When starting a BRS with a debit balance as per the Cash Book, cheques issued but not yet presented for payment should be: MCQ with Answer and Explanation
A: Input Tax Credit (ITC) allows a business to reduce the tax it has already paid on inputs. R: ITC prevents the cascading effect of taxes (tax on tax). Choose the correct option.
A.A is false but R is true
B.Both A and R are true but R is NOT the correct explanation of A
C.Both A and R are true and R is the correct explanation of A
Explanation:
ITC allows businesses to claim credit for taxes paid on purchases against their output tax liability. This ensures tax is only levied on the value added at each stage, eliminating the cascading effect. R correctly explains the purpose of ITC.
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