2.

Fiscal policy is the use of government spending and taxation to influence the
economy. When the government decides on the goods and services it purchases,
the transfer payments it distributes, or the taxes it collects, it is engaging in fiscal
policy. The primary economic impact of any change in the government budget is felt
by particular groupsa tax cut for families with children, for example, raises their
disposable income. Discussions of fiscal policy, however, generally focus on the
effect of changes in the government budget on the overall economy. Although
changes in taxes or spending that are revenue neutral may be construed as fiscal
policyand may affect the aggregate level of output by changing the incentives
that firms or individuals facethe term fiscal policy is usually used to describe the
effect on the aggregate economy of the overall levels of spending and taxation, and
more particularly, the gap between them.

Transaction
The transaction is the starting point of the accounting cycle. The transaction occurs
when a business does anything that causes it to gain, lose or exchange assets.
Examples of transactions include selling products, buying property or taking out loans.
Journal Entry
Journal entries are used to document business transactions. The journal entry records
all of the essential information about the transaction. It records the date of the
transaction, the accounts involved and a sort explanation of the transaction. For
example, if you sold your inventory off for cash, the journal entry would indicate the date
it occurred and would show the increase in the cash account and decrease in the
inventory account. It also would contain a note such as "sale of inventory" to indicate
what happened.
General Ledger
The general ledger keeps a running tally of a firm's accounts. There are five basic
categories for all accounts in the general ledger: assets, liabilities, owner's equity,
revenue and expenses. Each specific account is listed under one of these categories.
After you post a transaction, the resulting accounts are debited or credited on the
general ledger to reflect this change.
Tallying the Ledger
The general ledger must be added up at the end of the accounting period to show
where each account stands. Each account must be totaled to show its current value.

How often this is performed depends on how often your business prepares financial
statements. At the very least, it should be done once a year to produce annual
statements, but you also can do it quarterly or monthly.
Financial Statements
After tallying the accounts in the general ledger, you can use the information to produce
financial statements such as the balance sheet or income statement. These are used to
assess a firm's standing at the end of a period. The balance sheet, for example, lists the
firm's assets, liabilities and owner's equity, while the income statement summarizes
revenues and expenses for the period. The statements are used by owners, investors
and others to assess the financial well-being of the company.
3. The basic sources of tax law in the Philippine's are the nation's constitution, the National
Internal Revenue Code, administrative issuance, and local laws. Sources of Tax Law After

the constitution, the primary source of specific tax law in the Philippines is
the National Internal Revenue Code (NIRC), the most recent version of which
was enacted via the The Tax Reform Act of 1997. The NIRC establishes basic
taxes the government may levy such as personal income taxes, corporate
taxes, sales taxes, excise taxes and estate taxes. It also codifies the tax
collection process and procedures for appeals. Additionally, Philippine tax law
empowers local governments to establish and assess some types of taxes,
but which may not include taxes specifically limited to the national
government such as personal income taxes, estate taxes, and some sales
taxes.
* The Philippines currently has the second highest personal and highest
corporate income tax systems among the Association of the Southeast Asian
Nations (ASEAN) economies At 32 percent for personal and 30 percent for
corporate, even Finance Secretary Cesar Purisma agrees with some
government officials and business groups that its high time for a tax
reform.
*

* Non-resident citizen who is:

a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner

the fact of his physical presence abroad with a definite intention to reside therein
b) A citizen of the Philippines who leaves the Philippines during the taxable year to
reside abroad, either as an immigrant or for employment on a permanent basis

c) A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time
during the taxable year
d) A citizen who has been previously considered as a non-resident citizen and who
arrives in the Philippines at any time during the year to reside permanently in the
Philippines will likewise be treated as a non-resident citizen during the taxable year in
which he arrives in the Philippines, with respect to his income derived from sources
abroad until the date of his arrival in the Philippines.

