Which business expense is generally allowable as a deduction when computing business income under the ordinary principle of business taxation?
Correct answer: C. An expense incurred wholly for business purposes
- A. A private household expense of the owner
- B. A personal gift given by the proprietor
- C. An expense incurred wholly for business purposes
- D. A penalty imposed for breaking the law
Explanation
An expense incurred wholly and exclusively for business purposes is generally considered deductible, subject to the relevant tax law and documentation. Personal expenses and many penalties do not qualify merely because they are paid by the business owner.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
Practise Taxation
50 free Taxation MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Taxation questions
A registered supplier charges sales tax on a taxable sale. What is this charged amount generally called for the supplier?
Which action is best described as tax evasion?
What is the main purpose of withholding tax in Pakistan?
What is the usual effect of exempt income when taxable income is calculated?
If tax credits are available after tax has been calculated on taxable income, what is their usual effect?
What is the main distinction between a tax return and a tax assessment?