04/25/11

FINAL PREBOARD EXAMINATION

April 25, 2011
1. When by-laws are adopted and filed after the incorporation, which of the following
is correct?
a. Submitted within one (1) month after the filing of the Articles of
Incorporation with the SEC
b. Approved and signed by at least a majority of the incorporators
c. Approved by the stockholders representing at least 2/3 of the outstanding
capital stock
d. Approved by the stockholders representing at least a majority of the
outstanding capital stock.
2. I. A corporation commences to have a juridical personality upon the execution of
the Articles of Incorporation unless a different date is set by the incorporators.
II. A partnership begins from the moment of the execution of the partnership
contract unless a different date is set by the partners.
a. True, true

b. True, false

c. False, true

d. False, false

3. If par value shares are now treasury shares, the following rules are applicable,
except one. The exception is
a. They shall have no voting rights as long as they remain in the treasury
b. They are not entitled to dividends
c. They may gain be disposed of for a reasonable price even below par
d. They are not part of subscribed stock and not considered as outstanding
shares
4. Which of the following statements is correct?
a. When a vacancy in the board arises, such vacancy maybe filled by the
remaining directors provided they still constitute a quorum.
b. The officers of a non-stock corporation maybe elected directly by the
members instead of by the board of trustees
c. The number of trustees in a non-stock corporation maybe five (5) but not
more than fifteen (15)
d. A director individually and acting as such can bind the corporation because
he is an agent of the corporation.
5. May not require stockholders approval
a. Declaration of stock dividend
b. Management contract

c. Amendment of By-laws
d. Removal of a director

6. Statement I- Unless the by-laws provides, the Chairman of the Board presides
the meetings of the Board
Statement II- Unless the by-laws provides, the President presides the meetings
of stockholders.
a. True, true

b. True, false

c. False, true

d. False, false

7. The articles of incorporation of ABC Corporation provides for 7 directors. In the

monthly meetings of the board of directors held on April 8, 2010, directors B, C, D
and E were present and the following resolutions were approved:
A. A resolution for the purchase of a delivery truck from E Trading, a sole
proprietorship owned by E. B, C, D and E voted for the resolution.
B. A resolution appointing T as the new corporate secretary where B, C, D and
E voted for the resolution.
Which is correct?
a. Both resolutions are valid and do not need stockholders approval
b. Both resolutions are valid but need stockholders approval
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c. Resolution A needs stockholders approval. Resolution B is valid
d. Resolution A is not valid. Resolution B needs stockholders approval
8. Land Corporation is a non-stock, non-profit corporation whose articles of
incorporation provide for 9 trustees. The trustees elected and their respective
terms are: A, B, and C for 3 years; D, E, and F for 2 years; G, H, and I for 1 year.
After one year, J, K and L were elected to replace G, H and I whose term expired,
while M and N were elected to replace B and E, respectively who resigned after
one year in office. What is the term of office of:
L
a.
b.
c.
d.

3
3
1
2

years
years
year
years

3 years
2 years
2 years
2 years

3 years
1 year
1 year
2 years

9. A is the listed owner of 10,000 with par value of P100/share common shares in
ABC Corporation. ABC sued A for the payment of As indebtedness of P1M. A
contends that such debt must be compensated by his shares of stocks with the
plaintiff corporation. The contention of A is:
a. Valid due to legal compensation
b. Valid by virtue of judicial compensation
c. Untenable since he is not a creditor of the corporation
d. Automatically extinguished if the fair market value of the shares is P1M
10.In the partnership of A, B, C and D, D was designed as the managing partner. Ds
able management prevented the firm to suffer from the economic turbulence
caused by the instability of the Philippine peso. Partners A, B and C became
jealous of Ds good name. As a result, D was capriciously and whimsically
removed as manager without a valid cause without a valid cause. Is the removal
valid?
a. Yes, Ds removal is valid even without his consent
b. Yes, provided it is approved by all the other partners
c. No, Ds appointment is irrevocable without a just or lawful cause
d. No, D can only be removed for a valid cause with vote of the partners
owning the controlling interest
11.A and B entered into a universal partnership of all present property. No stipulation
was made regarding future property. After the perfection of the contract, A
inherited a parcel of land and B acquired a car as remuneration for services
rendered. The properties acquired after the perfection of the contract belong to
Land
Car
Land
Car
a.
b.

