Five Sources Of Taxance

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SOURCES OF REVENUE Public finance focuses on the income and spending activities of the government and their influence on the allocation and distribution of income. There are five sources of revenue which include taxation, public borrowing ,deficit financing , income from public undertakings and grants in aid the revenue is used for the public expenditures. The main focus will be on taxation and grants in aid . Taxation is a method by which governments finance their expenditure by imposing charges on citizens and corporate entities. thus it becomes a compulsory contribution of the wealth of a person or a body of persons for the service of the public powers. there are two types of taxes which are direct(those directly charged too an individual…show more content…
A canon is a rule or principle that should be followed .The canons are as follows: Canon of equity-the tax burden charged on individuals should be fair and just thus each individual must pay taxes in proportion to the income they earn. Canon of certainty –this suggest that the tax payer should know how much to pay when to pay and the method of payment .this canon also helps the government know how much revenue it will get. Canon of convenience – the tax payer should not be burdened as they have to pay where it is most convenient for them. Canon of economy-the cost of collecting the taxes should not be more than the taxes to be collected . The other source of revenue is the grant in aid .This is usually financial assistance that is , given to developing countries by countries in the developed world and international financial institution at no cost or very low cost for economic development. A government grant may be in the form of a transfer of a non-monetary asset, such as land or other resources, for the use of the entity. In such cases it is usual to assess the fair value of the non-monetary asset and to account for both grant and asset at that fair…show more content…
This fund accounting is entirely cash based accounting .Objectives of fund accounting include : • Demonstrating accountability and stewardship- this helps ensure that the instructed funds are used and the documentation that the funds were used properly • Determining financial condition –there is knowledge as to how much can be done with the resources at hand ,value of assets and buildings and definitely the financial bearing of sustaining the assets • Planning and budgeting –this focuses on what should be done with the funds received and how much is needed as to do the correct job • Evaluating organizational and managerial performance –it helps weigh if the organisation is accomplishing its objectives and If they are operating efficiently and effectively • Determining/forecasting cash flow –this objective helps the organisation have full knowledge of the movement of cash (how much is coming in and going

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