02.

a) VAT has become the single largest source of government revenue in Bangladesh. Do you agree with the statement? Justify your stand.

b) Explain different methods of accounting for calculating income from business & profession. c) The income statement for the year ended on June 30, 2020 of Mamun Traders is given below:

Mamun Traders

Income Statement

For the year ended June 30, 2020

Debit	Taka	Credit	Taka
Salaries	450,000	Gross Profit	1730,000
Underwriting Commission	110,000	Dividend on ABC Ltd.s Share	70,000
Commission	50,000	Bad debt recovered	35,000
Donation	1,89,500	Interest on Commercial Securities	1 5,000

Fine and penalties	60,000	Interest and Discount Received	5,000
Bad debt	35,000	Commission	20,000
Incentive Bonus	70,000	Income from House Property	25,000
Repair expense	25,000
Provision for Bad debt	60,000
Legal Expenses	40,000
Fund Embezzlement	30,000
Provision for Income Tax	25,000
Miscellaneous Expense	70,000
Royalty	40,000
Depreciation	70,000
Net profit	575,500
	1,900,000 =======		1,900,000 =======

Other Information:

i. Salaries include Tk. 30,000 as salaries paid to the owner.

ii. Fund Embezzlement occurred after office hour.

iii. Tax depreciation amounts to Tk. 60,000.

iv. Donation includes Tk. 1, 75,000 paid to a recognized charitable hospital. v. Legal expenses have been incurred in defending a suit for alleged breach of a trading contract.

vi. Miscellaneous expense includes Tk. 40,000 that was incurred for purchasing assets for the business.

vii. Repair expenses Tk.5,000 is spent for owners residential purpose.

Required:

i. Calculate the taxable income from business or profession for the year ended on June 30, 2020.

ii. Calculate the tax liability for related assessment year.