A
A

B
Partnership

c. Partnership
d. Partnership

B
Partnership

12.Which of the following statement is false?

a. Treasury shares revert to the unissued shares of the corporation and being
in the treasury they dont have the status of outstanding shares
b. Shares issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the
corporation or its creditors in respect thereto
c. Redeemable shares may be redeemed regardless of the existence of
unrestricted retained earnings provided such redemption would not cause
insolvency or inability of the corporation to meet its debts as they mature
d. When par value shares are issued above par, the premium or excess is not
to be considered as part of the legal capital

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13.In case the members of the board of directors of a corporation still constitute a
quorum, and there are vacancies who fill up such vacancies?
Removal
Resignation
Expiration of term
Increase in the number
of Directors
a. Stockholders
Board
Stockholders
Board
b. Board
Board
Stockholders
Stockholders
c. Stockholders
Board Stockholders
Stockholders
d. Stockholders
Stockholders
Board
Stockholders
14.Spouses H and W are under the regime of absolute community of property. H,
through violence and intimidation obtained the signature of W to a contract of
sale involving Ws exclusive property in favor of H. The fair market value of the
property is P1M but the selling price is only P700,000. The sale is
a. Rescissible
b. Voidable c. Unenforceable d. Void
15.A contract of loan is
a. A consensual contract
b. A real contract

c. A formal contract
d. A solemn contract

16.A, husband and B, wife are legally separated. By order of the court, which decreed
the legal separation. A is obliged to give a monthly support of P50,000 to B
payable in advance within the first five days of the month. B owes A P50,000 by
way of loan. On the other hand, A has not yet given B support of P50,000 for the
preceding month and another P50,000 of the present month. All the debts are
already due. Based on the foregoing, which of the following statements is
incorrect?
a. If B demands her support for the preceding month, A may set up
compensation as regards the loan that B owes him
b. If B demands her support for the current month, A may claim compensation
as regards the loan that B owes him
c. If A demands payment of the loan, B may set up compensation as regards
her support the preceding month that A owes her
d. If A demands payment of the loan, B may set up compensation as regards
her support the current month that A owes her
17.On January 1, 2010, A bought a parcel of land from B who was insane. The deed
of sale was duly acknowledged before a notary public. Six months after the sale,
A realized that he needed a larger area on which to construct a commercial
building. At about the same time, B who had been undergoing psychiatric
treatment was declared of sound mind by his neurologist. Should a court action
be filed today, which is correct?
a. A may successfully prosecute a court action to annul the contract on the
ground of Bs insanity
b. B may successfully prosecute a court action to annul the contract on the
ground of his insanity
c. Neither A nor B may successfully prosecute a court action to annul the
contract
d. A may successfully prosecute a court action to annul the contract on the
ground of mistake as to the area of the parcel of land
18.A delivered to B the following instrument:
In payment of gambling debt, A made a promissory notes which reads: I promise
to pay to B P10,000 Sgd. A. B indorsed the note in blank before maturity and
delivered it to C for value. When due, A refused to pay and C sued B. Could C
recover from B?
a. No, C could not sue B because B did not write the name of C as indorsee
b. No, the instrument is not negotiable and B is a mere assignor of credit
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c. Yes, provided C gives notice of dishonor to B otherwise B is discharged from
liability
d. Yes, the endorsement will be considered as an assignment, hence B will be
liable as an assignor of the instrument
19.Using the preceding number, but the note is in payment of merchandise
purchased by A from B and A failed to pay due to insolvency. Could C collect from
B?
a. No, C could not sue B because B did not write the name of C as indorsee
b. No, the instrument is not negotiable and B is a mere assignor of credit
c. Yes, provided C gives notice of dishonor to B otherwise B is discharged from
liability
d. Yes, the endorsement will be considered as an assignment, hence B will be
liable as an assignor of credit
20.What is the effect of the loss of the prestations in an alternative obligation where
the right of choice belongs to the debtor and the loss is due to his fault?
A. If only one remains, the obligation still subsists, but it ceases to be
alternative as it becomes a simple obligation
B. If two or more objects remain, the obligation still subsists retaining its
alternative character
C. If none remains, the obligation is extinguished because he chose not to
give anything
a. A and B
b. A and C
c. B and C
d. A, B and C
21.In payment of 10 grams of shabu, A made a promissory note which reads I
promise to pay B P10,000 Sgd. A. B transferred the note to C, who acted in good
faith. Which is correct?
a. C can collect from A
c. C can collect from either A
or B
b. B can collect from A
d. C can collect from B
22.A and B are solidary debtors of C for P100,000 which is due on August 1, 2010.
Thinking that the obligation is already due, A paid C P100,000 on August 1, 2009.
What rights will A have on February 1, 2010?
a. A can recover P50,000 reimbursement from B without interest
b. A can recover P100,000 from C plus interest from August 1, 2009 to
February 1, 2010
c. A can recover P50,000 reimbursement from B with interest from August 1,
2009 to February 1, 2010
d. A cannot recover yet from either B because the obligation is not yet due or
C because the payment was voluntary
23.Using the preceding number, but it is already September 1, 2010, which of the
following is correct?
a. A can recover from C only the interest from August 1, 2009 to July 31, 2010
b. A can recover P50,000 from B plus interest from August 1, 2009 to August
1, 2010
c. A can recover P50,000 from B plus interest from August 1, 2009 to
September 1, 2010
d. A can recover from C only the interest from August 1, 2009 to September 1,
2010
24.M delivers a negotiable promissory note payable to P or order. Later, P makes a
special indorsement to A and A delivers the note to B. who is the holder?
a. B, because he is in possession of the note
b. A, because he is the indorsee
c. P, because he is the payee
d. No one can be considered as holder
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25.A issued a negotiable promissory note to the order of B for P10,000 payable in 30
days after date. Later, B endorsed the note to C. then X stole the note from C,
forged the signature of C and negotiated it to D, and D to E, E to F, the holder. On
maturity of the note, which of the following statements is not correct?
a. F can collect from either D or E because their signature are genuine and
the note is operative against them
b. F can collect from A because A cannot put up forgery as his defense as his
signature is genuine
c. F cannot collect from C because it was Cs signature which was forged
d. F cannot collect from B because B is a party prior to the forgery

