The financial year of the Federal Government of Pakistan runs from:
Pakistan's fiscal year starts on 1 July and ends on 30 June.
Accounting and Finance MCQs
The Federal Consolidated Fund of Pakistan is established under:
Article 78 provides for the Federal Consolidated Fund and the Public Account of the Federation.
An expansionary fiscal policy involves:
It aims to boost aggregate demand.
An example of an automatic stabilizer is:
Automatic stabilizers work without new government decisions.
If the marginal propensity to consume (MPC) is 0.8, the simple expenditure multiplier is:
Multiplier = 1 / (1 - MPC) = 1 / 0.2 = 5.
A budget deficit occurs when:
The gap is financed by borrowing or other financing.
Total expenditure is Rs. 1,000 billion, total revenue is Rs. 800 billion and interest payments are Rs. 120 billion. The primary deficit is:
Fiscal deficit = 1,000 - 800 = 200. Primary deficit = 200 - 120 = Rs. 80 billion.
Primary balance is the fiscal balance:
A primary surplus means non-interest revenue exceeds non-interest expenditure.
Public debt is best described as:
Deficits are flows; debt is the stock built up over time.
The crowding-out effect refers to:
Heavy government borrowing competes with private borrowers for funds.
Fiscal policy is the use of:
Monetary policy is controlled by the central bank; fiscal policy by the government.
An example of an indirect tax is:
Indirect taxes are levied on goods or services and the burden can be shifted to consumers.
The ability-to-pay principle of taxation says that:
It supports progressive taxation.
The benefit principle of taxation says that:
User charges such as tolls follow the benefit principle.
Which of the following is NOT one of Adam Smith’s canons of taxation?
Smith's canons are equity (or equality), certainty, convenience and economy.
Tax incidence refers to:
Statutory burden and final burden can differ.
The Laffer curve shows the relationship between:
It suggests that beyond some rate, higher tax rates may reduce revenue.
An example of a direct tax is:
A direct tax is levied directly on the person who bears the burden, e.g. income tax.
According to Musgrave, the three functions of government in public finance are:
These are the resource allocation, income distribution and economic stabilization branches.
In a progressive tax system:
Higher income earners pay a higher proportion of income in tax.
In a regressive tax system:
Low-income earners pay a larger share of income than high-income earners.
A proportional (flat) tax:
The tax rate remains constant as income changes.
In capital budgeting, depreciation is relevant only because of its effect on:
Depreciation is a non-cash expense, but it reduces taxable profit and therefore tax paid.
The cost of a machine bought last year and already paid for is, in a new investment decision:
Sunk costs are past costs that do not change with the decision.
Working capital management mainly deals with decisions about:
It aims to maintain adequate liquidity while earning a return.