RECENSEO 2020 Comprehensive Examination Reviewer Material PDF

UNIVERSITY OF THE EAST- CALOOCAN
COMPREHENSIVE EXAMINATION SCHEDULE 2020
I. SCHEDULE AND COVERAGE OF EXAMINATION

The Comprehensive Examination for 2020 shall be administered online, through CANVAS on
Monday, July 20, 2020 and divided on the following schedules, topic coverage and item
specification:
Schedule I
Coverage:
 Fundamentals of Accounting
 Financial Accounting
Date: July 20, 2020
Time: 10:00am – 12:00nn
Coverage No. of items
Fundamentals of Accounting 14
Financial Accounting 36
 Financial Accounting and Reporting
 Conceptual Framework and Accounting Standards
 Intermediate Accounting 1 & 2
 Intermediate Accounting 3
TOTAL 50
Schedule II
Coverage:
 Cost Accounting
 Taxation
 Business Laws
Date: July 20, 2020
Time: 1:00pm – 3:00pm
Coverage No. of items
Cost Accounting 12
 Cost Accounting and Cost Control
 Strategic Cost Management
Taxation 14
 Income Taxation
 Business and Transfer Taxes
Business Laws 24
 Law on Obligation and Contracts
 Business Laws and Regulations
 Regulatory Framework and Legal Issues in Business
 Special Commercial Laws
TOTAL 50
The examination will be given on a multiple- choice pattern and will be composed of both
theoretical and practical questions (problems and applications)
RECENSEO 2020
COMPREHENSIVE EXAMINATION REVIEWER SUBJECTS COVERAGE OUTLINE
The Recenseo 2020 Comprehensive Examination Reviewer is comprised of 472

questions focused on 5 different subjects included in the scope of comprehensive examination
set by the University. The 4 recognized B.A student organizations of the University of the East-
Caloocan (ATLAS- Association of Taxation and Law Students, BES Honors Society & HNS
Honors society with JPIA- Junior Philippine Institute of Public Accountants) decided to tie up for
this comprehensive examination reviewer to be utilized by the incoming 3 rd year students of the
university. Here´s the detailed list of topics per subject reviewer:
I. FUNDAMENTALS OF ACCOUNTING (45 items)

1. Accounting Concepts and Principles
2. Financial Statements
3. Basic Accounting Equation
4. Expanded Accounting Equation
5. Financial Transaction Worksheet
6. Accounting Cycle
7. Special Journals
8. Accounting for Partnership
II. FINANCIAL ACCOUNTING (105 items)

1. Cash and Cash Equivalents
2. Bank Reconciliation
3. Receivables
4. Inventories
5. Biological Assets
6. Property, Plant and Equipment
7. Wasting Assets
8. Intangible Assets
9. Investment in Debt and Equity Securities
10. Investment Property
11. Noncurrent Assets held for sale
12. Current Liabilities
13. Provisions and Contingencies
14. Notes Payable
15. Bonds Payable
16. Liabilities
17. Equity
18. Leases
III. COST ACCOUNTING (63 items)

1. Cost Accounting and Control
2. Introduction to Costs Concepts and Classifications
3. Normal Costing Vs. Actual Costing
4. Cost of Goods Sold Statement
5. Job Order Costing
6. Process Costing
7. Allocation of Joint Costs and Accounting for By-Product/Scrap
8. Activity Based Costing System
9. Economic Order Quantity
10. Standard Costing
IV. TAXATION (109 items)

1. TAX – Basic Concepts and Introduction about Tax
2. TAX -- Individual
3. TAX -- Corporation
4. TAX -- Partnership
5. TAX -- Gross Income (exclusions and deductions)
6. Value Added Tax
7. Percentage Tax
8. Estate Tax
9. Donors Tax
V. BUSINESS LAWS (150 items)

1. Obligations
2. Contracts
3. Partnership
4. Corporations
5. Cooperatives
6. Negotiable Instruments
7. Special Laws
8. Sales
9. Agency
10. Credit Transactions
NOTE: The answers for each question will be provided after each subject questionnaire portion.
Thank you!
UNIVERSITY OF THE EAST
Caloocan
FUNDAMENTALS OF ACCOUNTING
RECENSEO 2020 COMPREHENSIVE EXAM REVIEWER
SUBJECT COVERAGE:
 Accounting Concepts and Principles  Financial Transaction Worksheet
 Financial Statements  Accounting Cycle
 Basic Accounting Equation  Special Journals
 Expanded Accounting Equation  Accounting for Partnership
I. ACCOUNTING CONCEPTS AND PRINCIPLES
1. The personal assets of the owner of a company will not appear on the company's balance
sheet because of which principle/guideline?
a. Cost c. Monetary Unit
b. Economic Entity d. Conservatism
2. Which principle/guideline requires a company's balance sheet to report its land at the amount
the company paid to acquire the land, even if the land could be sold today at a significantly
higher amount?
3. Which principle/guideline allows a company to ignore the change in the purchasing power of
the dollar over time?
4. Which principle/guideline requires the company's financial statements to have footnotes