26.A owes B P10,000 as gambling debt and A issued a promissory note to B to cover
the debt, as follows:
I promise to pay B or order P10,000. Sgd. A
Which of the following statements is correct?
a. B can collect from A because the note is negotiable
b. B cannot negotiate the note because the consideration between A and B is
illegal
c. If B negotiates to C, a holder in due course, C can collect from A
d. A is not liable because of illegal consideration
27.A, minor issued a promissory note to B as follows:
I promise to pay B or order P10,000. Sgd. A
Which of the following statements is not correct?
a.
b.
c.
d.

The promissory note is not negotiable because the maker is a minor

B cannot collect from A because A is a minor
If B negotiates to C, a holder in due course, C cannot collect from A
If B negotiates to C, a holder for value, C cannot collect from A

28.G was appointed as guardian of M, the latter being 17 years old. Later, without
authority from G, M sold Gs watch in writing to B valued at P100,000 for P70,000,
suffering lesion by more than of the value, the contract is
a. Rescissible
b. Voidable c. Unenforceable d. Void
29.A, sells to B a Sony Colored TV for P12,000 payable in twelve equal monthly
installments beginning May 5, 2010 and every 5 th day of each month thereafter.
The contract provides that upon failure to pay any installment due, the whole
balance become due and demandable. To secure the obligation, a chattel
mortgage over the TV set was executed. When B defaulted in the 7 th and 8th
installments A sued B for the payment of the whole balance of P6,000. The TV set
was levied and subsequently sold at a public sale for P5,000. Can A still recover
the deficiency of P1,000 from B?
a. Yes, if there was stipulation to that effect
b. Yes, even though there was no stipulation
c. No, any stipulation allowing recovery is void
d. No, if there was no stipulation to that effect
30.X, Y and Z are joint creditors of A, B,
P60,000. How much can X and Y collect
a. X and Y can collect P30,000 from
b. X and Y can collect P40,000 from
c. X and Y can collect P45,000 from
d. X and Y can collect P30,000 from
5