Overseas Filipino Worker, including overseas seaman

An individual citizen of the Philippines who is working and deriving income from abroad
as an overseas Filipino worker is taxable only on income from sources within the
Philippines; provided, that a seaman who is a citizen of the Philippines and who
receives compensation for services rendered abroad as a member of the complement of
a vessel engaged exclusively in international trade will be treated as an overseas
Filipino worker.
NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the
Philippine Embassy/consulate is not treated as a non-resident citizen, hence his income
is taxable.
* Transcript of Limitations on the Power of Taxation

Limitations on the Power of Taxation

Classifications of Tax
Constitutional Limitations
- those expressly found in the Constitution or implied from its provisions
Inherent Limitations
- those which restrict the power although they are not embodied in the
constitution
Requirement of due process
Basis
- Sec. 1, Art. III
Meaning of due process
- we can safely say that any deprivation of life, liberty, or property by the
gov't is w/ due process if it is done with:
Substantive due process

- under the authority of a law that is valid.

Procedural due process
- after compliance with fair and reasonable methods of procedure prescribed
by law.
Requirement of equal protection
Basis
- Sec. 1, Art III
Meaning of equal protection of the laws
- all persons subject to legislation shall be treated alike under like substances
and conditions both in the privileges conferred and liabilities imposed.
Requirements of Uniformity and Equity in Taxation
Basis
- Sec. 28[1], Art. VI
Meaning of uniformity in taxation
- all taxable articles or properties of the same class shall be taxed at the
same rate.
Uniformity of operation throughout tax unit
- the rule requires the uniform application and operation w/o discrimination,
of the tax in every place where the subject of it is found.
Equity in burden
- uniformity implies equality in burden, not equality in amount or in its strict
and literal meaning

Prohibition against imprisonment for non-payment of poll tax

Basis
- Sec. 20, Art III
Application
- a person cannot be sent to prison for failure to pay the community tax
Meaning of equity in taxation
- the concept of equity in taxation requires that such apportionment be more
or less just in the light of the taxpayer's ability to shoulder the tax burden, ad
on the basis of the benefits he receives from the gov't
the constitutional requirement of equity in taxation also implies an approach
which employs a reasonable classification of the entities or individuals who
are to be affected by a tax
Relationship w/ equal protection guarantee

Uniformity and equity refer to the proper relative treatment for tax purposes
of persons in unlike circumstances.
Prohibition against impairment of obligation of contracts
Basis
- Sec. 10, Art. III
Meaning of impairment of obligation of contract
- obligation is impaired when its terms or conditions are changed by law or
by a party w/o the consent of the other
The contract, the obligation of which is secured against impairment under
the constitution, includes contracts entered by the gov't
The law, the enactment of which is prohibited, includes also executive order
or instructions issued by the President
Prohibition against infringement of religious freedom
Basis
- Sec. 5, Art. III
Application
- It has been held that the imposition of license fees on the distribution and
sale of bibles and other religious literature not purposes of profit by a nonstock, non-profit religious corporation violates the above constitutional
guarantee of the free exercise and enjoyment of religious profession and
worship.
Prohibition against appropriation for religious purposes
Basis - Sec. 29[2], Art. VI
Application - the above limitation is based on the requirement that taxes can
only be levied for a public purpose.
Prohibition against taxation of religious, charitable, and education entities,
etc.
Basis
- Sec. 28[3], Art. VI
Application
- the exemption covers only property taxes and not other taxes
Test of exemption
- It is the use of the property and not ownership
Nature of use
- to be tax-exempt, the property must be actually, directly, and exclusively
used for the purposes mentioned
Prohibition against taxation of non-stock, non-profit educational institutions
Basis
- Sec. 4[3], Art XIV ; Sec 4[4], Art. XIV

