.
Question
… is responsible for the bulk of state revenue.
A. Corporate income tax
B. Tax liability
C. Payroll tax
D. Personal income tax
The correct answer is: D. Personal income tax
Personal income tax contributes the largest share of revenue to the state as it is collected from a wide base of individual taxpayers, unlike corporate or payroll taxes.
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Question
Taxes are recovered by SARS on behalf of the government.
The correct answer is: True
SARS (South African Revenue Service) is the official body responsible for collecting taxes and ensuring compliance on behalf of the national government.
Question
Taxation is of a voluntary, optional nature.
The correct answer is: False
Taxation is a legal obligation, not voluntary. Citizens and businesses are required by law to pay taxes, and non-compliance leads to penalties.
Question
Donation taxation aims to protect other tax sources, such as estate duty and income tax.
The correct answer is: True
By taxing donations, the government prevents individuals from avoiding estate duty and income tax by transferring wealth without generating taxable income.
Question
Company tax is the most important source of income for the government.
The correct answer is: False
Although significant, company tax is not the largest revenue source. Personal income tax generally provides the highest contribution to state income.
Question
Transfer taxation may be regarded as a tax on the riches of the wealthier people of society, as reflected by their capital assets.
The correct answer is: True
Transfer taxes, such as estate and donation taxes, target high-value assets and are typically paid by individuals with substantial wealth.
Question
Stamp duty is not an ad valorem tax.
The correct answer is: True
Stamp duty is usually a fixed charge or based on documents, rather than the value of a transaction, which is characteristic of ad valorem taxes.
Question
The main tool of control is the audit.
The correct answer is: True
Audits are used to check the accuracy and integrity of financial and tax records, making them a primary method for enforcing compliance and detecting fraud.
Question
VAT can be regarded as a consumption tax.
The correct answer is: True
VAT (Value-Added Tax) is imposed on the consumption of goods and services, making it a typical example of a consumption-based tax.
Question
The rate of income tax is determined by legislation.
The correct answer is: True
Income tax rates are established by law through the national budget and tax legislation passed by Parliament, ensuring uniform application.
Question
Taxable income is that part of the revenue on which taxation is based.
The correct answer is: True
Taxable income is the portion of a person’s or entity’s income that remains after allowable deductions and is subject to tax.
Management Communication N4 | Verbal and non-verbal communication
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Question
… budget deals with big projects that are paid once to develop something in the community.
The correct word is: Main
This type of budget is used for infrastructure and development projects that require a large amount of funding paid once-off, such as roads, schools, or clinics.
Question
The … runs from 1 April to 31 March each year.
The correct word is: Budget
In South Africa, the government’s financial year starts on 1 April and ends on 31 March the following year, during which public funds are planned and spent.
Question
The … is determined by SARS.
The correct word is: Income tax rate
SARS (South African Revenue Service) is responsible for setting and enforcing the rate at which individuals and businesses are taxed on their income.
Question
The … budget is enforceable until the main budget comes into effect.
The correct word is: Interim
An interim budget is used temporarily at the start of the financial year when the main budget has not yet been approved or finalized.
Question
That portion of income or wealth which is subject to taxation is called …
The correct word is: Tax base
The tax base is the total amount of assets or income that can be taxed by the government, and it determines how much revenue can be collected.
Question
A situation whereby an industry in a country is subsidised, results in …
The correct word is: Dumping
Dumping happens when goods are sold at below market value in another country because of subsidies, making local industries unable to compete.
Question
The reason why government is willing to partly fund spillover effects, is because of …
The correct word is: Externalities
Externalities are the indirect effects (positive or negative) of an activity on others. The government supports positive externalities like education or healthcare for wider societal benefit.
Question
An example of … is rent for use of government-owned properties, such as sporting facilities.
The correct word is: Sundry revenue
Sundry revenue refers to miscellaneous income earned by the government outside regular taxes, such as renting out public spaces or buildings.
Question
The wealth tax that you pay when you own land and building, is called …
The correct word is: Property tax
Property tax is paid annually by individuals or businesses that own land or buildings, and it’s based on the value of the property.
Question
… system entails that the tax rate increases with income, and redistribution of wealth takes place automatically.
The correct word is: Progressive tax
In a progressive tax system, people who earn more pay a higher percentage of tax, helping to reduce inequality and support social services.
Question
The government of the day might decide to use (monetary/fiscal) policy to stimulate the economy and growth.
The correct term is: Fiscal
Fiscal policy refers to the use of government spending and taxation to influence the economy, which is commonly done to boost growth or manage inflation.
Question
The government budget is valid for (6 months/12 months).
The correct term is: 12 months
A government budget covers a full financial year, which is typically 12 months, from 1 April to 31 March in South Africa.
Question
Duty imposed on personal property is referred to as (transfer duty/stamp duty).
The correct term is: Stamp duty
Stamp duty is a tax on legal documents, often related to personal property transactions like property transfers or contracts.
Question
Excise duty is often referred to as (sin/property) tax.
The correct term is: Sin
Excise duties are often called “sin taxes” because they are levied on goods that are harmful to health, like alcohol and tobacco.
Question
Mining rights and licences of various kinds are classified under (user charges/nominal levies).
The correct term is: Nominal levies
Nominal levies are small fixed charges or fees applied to licenses and permits such as mining rights, rather than based on value or usage.
Question
Levies on imported products are (transfer/income).
The correct term is: Income
Levies on imports generate revenue for the state and are classified as a source of income, not as transfers between entities.
Question
The finance unit of each government department must provide a written (programme/motivation) to accompany estimates.
The correct term is: Motivation
A motivation is a written justification explaining why a department needs the funds it is requesting in the budget.
Question
(Corporate income tax/Personal income tax) is responsible for most of the revenue of the state.
The correct term is: Personal income tax
In South Africa, personal income tax contributes the largest portion of total government revenue compared to other tax sources.
Question
A differentiated tax structure provides for (social responsibility/inflation) to be limited.
The correct term is: Social responsibility
A differentiated tax structure supports social responsibility by ensuring wealthier individuals contribute more to public services.
Question
A/An (exchequer/budget) is a financial statement containing estimates of income and expenditure.
The correct term is: Budget
A budget outlines how much the government expects to earn and spend over a given financial year, and is key for financial planning.
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