C and D, joint debtors in the amount of

from A, B and C?
A, B, and C
A, B, and C
A, B, and C
anyone of A, B, and C

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31.A promissory note reads I promise to pay to the order of B, P1,000. Sgd. A. Then
B made a qualified indorsement to C. on maturity, A dishonors the instrument on
the ground of total absence of consideration between him and B. After giving
notice of dishonor, which of the following is not correct?
a. C can collect from B, only if he is a holder in due course
b. C can collect from B, even if he is not a holder in due course
c. C can collect from B, regardless of whether or not he is a holder in due
course
d. C can enforce the instrument against A, if he is a holder in due course

32.A, B, C, D and E formed Super corporation and submitted their Articles of

Incorporation to the SEC Inadvertently, through an oversight; the SEC approved
the Articles and issued a certificate of incorporation. Thereafter. It was discovered
that they have not completed their required period of residency in the Philippines.
As a result, which of the following is not correct?
a. The corporation shall be considered as a de-facto corporation and shall be
allowed to function as a corporation under the color of law
b. The right to exercise corporate powers , shall not be inquired into
collaterally in any private suit to which the corporation maybe a party
c. The Solicitor General has the right to question or contest the validity of its
corporate existence through a quo-warranto proceedings
d. In suit filed by F, against the corporation for breach of contract, she can
alleged that the corporation has no legal personality and therefore all
incorporation shall be held personally liable for damages
33.On April 1, 2010, A and B entered into a contract of partnership for the purpose of
selling cows milk with the former as capitalist partner and the latter as industrial
partner. It was agreed that A shall contribute 1,000 cows to the common fund on
May 2, 2010. Upon the arrival of the designated date, A failed to deliver the
contribution he promised. As a result
a. B should make a demand upon A for the delivery of his contribution and its
fruits to render A in default
b. The contract of partnership becomes void because A failed to give his
contribution to the common fund
c. B can compel A to deliver his contribution and its fruits without the
necessity of demand
d. The contract of partnership was never perfected because there was no
delivery of contribution by the partners
34.A, B and C formed a limited a partnership with A as a general partner. B as limited
partner and C as an industrial partner. A and B contributed P50,000 each. The
partnership failed and after disposing all in assets to pay partnership debts, there
still remains a note payable in the sum of P15,000. Against whom can the creditor
demand payment of the note of P15,000
a. Only A is liable to pay the P15,000 indebtedness
b. A and B are liable to pay P7,500 each
c. A and C are liable to pay P7,500 each
d. A, B, and C are liable to pay P5,000 each
35.The following items, pertain to a contract of sale, which pertains to contract to
sell?
a. Ownership of the thing sold is transferred upon delivery
b. Ownership of the thing is transferred to the buyer at some future time
c. The risk of loss is on the buyer upon delivery
d. The risk of loss is on the buyer if the price is not yet fully paid
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36.A made a negotiable promissory note payable to the order of B. Later, B made a
blank indorsement to C and C delivered the note to D, who likewise delivered the
note to E. E made a special indorsement to F and F made a qualified indorsement
to G. Which of the following is correct?
a. The indorsement made by E is not necessary because the instrument was
converted to bearer, hence the indorsement made F can be stricken out
b. C and D are not liable because they negotiated the instrument by delivery
c. If the instrument is dishonored by A, the present holder G cannot go after C
and D
d. Bs indorsement can be stricken out because Ds blank indorsement
converted the instrument to bearer

37.A promissory note reads:

I promise to pay B or bearer P20,000. Sgd. A
B delivered the note to C. C indorsed the note to D. then Y stole the note from D
and indorsed the note to E. E delivered the note to F. As a result
a.
b.
c.
d.

If A pays F in good faith, As obligation is extinguished

F can collect from D or E
F cannot be a holder in due course
F can go after indorsers C and Y

38.A promissory note reads:

I promise to pay B or order P20,000. Sgd. A
B made a special indorsement to C and C made a conditional indorsement to D. If
the condition is not yet fulfilled, which of the following is correct?
a.
b.
c.
d.

