Free Understanding the Budget 02 Practice Test - 12th Grade - Commerce 

Question 1

Service tax is an example of

A.

Direct tax

B.

Indirect tax

C.

Corporate tax

D.

None of the above

SOLUTION

Solution : B

Service tax which is applied to the sales of services is an indirect tax.

Question 2

Economic services of Railway and Postal Services provided by the government are covered by

A.

Plan Capital Expenditure

B.

Non-Plan Capital Expenditure

C.

Revenue Expenditure

D.

Both A and B

SOLUTION

Solution : B

Economic services of Railway and Postal Services provided by the government are covered by Non-Plan Capital Expenditure.

Question 3

The non-tax revenue in the following is

A.

Export duty

B.

Import duty

C.

Dividends

D.

Excise

SOLUTION

Solution : C

Out of the given options, dividend falls under the non-tax revenue of the government. 

Question 4

The direct tax is collected directly from

A.

The producers on goods produced

B.

The sellers on good sold

C.

The buyers of goods

D.

The income earners

SOLUTION

Solution : D

The direct tax is collected directly from the income earners.

Question 5

Which one of the following is a combination of direct taxes? 

A.

Excise duty and Wealth tax

B.

Service tax and Income tax

C.

Excise duty and Service tax

D.

Wealth tax and Income tax

SOLUTION

Solution : D

Wealth tax and income tax is a combination of direct taxes. Other options consist of direct tax and indirect tax.

Question 6

Which of the following is not a revenue receipt?

A.

Recovery of loans

B.

Foreign grants

C.

Profits of public enterprises

D.

Wealth tax

SOLUTION

Solution : A

Recovery of loans either create a liability or cause a reduction in the assets of the government. Therefore, they are capital receipts. Other options are revenue receipts.

Question 7

Which of the following sources of receipts in government budget increases liabilities?

A.

Direct taxes

B.

Recovery of loans

C.

Borrowing

D.

Dividend from public sector undertakings

SOLUTION

Solution : C

Out of the given options, borrowings increase the liabilities as the government is obliged to repay the borrowed funds.

Question 8

Which of following is a direct tax?

A.

Corporate tax

B.

Entertainment tax

C.

Excise duty

D.

Service tax

SOLUTION

Solution : A

Corporate tax is a direct tax. Entertainment tax, excise duty and service tax are indirect taxes. 

Question 9

Which of the following is a source of capital receipt?

A.

Foreign donations

B.

Dividends

C.

Disinvestment

D.

Indirect taxes

SOLUTION

Solution : C

The receipts obtained from the sale of shares in Public Sector Undertakings is referred to as disinvestment. It is a source of capital receipt. 

Question 10

Which of the following is a non-tax receipt?

A.

Gift tax

B.

Sales tax

C.

Donations

D.

Excise duty

SOLUTION

Solution : C

Non-tax revenue or non-tax receipts refer to the government revenues which are not generated from taxes. Out of the given options, the donation is a non-tax receipt.