FABM Taxation and Check Types Guide
Uploaded by
Araceli PonterosFABM Taxation and Check Types Guide
Uploaded by
Araceli PonterosCommon questions
Powered by AIIn the context of Philippine taxation, income from royalties, such as those from books, literary works, and musical compositions, is classified as passive income. This categorization has implications for how it is taxed, potentially leading to different tax treatment compared to active income, such as wages, affecting the overall tax liability of an individual .
Crossed checks are strategic tools used to enhance the security of financial transactions, specifically by ensuring that the payee cannot encash the check directly but must deposit it into their account. This provides a verifiable transaction trail, reduces the risk of theft or fraud, and limits the misuse of checks as they can only be used by the intended recipient .
The principle of theoretical justice in taxation refers to the idea that the burden of taxation should be proportionate to the taxpayer's ability to pay. This principle aims to ensure equity in taxation, meaning that individuals with greater financial resources should contribute more towards public expenses than those with fewer resources .
The drawer is the individual or entity who signs a check, authorizing the bank to pay a specified sum to the payee. They are responsible for ensuring there are sufficient funds in their account to cover the check amount .
Outstanding checks are checks issued by a depositor that have not yet been paid by the bank or presented for payment, and they are deducted from the cash balance per bank when preparing a bank reconciliation. This adjustment is necessary because the bank has not yet recorded these checks as a reduction in the account balance, but the depositor's book reflects these checks as expenses .
A cancelled check is one that the bank has paid and deducted from the depositor's account, whereas an outstanding check is issued by the depositor but not yet paid by the bank or presented for payment. Hence, cancelled checks are considered settled, while outstanding checks are yet to be cleared .
A bank credit memo increases the cash balance in a depositor's account, often due to interest earned or a collection made by the bank on behalf of the depositor. It is essential for maintaining accurate financial records as it reflects transactions that enhance the depositor's liquidity, thereby impacting how cash resources are reported and managed .
Fiscal adequacy is critical in governmental planning and budgeting as it ensures that the revenue collected is sufficient to meet the government's various expenses, such as infrastructure, social services, and public safety. A failure in fiscal adequacy can lead to deficits, reduced public services, and financial instability, underscoring the necessity for governments to carefully forecast and align resources with expenditures .
The bank service charge is an important item in bank reconciliations as it represents fees deducted by the bank from a depositor's account for services provided. This charge must be reconciled by deducting it from the cash balance per books to ensure the depositor's records match the bank's records, maintaining accuracy in financial accounting .
For a non-resident citizen, any income derived within the Philippines is subject to taxation under Philippine law. This ensures that income generated from Philippine sources contributes to the country's revenue collection .