If
If
If
If

A
A
A
A

dishonors the note, D can collect from B or C

pays D, As obligation is extinguished
pays, A becomes liable if D fails to fulfil the obligation
dishonors the note D can collect from B but not from C

39.S sold his car to B on instalments and a chattel mortgage was constituted on the
car. B defaulted in two instalment payments. S foreclosed the chattel mortgage
and sold the car at a public auction. If there is deficiency, can S recover the
deficiency?
a. Yes, even without stipulation
c. No, even if there is
stipulation
b. Yes, if there is stipulation
d. No, unless there is stipulation
40.B borrowed P100,000 from S secured by a pledge on Bs diamond ring. The debt
is payable in instalment. When B defaulted in 2 installment payments, S
foreclosed the pledge and sold the diamond ring at a public auction. If there is
excess, who is entitled to the excess?
a. B, even without stipulation
c. B unless there is stipulation
b. S, only if there is stipulation
d. S, even without stipulation
41.Which of the following is taxable on income from within and without the
Philippines?
a. Justin Bigger, a Canadian citizen who stayed in the Philippines for 181 days
b. Taylor Sweep, an American citizen, married to Dan Lloyd Cruz. She had
been living in manila since 1999
c. Dan Delacruz, a native of Milan, Italy, now a naturalized Filipino citizen and
living in Quezon City since 2000
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d. Dingdan Dantes, a Filipino citizen born in Sampaloc Manila but working as
overseas contract worker in Malaga, Spain
42.Which of the following is taxable only on estate from within the Philippines?
a. Manny Pasyal, a Filipino overseas contract worker residing in Saudi Arabia
b. Antonio Barreta, a Mexican, married to a Filipina and living in Manila since
2005
c. Yao Ming Soo, a Taiwanese, now a naturalized Filipino citizen and living in
Makati since 2002
d. Oscar dela Hoy, an American professional boxer residing in USA

43.The gross receipts of A, a lessor from his residential units for the year, show:
Monthly Rent/Unit
No. of Units
Total
Php 10,000
20
Php 2,400,000
Php 12,000
10
1,440,000
Php 14,000
6
840,000
Php 16,000
10
1,920,000
The output VAT is
a. Php 792,000

b. Php 504,000

c. Php 230,400

d. Php 318,400

44.ABC the corporation a vat-registered enterprise has the following sales for the
month:
Sale to private entities

Php 2,000,000

Sale of exempt goods

1,000,000

Sale to the government

1,000,000

Total sales for the month

Php 4,000,000

The following input taxes were passed on by its vat suppliers:

Input tax on taxable goods

Php 80,000

Input tax on sale to the exempt goods

20,000

Input tax on sale to the government

40,000

Input tax on depreciable capital goods not directly attributable

to any specific activity (monthly amortization for 60 months)
160,000
The vat due for the month is
a. Php 80,000

b. Php 160,000

c. Php 40,000

d. Php 0

45.Using the preceding number, the amount not available for input tax credit but
may be recognized as cost or expense is
a. Php 140,000
b. Php 70,000
c. Php 60,000
d. Php 80, 000
46.The export sales amounting to Php 2,000,000 of a non-vat enterprise is
a. Exempt form vat
c. Subject to 12% vat
b. Subject to 0% vat
d. Subject to percentage tax

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47.Proceeds of life insurance where a third person other than the executor, or
administrator or the decedent is the beneficiary is
a. Part of gross income whether revocable or irrevocable
b. Not part of gross income whether revocable or irrevocable
c. Part of gross estate whether revocable or irrevocable
d. Not part of gross estate whether revocable or irrevocable
48.Date assessment was received

March 8, 2011

Date petition for reconsideration was filed with BIR

March 18, 2011

Date filling of document to support the petition

April 8, 2011

Date of decision of denial of the petition was received

April 28, 2011

The last day to appeal to the CTA is

a. May 8, 2011

b. May 18, 2011

c. March 8, 2012

49.Using the preceding numbers:

Second request for reconsideration was filed with the BIR
2011

d. May 28, 2012

May

7,

Date decision of denial of second request for reconsideration was received

June 2, 2011
The last day to appeal to the CTA is
a. July 2, 2011

b. June 2, 2011

c. June 23, 2011

50.Using the preceding numbers:

Second request for reconsideration was filed with the BIR
2011

d. June 21, 2011

May

7,

Date revised assessment was received

June 2, 2011
The last day to appeal to the CTA is
a. July 2, 2011

b. June 7, 2011

c. June 23, 2011

d. June 21, 2011

51.A cash dividend of P100,000 received by a taxpayer in 2011 from a foreign

corporation whose income from Philippines sources is 40% of its total income is
Statement 1 - Partly taxable if he is a resident citizen
Statement 2 - Partly taxable if he is a non-resident citizen
a. Both statement are true
b. Both statement are false
52.Using
a.
b.
c.
d.

c. Only statement 1 is true

d. Only statement 2 is true

the above data, which of the following is correct? The cash dividend is
Exempt from income tax if he is a resident citizen
Partly taxable if he is a resident alien
Taxable in full if he is a non-resident alien
Exempt form income tax if he is a non-resident citizen

53.Which of the following statement is correct?

a. The monetized value of unutilized vacation leave credits of ten (10) days or
more which were paid to the employee during the year are not subject to
income tax and to withholding tax
b. The salary of an employee on vacation or on sick leave, which are paid not
withstanding his absence from work constitute compensation income
c. Any amount is required by law to be deducted by the employer from the
compensation of an employee excluding the withheld tax is considered as
part of the employees compensation
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d. If living quarters or meal are furnished to an employee for the convenience
of the employer, the value thereof should be included as part of
compensation income
54.The following are the requirements to exempt retirement pay due to old age from
income tax, except:
a. The retiree must be a senior citizen
b. The retirement program is approved by the BIR
c. The retirement pay should have been availed of for the first time
d. The retiree should have been employed for at least 10 years
55.Mr. A files his ITR for 2007 on April 1, 2008 and paid the tax due thereon of
P100,000. The BIR made an assessment on April 15, 2011 which shows that the
correct income tax due should have been P150,000 requiring payment on or
before July 15, 32011. The assessment was received by Mr. A on June 1, 2011. Mr.
A can
a. Ignore the assessment because June 1, 2011 is beyond 3 years form April
1, 2008
b. Ignore the assessment because June 1, 2011 is beyond 3 years form April
15. 2011
c. Appeal to the CTA within 30 days from June 1, 2011
d. Dispute the assessment with the CIR within 30 days from June 1, 2011
56.A filed his income tax return for calendar year 2010 on March 20, 2011. When is
the last day for the BIR to collect, assuming A did not pay the tax due upon filing?
a. March 20, 2014
b. April 15, 2014
c. April 15, 2016
d. March 20,
2015
57.Using the above data, assuming A files his income tax return on April 20, 2011
and the return is not fraudulent , when is the last day for the BIR to make an
assessment?
a. April 20, 2014
b. April 15, 2016
c. March 10, 2018
d. April 15,
2016
58.Using the data above, if the BIR issued a deficiency income tax on March 10,
2013, when is the last day for the BIR to collect?
a. March 10, 2016
b. April 15, 2016
c. March 10, 2018
d. April 15,
2016
59.Which of the following statement is not true?
a. Only compulsory heirs will inherit in case of intestate succession
b. The sharing of heirs in testamentary succession must satisfy the rules of
legitime
c. A compulsory heir can demand more than his legitime in case of
testamentary succession
d. There can be disinheritance of a compulsory heir
60.A vat-registered taxpayer acquired the following depreciable assets during the
month:
Equipment
included

Estimated Useful Life

Acquisition

Cost,

8 years

P800,000

5 years

P400,000

3 years

P300,000

The creditable input tax for the month is:

a. P180,000

b. P3,400

c.P2,800
10

d. P3,000

vat

not

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61.The gross estate of A includes P80,000 receivable which is duly notarized from
debtor B whose records shows:
a. Assets
P100,000
b. Indebtedness to:
i.
Government by way of taxes
40,000
ii.
A
80,000
iii.
Other creditors
20,000
The deductible claims against insolvent person is
a. P80,000

b. P29,285

c. P48,000

d. P32,000

62.Which of the following is subject to vat?

