FABM-REVIEWER
FABM-REVIEWER
FABM-REVIEWER
Bank Reconciliation:
Bank Reconciliation Statement
-A bank reconciliation statement is prepared by an entity to reconcile the
cash-in bank account balance in the entity’s books versus the balance as
reported by the bank in the bank statement.
Here the items to reconcile for both bank and book records:
Bank Reconciling Items
1. Deposit in transit - deposits already recorded in the company’s books but
not
yet recorded by the bank.
2. Outstanding checks - checks issued by the company but not yet paid by
the
bank.
3. Bank errors - items erroneously recorded by the bank.
Principle of taxation:
The Inherent Powers means existing as a natural or basic part of every
sovereign State, without being conferred or granted by the people or the
Constitution.
1. Power to Tax
2. Police Power
3. Eminent Domain
TAX
- is an imposition by the government upon person property or rights exercise
within its jurisdiction.
b. Compensatory Purposes
Reduction of Social Inequality
Economic Growth
Characteristic:
• a. A tax is a forced charge, imposition or contribution.
• b. It is a pecuniary burden payable in money.
• c. It is imposed for public purpose.
• d. It is imposed pursuant to a legislative authority.
• e. It is levied within the territorial and legal jurisdiction of a state.
• f. It is assessed in accordance with some reasonable rule of
apportionment.
THEORY OF TAXATION:
Necessity Theory
• The existence of government is a necessity. The government cannot
continue to perform of serving and protecting its people without means
to pay its expenses. For this reason, the state has the right to compel
all its citizens and property within its limits to contribute.
Lifeblood Doctrine
Taxes are the lifeblood of the government without which it can neither
exist nor endure.
Scope of the Taxing Power of the Legislative
The matters within the competence of the legislature include the
determination of the following:
1.The subject or object (person, property, or excises/privileges) to be
privileges to be taxed. Excises or privilege to be taxed.
2. The purpose of the tax as long as it is a public purpose.
3.The amount or rate of the tax.
4. Kind of Tax
5. Appointment of tax (i.e., whether the tax shall be general or limited to a
particular locality or partly general and partly local)
6. Situs of taxation.
7. The manner of taxation
TAX LAW
• NATURE OF INTERNAL REVENUE LAWS- Tax laws are civil and not
penal in nature, although there are penalties provided for their
violation. The purpose of tax laws in imposing penalties provided for
delinquencies is to compel the timely payment of taxes or to punish
evasion or neglect of duty in respect thereof.
APPLICATION OF TAX LAWS
• Tax laws are a prospective in operation because the nature and
amount of the tax could not be foreseen and understood by the
taxpayer at the time the transactions which the law seeks to tax was
completed.
EXCEPTION- While it is not favored, a statute may nevertheless operate
retroactively provided it is expressly declared or is clearly the legislative
intent. But a tax law should not be given retroactive application when it
would be harsh and oppressive.
Tax avoidance – this is legal and allowed. This happens when a tax payer m
inimizes histax liabilities by taking advantage of legally available tax plannin
g opportunities. Otherwise known as tax minimization.
Tax Evasion – illegal and prohibited. Occurs when the taxpayer resorts to un
lawful means to lessen or to get away from his tax liability
INCOME TAXES
is the imposition of taxes on the income of individuals derived from
compensation, business trade, self-employed, or practice of a profession or
from property less deductions authorized by the law the term "gross
income" refers to the taxpayer's income for taxation purposes.
De Minimis Benefit - are other forms of benefits that are relatively small
value and are given to employees to promote health, goodwill, contentment
and work efficiency. The following are considered “De minimis benefits”
TAXATION
De minimis benefits are not taxable up to the prescribed limit stated in the
previous slides.
STEPS IN COMPUTING THE TAXATION OF DEMINIMIS BENEFIT:
1. Determine the excess of each “De minimis” benefit received by the
employee over the prescribed limit stated in the previous slide
2. Add the excess “De minimis” benefits to the 13th month pay and other
benefits received by the employee.
3. compare the amount determined in step 2 with the 90,000 limit.If the
amount is less than P90,000 it is not taxable If the amount exceeds
P90,000, the excess is taxable
Every taxpayer must register once with the BIR and obtain one (1) Tax
Identification Number (TIN). A taxpayer acquiring more than one TIN for
himself/herself is punishable by law through monetary fines or
imprisonment. Tax evasion (tax dodging) is a taxpayer who avoids paying
taxes using illegal means (e.g., non-declaration of taxable income or under-
declaration). In contrast, Tax avoidance is a taxpayer minimizing their tax
exposure by legal means (e.g., careful tax planning).