containing information that is important to users of the financial statements?
a. Conservatism c. Economic Entity
b. Full Disclosure d. Materiality
5. Which principle/guideline justifies a company violating an accounting principle because the

amounts are immaterial?
a. Conservatism c. Economic Entity
b. Full Disclosure d. Materiality
II. FINANCIAL STATEMENTS
6. Which type of journal entries are made at the end of each accounting period so that the
financial statements better reflect the accrual method of accounting?
a. Adjusting c. Reversing
b. Closing d. Journalizing
7. The generally accepted accounting principles used in the financial statements of U.S
corporations are researched and developed by which organization?
a. American Accounting Association (AAA)
b. Financial Accounting Standards Board (FASB)
c. Internal Revenue Service (IRS)
d. International Financial Reporting Standard (IFRS)
8. Which financial statement will allow you to determine the gross margin for a retailer or
manufacturer?
a. Balance Sheet c. Statement of Cash Flows
b. Statement of Comprehensive Income d. Income Statement
9. Which financial statement reports the adjustments for changes in the market value
of available-for-sale investment securities and adjustments for foreign currency translation?
a. Statement of Cash Flows c. Statement of Income
b. Statement of Comprehensive Income d. Statement of Stockholders’ Equity
10. The amount spent for capital expenditures will be reported in which section of the statement
of cash flows?
a. Cash Provided/used In Financing Activities
b. Cash Provided/used In Operating Activities
c. Cash Provided/used In Investing Activities
d. Supplemental Information
III. BASIC ACCOUNTING EQUATION
11. Which of the following will cause owner’s equity to increase?

a. Expenses c. Owner Draws
b. Revenue d. None of the Above
12. Which of the following will cause owner’s equity to decrease?
a. Net Income c. Net Loss

b. Net Worth d. Revenue
13. Using the basic accounting equation identify the missing item. Assets = 1700 Liabilities =?
Capital = 200 Retained Earnings = 500
a. 1,500 c. -1,000
b. 1,000 d. 1,700
14. Using the basic accounting equation identify the missing item. Assets = 9000 Liabilities = 5000
Capital = ? Retained Earnings = -1000
a. 5,000 c. 6,000
b. 4,000 d. 3,500
15. Using the basic accounting equation identify the missing item. Assets = 4850 Liabilities = 1250
Capital = 600 Retained Earnings = ?
a. -3,000 c. 2,500
b. 3,000 d. 4,000
IV. EXPANDED ACCOUNTING EQUATION

16. I. In sole proprietorship, owner’s withdrawal is a Contra-Equity account
II. Business’ Expenses is a Contra-Equity account
a. I & II are both TRUE c. I is FALSE; II is TRUE
b. I is TRUE; II is FALSE d. I & II are both FALSE
17. Where does the main difference between the Basic and Extended Accounting Equation be
more evident?
a. Asset c. Equity
b. Liability d. None of the Above
18. If the company has withdrawal of P50,000, expenses of P20,000, owner’s additional
contributions of P30,000 and income of P25,000, there will be:
a. Net Gain of P15,000 c. Breakeven
b. Net Loss of P15,000 d. None of the above
19. If the company has withdrawal of P30,000, expenses of P25,000, owner’s additional
contributions of P50,000 and income of P20,000, there will be:
a. Net Gain of P15,000 c. Net Loss of P15,000
b. Breakeven d. None of the above
20. Owner’s Equity can be expanded to as:

a. Capital + Withdrawals + Expenses + Revenue + Additional Contributions
b. Capital – Withdrawals – Expenses – Revenue – Additional Contributions
c. Capital + Withdrawals + Expenses – Revenue – Additional Contributions
d. Capital – Withdrawals – Expenses + Revenue + Additional Contributions
V. FINANCIAL TRANSACTION WORKSHEET
21. They are accounts whose balances are reduced to zero at the end of the accounting period.
a. Accounts Payable c. Real Accounts
b. Nominal Accounts d. Accounts Receivable
22. It is also known as books of original entry.

a. Journal c. General Journal
b. Ledger d. General Ledger
23. It is an expense paid or incurred but not yet consumed.