a. Sale of passenger or cargo vessels and aircraft for domestic or international
transport operations
b. Sale of agricultural and marine food products in their original state
c. Sales by agricultural cooperatives duly registered with the Cooperative
Development Authority
d. Sale of fuel, goods and supplies by person engaged in international
shipping or air transport operations
63.A cash dividend of P100,000 received by a taxpayer in 2010 from a domestic
corporation whose income from Philippines source 40% or its total income is
a. Partly taxable if he is a resident alien
b. Exempt from final tax if he is a non-resident citizen
c. Partly taxable if he is a resident citizen
d. Taxable in full if he is a non-resident citizen
64.A resident citizen received a prize of P40,000. Which of the following statement is
correct in connection with the imposition of final tax on the prize?
a. The first P10,000 is part of taxable income while, the remaining P30,000 is
subject to 20% final tax
b. The whole amount is part of taxable income
c. The whole amount of P40,000 shall be subject to 20% final tax
d. The first P10,00 shall be exempt from tax, the remaining P30,000 is subject
to 20% final tax
65.A sold his residential lot, a capital asset for P2,000,000. The said lot was acquired
in 2000 at a cost of P1,700,00. The fair market value of the property as
determined by the BIR is P2,200,000 but the fair market value as shown in the
schedule of values of the City Assessors is P1,950,000. The entire proceeds were
utilized for the acquisition of As principal residence. The final tax due is
a. P120,000
b. P132,000
c. P117,000
d. P0
66.Using the above data, but only P1,600,000 was utilized for the acquisition of As
residence, the final tax due is
a. P24,000
b. P26,400
c. P120,000
d. P132,000
67.For vat purpose, the following transaction shall be deemed sale, except
a. Transfer, use or consumption in the course of business of goods or
properties originally intended for sale or for use in the course of business
b. Property dividends which constitute stock in trade or properties primarily
held for sale or lease declared out of retained earnings
c. Distribution or transfer of goods to creditors in payment of debt or
obligation
d. Consignment of goods if actual sale is not made within 60 days following
the date such goods were consigned
68.Which of the following is not a power vested in the Bureau of Interval Revenue?
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a. The assessment and collection of all national internal revenue taxes, fees
and charges
b. The enforcement of all forfeitures, penalties and fines
c. The granting of tax exemption and other tax incentives to taxpayer
d. The execution of judgement in all cases decided in its favor by the Court of
Tax Appeal and the ordinary courts
69.Statement 1 Born of a poor family in 1963, A worked his way through college.
After working for 20 years, A decided to retire in 2011 and avail of the benefits
under a very reasonable retirement plan maintained by his employers for those
who have rendered continuous service for at least 20 years. A received P1M as
retirement benefits.
Statement 2 Mrs. B, wife of a deceased employee received financial benefits
voluntarily
voted upon by the Board of Directors of the employer company in
recognition of her husbands
long,loyal and dedicated service and primarily to
help her meet financial needs.
a.
b.
c.
d.

Both statement are subject to income tax

Both statement are exempt from income tax
Only statement 1 is a taxable income
Only statement 2 is a taxable income

70.Income derived by a depository bank under expanded foreign currency deposit

system foreign currency transaction with local with local commercial bank,
including branches of foreign banks that maybe authorized by the Bangko Sentral
ng pilipinas, shall be subject to a final tax on such income at
a. 7.5%
b. 10%
c. 15%
d. 20%