Application
- the exemption covers income, property and donor's taxes, and custom
duties
Granting of tax exemption
Basis - Sec. 28[4], Art. VI
Veto of appropriation,revenue, or tariff bills by the President
Basis - Sec. 27[2], Art VI
Non - impairment of the jurisdiction of the Supreme Court
Basis - Sec. 2, Art VIII ; Sec. 5 [2b], Art VIII
4. Purpose The Government of the Philippines adopted the PerformanceInformed Budgeting (PIB) Structure through the National Budget
Memorandum (NBM) No. 117 in crafting the 2014 National Budget as a new
approach for a more responsive, transparent and accountable public
expenditure management system. In the past, the National Budget contained
incomprehensible numbers and line items which did not specify tangible
results or expected outcomes. With the introduction of PIB, the government
is changing the face of the budget. The PIB structure emphasizes the
outcomes and outputs that government agencies commit to achieve using
the resources allocated to them. Performance information includes the
purpose for the funds, outputs to be delivered, outcomes to be achieved and
cost of the programs, activities and projects (PAPs) which make the budget a
comprehensible, transparent and accountable document accessible for every
Juan. More so, performance information both financial and non-financial
enables government agencies to strengthen the link between planning and
budgeting and to simplify the presentation of the budget. With its more
meaningful presentation aligned to planned resources, the PIB empowers
citizens in measuring each government agencys performance.
Status The PIB Structure is already adopted in the National Expenditure Plan
and General Appropriations Act of FY2014. To fully support the performance
informed budgeting system, the Government of the Philippines adopted the
Budget Priorities Framework (BPF) through NBM No. 118 following NBM No.
117. The BPF sets the budget priorities for FY2014 in line with the five
Priority Areas of President Aquinos Social Contract with the Filipino People.
This will guide departments and agencies in strategically planning their
respective activities for the year 2014. With this mechanism, strategic
planning will be integrated with performance information. Together with
other reforms in public expenditure management, PIB allows us to exercise
good governance with maximum impact. PIB | Page 1 PFM Committee

Executive Order No. 55 s. 2011 mandated the PFM Committee composed of

Commission on Audit (COA), Department of Budget and Management (DBM),
Department of Finance (DOF) and Bureau of the Treasury (BTr) to oversee the
integration and automation of government financial and information
systems, and implementation of the PFM Reform Roadmap. The roadmap is
implemented through six key initiatives: Budget Reporting and Performance
Standards, Accounting and Auditing Reforms, Improvement of Treasury Cash
Management Operations, Liability Management, Government Integrated
Financial Management Information System, and Capacity Building.
Strengthening Performance Delivery through the New Face of the Budget
Changing the Face of the Budget The GAA was traditionally a detailed lineitem document containing all the appropriations assigned to different
components and PAPs of the National Government. These are divided into
New Appropriations and Current Operating Expenditures which are further
separated into three components Personnel Services, Maintenance and
Other Operating Expenses and Capital Outlays. With the adoption of the PIB
structure, the New GAA will now present performance information aligned to
planned resources which is more responsive, comprehensive and accessible
to the people: It presents non-financial performance information together
with the allocated resources for the different PAPs. Instead of using a lineitem after line-item, PAPs will be grouped according to the MFOs that the
department seeks to achieve. Each agencys strategic objectives
mandate, vision and mission of each agency, as well as Presidential Key
Result Areas and the sector and organizational outcome it wishes to achieve
are defined upfront. With the adoption of the PIB as a new budgeting
approach, the government commits to deliver the following benefits:
Reinforce the meaning of accountability as a commitment to perform
Empower citizens to participate in budget use and allocation with more
transparent, accountable and responsive budget documents Enable
individual agencies to see opportunities on how activities fit in the broader
development plan and how they could collaborate with other agencies in
achieving a common goal Allow the Executive Branch to ensure that each
peso spent is tightly linked to its priority outcomes, to reduce overlaps and to
avoid duplicative or inefficient spending Enable legislators to have better
information for evaluating the budget proposals of each department and
agency Congress could better exercise its oversight function to check if
agencies and departments deliver the results they committed to Ensure
that agencies projects and programs are properly aligned with the
Administrations priority goals, objectives and programs The New Face of the

Budget: Efficient Spending, Tangible Results and Transparent Resource

Allocation The New PIB Structure and the Results Framework The New PIB
structure follows the Results Framework or the Logical Framework
(LogFrame) established for each department and agency through the
Organizational Performance Indicator Framework (OPIF). In the budgeting
process, agencies are to specify their programs, activities and projects
(PAPs). The PAPs are the agencys inputs and strategies to meet its Major
Final Outputs (MFOs). Fulfillment of MFOs contributes to the Organizational
and Sectoral Outcome toward the achievement of the Administrations Key
Result Areas and Societal Goals.