a. Accrued Expense c. Prepaid Expense
b. Depreciation Expense d. Bad Debts Expense
24. Suppose an entity pays P30,000 to its creditors by check. The journal entry should be:
Accounts to be debited Accounts to be credited
a. Accounts receivable Cash on hand
b. Accounts payable Cash on hand
c. Accounts payable Cash in Bank
d. Cash Accounts payable
25. A sole proprietor borrows P50,000 cash from the bank for the purchase of computer
equipment of P40,000 in the office. The remaining cash is held in hand. The journal entry
should be:
Account(s) to be debited Account(s) to be credited
a. Equipment, P50,000 Bank loan, P50,000
b. Equipment, P40,000 Bank loan, P50,000
Cash, P10,000
c. Bank loan, P50,000 Equipment, P40,000
Cash, P10,000
d. Cash, P50,000 Equipment, P40,000
Bank loan, P10,000
VI. ACCOUNTING CYCLE
26. The Beta Company—consignee—paid the freight costs for goods shipped from the Foxtrot
Incorporated—consigner. The freight costs are to be deducted from the Beta Company's
payment to the Foxtrot Incorporated when the goods are sold. Until the Beta Company sells
the goods, the freight costs should be included in which of the following?
a. Selling expense c. Cost of merchandise sold
b. Freight-out d. Account Receivable
27. The difference between net sales and cost of merchandise sold for a merchandising business
is:
a. Sales c. Gross Profit
b. Net Sales d. Gross Sales
28. When purchases of merchandise are made on account, the transaction would be recorded
with the following entry:
a. Debit Accounts Payable, credit Merchandise Inventory
b. Debit Merchandise Inventory, credit Accounts Payable
c. Debit Merchandise Inventory, credit Cash
d. Debit Cash, credit Merchandise Inventory
29. When a corporation sells merchandise and the terms are FOB shipping point and pays the
shipping costs, the seller would record the transportation costs with the following entry:
a. Debit Cash, credit Accounts Receivable
b. Debit Accounts Receivable, credit Sales
c. Debit Accounts Receivable, credit Cash
d. Debit Merchandise Inventory, credit Accounts Payable
30. Cost of Merchandise Sold would be classified as:

a. Asset c. Liability
b. Expense d. Revenue
VII. SPECIAL JOURNALS
31. Mimi Co. purchased equipment from Didi Co. worth P250,000. In what special journal should
the transaction be recorded?
a. Cash Disbursement Journal d. Sales Journal
b. Cash Receipts Journal e. General Journal
c. Purchase Journal
For questions 32-35:

TayNew Co. purchased merchandise from OffGun Co. worth P50,000, on account. The next day,
TayNew Co. fully paid their balance to OffGun Co.
32. From the point of view of TayNew Co., where should the first transaction be recorded?
c. Purchases Journal
33. From the point of view of TayNew Co., where should the second transaction be recorded?
34. From the point of view of OffGun Co., where should the first transaction be recorded?
35. From the point of view of OffGun Co., where should the second transaction be recorded?
VII. ACCOUNTING FOR PARTNERSHIP
36. It is a contract among and between two or more persons who bind themselves to contribute
money, property or industry to a common fund with the intention of dividing the profits
among themselves.
a. Corporation c. Partnership
b. Sole proprietorship d. All of the above
37. Which is not among the characteristics of a partnership?

a. Separate legal personality c. Limited liability
b. Limited life d. Voluntary association
38. He is a partner who is not really a partner but allows his name to be used by the partnership
for accommodation or for other consideration.
a. Nominal partner c. Dormant partner
b. Secret partner d. Silent partner
39. A partner who actively manages the affairs of the business and is known to be a partner
a. Industrial partner c. General partner
b. Managing partner d. Dormant partner
40. Among the various options available by determining the partners` share of profits are the
following except
a. Loans to the partnership
b. Stated fraction or ratio
c. Capital contributions
d. Capital contributions and service to the partnership
41. He is a partner who actively manages the affairs of the business but is not known to be a
partner.
a. Managing partner c. Secret partner
b. Silent partner d. Dormant partner
42. The Articles of Co-Partnership should contain clear provisions on all of the following except:
a. Taxes paid by the partnership c. Withdrawals allowed to partners
b. Causes of partnership dissolution d. Profit –sharing ratio
43. The non-cash contributions of the partners to form a partnership are recorded by partnership
at their:
a. Book value c. Dissolution value
b. Agreed value d. Original value
44. When a partnership cannot pay its debts with business assets, the partners
a. Are not personally liable for the debts
b. Have limited personal liability
c. Must convert the partnership to a joint venture
d. Must use their personal assets to meet debts
45. If the partners have not drawn up an agreement, then they must share profits and loses
a. Equally c. By an appropriate ratio
b. By any means that will save taxes d. According to capital contributions
- END OF FUNDAMENTALS OF ACCOUNTING QUESTIONNAIRE -