71.Due to an uncertainly whether or not a new tax law is applicable to printing

companies, ABC printers submitted a legal query to the BIR on that issue. The BIR
issued a ruling that printing companies are not covered by the new law. Relying
on this ruling, ABC printers did not pay the said tax. Subsequently however, the
BIR reversed the ruling and issued a new one stating that the tax covers printing
companies. Could the BIR assess ABC printers for back taxes corresponding to the
years before the new ruling?
a. Yes, because the taxation is the rule and exemption is the exception
b. Yes, because the taxes are the lifeblood of the government
c. No, the BIR is not allowed to reverse its ruling
d. No, reversal of a ruling shall not be given a retroactive application if it will
be prejudicial to the taxpayer
72.XYZ corporation filed its income tax return and paid the tax due for calendar year
2008 showing a tax liability of P175,000. However, upon audit, it was discovered
that its income tax return was false or fraudulent because it did not report other
taxable income. Per investigation the correct income tax due is P350,000. The
corporation was duly informed of this finding through preliminary assessment
notice. Failing to protest on time against the preliminary assessment notice, a
formal letter of demand and assessment notice was issued on May 31, 2010
calling for payment of the deficiency income tax on or before July 15, 2010. The
amount due on July 15, 2010 is
a. P306,250
b. P437,500
c. P240,625
d. P612,500
73.Which of the following are elements of impact of taxation?
I.
Levy
II. Imposition
III. Assessment
IV. Collection
a. I and II
b. I, II and III
c. III and IV
d. I, II, III and IV

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74.In 2010 ABC Corporation paid for the annual rental of a residential house used by
its general manager amounting to P544,000. The entry to record the benefit is
a. Fringe Benefits Expense
Fringe Benefits Tax Expense
Cash
b. Fringe Benefits Expense
Fringe Benefits Tax Expense
Cash
c. Fringe Benefits Expense
Fringe Benefits Tax Expense
Cash
d. Fringe Benefits Expense
Fringe Benefits Tax Expense
Cash

P544,000
256,000
P800,000
P544,000
128,000
P672,000
P272,000
128,000
P400,000
P272,000
256,000
P528,000

75.Which of the following statement on fringe benefits is correct?

a. Not part of the taxable income of the employees
b. Part of the taxable income of the employees
c. The monetary value is subject to fringe benefits tax
d. Maybe given to employees regardless whether managerial supervisor or
rank and file

76.Consider the following statement

A. A special assessment is an enforced proportional contribution from the
owner of land especially or peculiarly benefited by public improvement
B. The power of eminent domain maybe exercised even by private individual
while the power of taxation and police power maybe exercised only by the
government
C. Unlike tax, debt draws interest, if stipulated
D. The police power, power of taxation and power of eminent domain being
fundamental power of the state maybe exercised by the government even
without any constitutional grant
a. A and B are correct
c. B and D are correct
b. Only C is not correct
d. All are correct
77.Requiring a license for the right to engage in business to earn income is an
exercise of
a. Taxation power
c. Police power
b. Power of eminent domain
d. People power
78.ABC Corp. concluded its eight year of operation. Its fiscal year ended June 30,
2009. The net income from July 1, 2008 to June 30, 2009 amounted P1M. The
gross income for the same period is P20M. The income tax due for the taxable
period is
a. P350,000
b.P310,000
c. P260,000
d. P285,000
79.Using the above data, but the ninth year of operation from July 1, 2009 to June
30, 2010 shows a new income of P1.2M and gross income of P15M. The tax due
for the period is
a. P360,000
b. P310,000
c. P260,000
d. P285,000
80.Interest income earned by a resident alien from outside the Philippines is
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04/25/11
a. Subject to scheduler tax
b. Not subject to income tax
partly

c. Subject to final tax

d. Partly subject to scheduler and
Subject to final tax

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ANSWERS: (April 25, 2011)
1. D
21.D
2. C
22.B
3. D
23.A
4. B
24.D
5. C
25.B
6. C
26.C
7. C
27.A
8. B
28.C
9. C
29.B
10.A
30.A
11.B
31.A
12.A
32.D
13.C
33.C
14.D
34.C
15.B
35.B
16.B
36.C
17.B
37.A
18.D
38.B
19.B
39.C
20.A
40.D
81.
82.
83.
84.
85.
86.
87.
88.

41.C
42.D
43.C
44.A
45.B
46.A
47.B
48.D
49.C
50.A
51.B
52.D
53.B
54.A
55.D
56.B
57.A
58.C
59.C
60.B
89.
90.
91.
92.
93.
94.
95.
96.
97.

15

61.D
62.D
63.D
64.C
65.B
66.D
67.A
68.C
69.C
70.B
71.A
72.A
73.B
74.B
75.D
76.C
77.C
78.D
79.D
80.B

98.