ANSWER KEY FOR FUNDAMENTALS OF ACCOUNTING
I. Accounting Concepts and Principles

1. B. Economic Entity
2. A. Cost
3. C. Monetary Unit
4. B. Full Disclosure
5. D. Materiality
II. Financial Statements
6. A. Adjusting
7. B. Financial Accounting Standards Board (FASB)
8. D. Income Statement
9. B. Statement of Comprehensive Income
10. C. Cash Provided/used in Investing Activities
III. Basic Accounting Equation
11. B. Revenue
12. C. Net Loss
13. B. 1,000
14. A. 5,000
15. B. 3,000
IV. Expanded Accounting Equation
16. A. I & II are both TRUE
17. C. Equity
18. B. Net Loss of P 15,000
19. A Net Gain of P 15,000
20. D. Capital – Withdrawals – Expenses + Revenue + Additional Contributions
V. Financial Transaction Worksheet
21. B. Nominal Accounts
22. A. Journal
23. C. Prepaid Expense
24. C. Accounts Payable – Cash in Bank
25. B. Equipment P 40,000
Cash 10,000
Bank Loan P 50,000
VI. Accounting Cycle
26. D. Account Receivable
27. C. Gross Profit
28. B. Debit Merchandise Inventory, credit Accounts Payable
29. B. Debit Accounts Receivable, credit Sales
30. B. Expense
VII. Special Journals
31. A. Cash Disbursement Journal
32. C. Purchases Journal
33. A. Cash Disbursement Journal
34. D. Sales Journal
35. B. Cash Receipts Journal
VIII. Accounting for Partnership
36. C. Partnership
37. C. Limited Liability
38. A. Nominal partner
39. B. Managing partner
40. A. Loans to the partnership
41. C. Secret partner
42. A. Taxes paid by the partnership
43. B. Agreed Value
44. D. Must use their personal assets to meet debts
45. D. According to capital contributions
Caloocan
FAR- FINANCIAL ACCOUNTING
SUBJECT COVERAGE:
 Cash and Cash Equivalents  Investment Property

 Bank Reconciliation  Noncurrent Assets held for sale
 Receivables  Current Liabilities
 Inventories  Provisions and Contingencies
 Biological Assets  Notes Payable
 Property, Plant and Equipment  Bonds Payable
 Wasting Assets  Liabilities
 Intangible Assets  Equity
 Investment in Debt and Equity Securities  Leases
I. CASH AND CASH EQUIVALENTS
1. Bardagol Company received a P 940 check from a customer for the balance due. The
transaction was erroneously recorded as a debit to Cash P 490 and a credit to Service
Revenue P 490. The correcting entry is:
a. debit Cash, P 940; credit Accounts Receivable, P 940

b. debit Cash, P 450 and Accounts Receivable, P 490; credit Service Revenue, P 940
c. debit Cash, P 450 and Service Revenue, P 490; credit Accounts Receivable, P 940
d. debit Accounts Receivable, P 940; credit Cash, P 540 and Service Revenue, P 490
2. On May 12, Park Seo Joon Company received a P 550 check from Kim Da-mi for services to
be performed in the future. The bookkeeper for Park Seo Joon Company incorrectly debited
Cash for P 550 and credited Accounts Receivable for P 550. The amounts have been posted
to the ledger. To correct this entry, the bookkeeper should:
a. debit Cash, P 550 and credit Unearned Service Revenue, P 550

b. debit Accounts Receivable, P 550 and credit Service Revenue, P 550
c. debit Accounts Receivable, P 550 and credit Cash, P 550
d. debit Accounts Receivable P 550 and credit Unearned Service Revenue, P 550
3. As of December 31, 2020, Itaewon Class Corporation’s Cash and Cash Equivalent has
balance per book in the amount of P 1,765,000. Included in the cash account are:
Compensating cash fund of P 300,000; Cash for the retirement of bonds payable of P 600,000;
Contingency fund of P 500,000; Three-months money market funds of P 750,000 and short
term operating funds of P 50,000. At what amount should the cash and cash equivalents be
reported in the statement of financial position as of December 31, 2020?
a. P 365,000 c. P 1,165,000
b. P 665,000 d. P 1,765,000
4. Money Heist Corporation records reveal the following data at year-end:
Commercial paper maturing in four months P 1,200,000

Uncashed tax refund check 550,000
Petty cash 100,000
2-months certificates of deposit 1,000,000
Balance in Union Savings and Loan savings account 2,500,000
Postage 50,000
Balance in United Bank Checking Account (250,000)
Treasury Notes maturing in six months 2,200,000
Cash on hand 500,000
Postdated customer check 125,000
Employee travel advance 75,000
Treasury bill maturing in one month 2,500,000
What is the correct amount of cash and cash equivalents that will appear as a current asset
on Money Heist Corporation’s balance sheet?
a. P 6,050,000 c. P 6,225,000
b. P 6,150,000 d. P 7,150,000
5. Crash Landing on You Co. Reported a total cash and cash equivalent of P 6,325,000 on
December 31, 2020, which includes the following information:
 Two certificates of deposits each totaling P 500,000. These certificate of deposit have a
maturity of 120 days.
 A check that is dated January 12, 2021 which is due in 30 days.
 A commercial paper of P 2,100,000 which is due in 30 days.
 Currency and coins on hand amounted to P 7,700.
Additional Information:
- Crash Landing on You Co. has agreed to maintain a cash balance of P500,000 in one of its
banks at all times and it is not available for withdrawal and to ensure future credit availability
(this amount was included in the above balance).
How much is the correct amount of cash and cash equivalents that Crash Landing on You Co.
should report in its December 31, 2020 statement of financial position?
a. P 2,600,000 c. P 4,700,000
b. P 3,100,000 d. P 5,200,000
II. BANK RECONCILIATION

Use the following information for answering questions 6-9.
The following information was included in the bank reconciliation for Spirited Away Corporation
for July 2019:
Checks and charges recorded by bank in July, including a July service charge of P 2,800, P
932,000; Service charge made by bank in June and recorded in books in July, P 1,200;
Customer’s NSF check returned as a bank charge in July (no entry made in books), P 6,000;
Customer’s NSF check returned in June, recorded by the company in July, P 15,000; Checks
issued in July for P 20,000 recorded by the company as, P2,000; Erroneous bank charge in July,
P 20,000; Erroneous bank credit in June corrected in July, P 30,000 and Erroneous book receipt
in June corrected in July, P 5,000
On February 1, 2020, Spirited Away Corporation factored receivables with a carrying amount of
P 300,000 to Agee Company assesses a finance charge of 3% of the receivables and retains 5%
of the receivables.
The following data concerning the inventory record of Spirited Away Corporation during the year.
Cost Retail
Beginning Inventory P 490,000 P 700,000

Purchases ,240,000 3,200,000
Freight-in 60,000 -
Net markups - 200,000
Net markdowns - 140,000
Sales - 3,360,000
6. What is the unadjusted disbursement per book on July 31, 2019?
a. P 909,400 c. P 922,000
b. P 918,800 d. P 927,600
7. Assume that Spirited Away Corporation factors the receivables on a without guarantee
(recourse) basis. The loss to be reported is:
a. P 0 c. P 15,000
b. P 9,000 d. P 24,000
8. Assume that Spirited Away Corporation factors the receivables on a with guarantee (recourse)
basis. The amount of cash received is
a. P 276,000 c. P 291,000
b. P 285,000 d. P 300,000
9. The ending inventory at retail should be
a. P 420,000 c. P 640,000
b. P 600,000 d. P 740,000
10. Which of the following is false about erroneous bank charges?
a. Cash balance per bank is understated

b. Disbursements per bank is overstated
c. It should be recorded as a debit to cash in bank account
d. It should be added to balance per bank in preparing bank reconciliation
III. RECEIVABLES
As of December 31, 2019, Howl’s Moving Castle Co. has a note receivable from My Neighbor
Totoro Inc. with face amount of P 200,000 that pays an annual interest of P 20,000 every
December 31 of the year. The historical effective interest rate is 10%. As of December 31, My
Neighbor Totoro Inc. Is in financial difficulty and indicates it will be unable to make all payments
according to the contractual terms. Below shows the cash flow schedule involving the receivable
from My Neighbor Totoro Inc.
December Contractual Cash Flows Expected Cash Flows Loss Cash Flows
2020 20,000 16,000 4,000
2021 20,000 16,000 4,000
2022 220,000 166,000 54,000
11. What amount of impairment loss should Howl’s Moving Castle Co. recognize on the above
receivable as of December 31, 2019?
a. P 46,830 c. P 66,830
b. P 47,513 d. P 67,513
12. Assume that the prevailing market rate of interest at the time the receivable was received was
8%, what amount of impairment loss should Howl’s Moving Castle Co. recognized on
December 31, 2019?
a. P 42,867 c. P 46,830
b. P 46,296 d. P 50,000
13. Which of the following items are true about PREMIUM on notes receivable?
I. Face value of note > Present value of note

II. Face value of note < Present value of note
III. Normal rate > Effective rate
IV. Normal rate < Effective rate
a. I and III c. II and III

b. I and IV d. II and IV
14. The following information pertains to the receivable of Teen Wolf Company for the year ended
December 31, 2019:
Unassigned Assigned
Jan 1, 2019 balance 2,000,000 3,000,000
Sales on account 10,000,000
Collection net of sales discounts 6,000,000 1,750,000
Sales discounts 100,000 50,000
Write-off 50,000 25,000
Sales return 60,000 30,000
Also, during the year Teen Wolf Company factored some of its unassigned receivables during
a net proceeds of P 750,000 and recognized in its profit or loss a loss of P 130,000 as a result
of the transfer. Also at the close of the business year December 31, 2019 recognized a
provision for uncollectible, future returns and discounts on all outstanding receivables for a
total amount of P 250,000. What is the amortize cost of the receivables as of December 31,
2019?
a. P 4,660,000 c. P 6,055,000
b. P 5,805,000 d. P 6,935,000
15. On January 2, 2018, ABC Company received an P900,000, 8%, 2-year note from DEF
Company as settlement for an outstanding past due account. The prevailing market rate of
interest on January 2, 2018 was 9%. The interest is payable every December 31 and the
interest due in 2018 were collected on time.
In 2019, DEF Company was in financial crisis, and as a result of this development, ABC
Company expects that the interest accruing for 2019 will still be collected on December 31,
but a reduced principal will be collected in equal annual installment over the next three years
starting December 31, 2020. As of December 31, 2019 the market rate of interest for a similar
instrument is 10%
What amount of impairment loss/bad debts should ABC Company recognize on December
31, 2019 related to its notes receivable?
a. None c. P 205,039
b. P 140,611 d. P 349,541
IV. INVENTORIES
16. The XYZ Department Store uses a calendar year and the Average retail inventory method
(assuming stable prices). It is the practice of the company to record sales net of 2% discount.
Information relating to the computation of the inventory at December 31 is as follows:
COST RETAIL
Inventory, January 1 P 320,000 P 800,000
Sales 6,076,000
Purchases 3,100,000 6,987,000
Freight In 80,000
Net markups 400,000
Net markdowns 200,000
Total Sales discounts (including
P50,000 Employee discounts) 175,000
Included in the purchases were inventory purchased with a cost of P 700,000 and with a retail
price of P 987,000. The terms of the purchased includes the right of the seller to buy back the
inventory on March 31, next year.
At the end of the accounting year, the company made a physical count and the amount of
inventory end at retail was P 200,000. What is the cost of the missing inventory?
a. None c. P 240,000
b. P 80,000 d. P 480,000
Use the following information for answering questions 17 and 18.
Units Unit Cost Total cost
Balance at January 1: 3,000 P 9.77 P 29,310
Purchases
January 6 2,000 10.30 20,600
January 26 2,700 10.71 28,917
Sales
January 7 (2,500)
January 31 (4,000)
Balance at January 31 1,200
17. Assuming that Rich does not maintain perpetual inventory records, what should be the
inventory at January 31, using the weighted-average inventory method, rounded to the
nearest dollar?
a. P 12,606 c. P 12,312
b. P 12,284 d. P 12,432
18. Assuming that Rich maintains perpetual inventory records, what should be the inventory at
January 31, using the moving-average inventory method, rounded to the nearest dollar?
a. P 12,606 c. P 12,312
b. P 12,284 d. P 12,432
An entity provided the following records connected to its inventory transactions:
Date and Transaction Units Unit Cost

January 1- Balance 40,000 P 20
February 10- Sale 30,000
April 12- Purchase 60,000 P 25
September 20- Sale 59,000
November 28- Purchase 40,000 P 30
The entity used the moving average method. At December 31, the entity determined that the NRV
per unit is P 23. (Round to two decimal places)
19. What is the cost of the inventory at December 31?
a. P 1,173,000 c. P 1,475,000
b. P 1,275,000 d. P 1,466,890
20. What amount of cost of goods sold should be reported at December 31?
a. P 2,225,000 c. P 2,033,110
b. P 2,327,000 d. P 2,025,000
V. BIOLOGICAL ASSETS
Use the following information for answering questions 21 to 23.
A herd of 50, 1-year old and 50, 2-year old animals were held by Rainbow Company at January
1, 2019. The company also purchased 20 animals aged 1.5 and 20 animals aged 2.5 on July 1,
2019. The following are their fair value of the biological assets:
Age of Animals Jan. 1, 2019 July 1, 2019 Dec. 31, 2019
1.0 year old P 2,500 P 3,000 P 3,500
1.5 year old 3,750 4,500 5,250
2.0 year old 5,000 6,000 7,000
2.5 year old 6,250 7,500 8,750
3.0 year old 7,500 9,000 10,500
0.0 year old 1,000 1,200
0.5 year old 2,000

Additional Information:
- 20 Animals were born during on July 1. 2019
21. How much of the increase in the fair value of the biological assets due to price change?
a. P 179,000 c. P 184,000
b. P 180,000 d. P 194,000
22. How much of the increase in the fair value of the biological assets due to physical change?
a. P 420,000 c. P 440,000
b. P 436,000 d. P 456,000
23. What is the fair value of the biological assets as of December 31, 2019?
a. P 1,085,000 c. P 1,225,000
b. P 1,145,000 d. P 1,265,000
Wander Company is in business of cattle farming. A herd of 200 3-year old and 180 4-year old
cattle are held on January 1, 2018. On July 2018, 50 calves were born. The only change during
the year is the increase in their physical attributes due to ageing. The relevant data are as follows:
Fair value of a 3-year old cattle at Jan. 1, 2018 P 4,500

Fair value of a 4-year old cattle at Jan. 1, 2018 6,000
Fair value of a 0-month old calf at Jul. 1, 2018 1,000
Fair value of a 0-month old calf at Dec. 31, 2018 1,300
Fair value of a 6-month old calf at Dec. 31, 2018 1,700
Fair value of a 3-year old cattle at Dec. 31, 2018 4,950
24. How much is the increase in the fair value of the biological asset due to physical change?
a. P 731,000 c. P 781,000
b. P 761,000 d. P 791,000
25. How much is the increase in the fair value of the asset attributable to price change?
a. P 220,000 c. P 235,000
b. P 230,000 d. P 240,000
VI. PROPERTY, PLANT AND EQUIPMENT
26. A company purchased land to be used as the site for the construction of a plant. Timber was
cut from the building site so that construction of the plant could begin. The proceeds from the
sale of the timber should be:
a. classified as other income.

b. netted against the costs to clear the land and expensed as incurred.
c. deducted from the cost of the plant.
d. deducted from the cost of the land.
27. A method which excludes salvage value from the base for the depreciation calculation is:
a. straight-line c. double declining balance

b. sum of years’ digits d. productive output
28. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale
were:
a. less than the current market value c. greater than book value
b. greater than cost d. less than book value
29. Bright Company purchased factory equipment which was installed and put into service
January 3, 2002 at a total cost of P 1,280,000. Salvage value was estimated at P 80,000.
The equipment is being depreciated over 8 years by the double declining balance method.
For the year 2003, how much depreciation expense should Bright record on this equipment?
a. P 225,000 c. P 300,000
b. P 240,000 d. P 320,000
Use the following information for answering questions 28 to 30.
Harper is contemplating exchanging a machine used in its operations for a similar machine on
May 31, 2002. Harper will exchange machines with either Austin Corporation or Lubin Company,
or will trade in the machine with Sub, Inc., a dealer in these machines. The data relating to the
machines are presented below:
Harper Austin Lubin Sub

Original cost of machine P162,500 P180,000 P150,000 P140,000
Accumulated depreciation
through May 31, 2002 98,500 70,000 65,000 0
Fair value at May 31, 2002 80,000 95,000 60,000 165,000
30. If Harper exchanges its used machine and P 15,000 cash for Austin’s used machine, the gain
that Harper should recognized from this transaction for financial reporting purposes would be:
a. P 0 c. P 15,000
b. P 2,526 d. P 16,000
31. If Harper exchanges its used machine for Lubin’s used machine and also receives P 20,000
cash, the gain that Harper should recognize from this transaction for financial reporting
purposes would be:
a. P 0 c. P 16,000
b. P 4,000 d. P 25,000
32. If Harper exchanges its used machine and P 85,000 cash for Sub’s machine, the gain that
Harper should recognize from this transaction for financial reporting purposes would be:
a. P 0 c. P 16,000
b. P 8,242 d. P 25,000
VII. WASTING ASSETS
33. Depletion expense
a. is usually part of cost of goods sold.

b. includes tangible equipment costs in the depletion base.
c. excludes intangible development costs from the depletion base.
d. excludes restoration costs from the depletion base.
34. The most common method of recording depletion for accounting purposes is the
a. percentage depletion method. c. straight-line method.

b. decreasing charge method. d. units-of-production method.
35. Of the following costs related to the development of natural resources, which one is not a part
of depletion cost
a. Acquisition cost of the natural resource deposit

b. Exploration costs
c. Tangible equipment costs associated with machinery used to extract the natural resource
d. Intangible development costs such as drilling costs, tunnels, and shafts
36. Tolan Resources Company acquired a tract of land containing an extractable natural
resource. Tolan is required by its purchase contract to restore the land to a condition suitable
for recreational use after it has extracted the natural resource. Geological surveys estimate
that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of
$1,200,000 after restoration. Relevant cost information follows:
Land $ 9,000,000
Estimated restoration costs 1,800,000
If Tolan maintains no inventories of extracted material, what should be the charge to depletion
expense per ton of extracted material?
a. $ 3.90 c. $ 4.80
b. $ 4.50 d. $ 5.40
37. In January, 2007, Miley Corporation purchased a mineral mine for $3,400,000 with removable
ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value
of $200,000 after the ore has been extracted. The company incurred $1,000,000 of
development costs preparing the mine for production. During 2007, 500,000 tons were
removed and 400,000 tons were sold. What is the amount of depletion that Miley should
expense for 2007?
a. $ 640,000 c. $ 840,000
b. $ 800,000 d. $ 1,120,000
VIII. INTANGIBLE ASSETS
Information concerning tiny Corporation’s intangible assets are as follows:

(a) On January 1, 2002, Tiny signed an agreement to operate a franchise for an initial
franchise fee of P 85,000. Of this amount, P 25,000 was paid when the agreement was
signed and the balance is payable in four annual payments of P 15,000 each beginning
January 1, 2003. The present value at January 1, 2002, of the four annual payments
discounted at 14% (the implicit rate for a loan at this type) is P43,700. The agreement
also provides that 5% of the revenue from the franchise must be paid to the franchisor
annually. Tiny’s revenue from the franchise for 2002 was P 900,000. Tiny estimates the
useful life of the franchise to be ten years.
(b) Tiny incurred P 78,000 of experimental and development costs in its laboratory to develop
a patent which was granted on January 2, 2002. Legal fees and other costs associated
with registration of the patent totaled P 48,000. Tiny estimates that the useful life of the
patent will be eight years.
(c) A trademark was purchased from Wall Company for P 40,000 on July 1, 1999.
Expenditures totaling P 68,000 were paid on July 1, 2002. Tiny estimated that the useful
life of the trademark will be 20 years from the date of acquisition.
38. How much is the amortization of franchise?
a. P 0 c. P 17,175
b. P 6,870 d. P 8,500
39. How much is the amortization of patent?
a. P 0 c. P 6,000
b. P 4,800 d. P 2,400
40. How much is the amortization of trademark?
a. P 0 c. P 4,000
b. P 2,000 d. P 6,000
41. How much is the unamortized cost of franchise at December 31, 2002?
a. P 68,700 c. P 61,830
b. P 51,525 d. P 60,200
42. How much is the unamortized cost of patent at December 31, 2002?
a. P42,000 c. P45,600
b. P48,000 d. P43,200
43. How much is the unamortized cost of trademark at December 31, 2002?
a. P 101,000 c. P 104,000
b. P 99,000 d. P 102,000
44. Intangible assets should be carried (benchmark treatment):
a. gross cost
b. fair value on balance sheet date
c. revalued amount minus accumulated amortization and accumulated impairment losses
d. cost minus accumulated impairment losses and accumulated amortization
45. How should a research and development cost be accounted for?
a. should be capitalized when incurred and then amortized over the estimated useful life.
b. should be expensed in the period incurred unless contractually reimbursable.
c. may be either capitalized or expensed when incurred, depending upon the fact of the
situation.
d. should be expensed in the period incurred unless it can be clearly demonstrated that the
expenditure will have significant future benefits.
IX. INVESTMENT IN DEBT AND EQUITY SECURITIES
46. Which securities are purchased with the intent of selling them in the near future?
a. Marketable equity securities c. Trading securities

b. Available-for-sale securities d. Held-to-maturity securities
47. Changes in fair value of securities are reported in the income statement for which type of
securities?

48. Which category includes only debt securities?

49. A debit balance in the account Market Adjustment--Available-for-Sale Securities at the end of
a year should be interpreted as
a. the net unrealized holding gain for that year.
b. the net realized holding gain for that year.
c. the net unrealized holding gain to date.
d. the net realized holding gain to date.
50. Northwick Company acquired 10,000 shares of the common stock of Shaver Corp. in July
2005. The following January, Shaver announced a $ 100,000 net income for 2005 and
declared a cash dividend of $ .50 per share on its 100,000 shares of outstanding common
stock. The Northwick Company dividend revenue from Shaver Corp. in January 2005 would
be:
a. $ 0. c. $ 5,000.
b. $ 2,500. d. $ 10,000
51. On January 2, 2005, Adler Co. acquired 2,000 shares of Boxworth Co. common stock for
$8,000 and classified these shares as available-for-sale securities. During 2005, Adler
received $ 6,000 of cash dividends. Adler's share of Boxworth's 2005 earnings (net income)
was $5,000. The fair value of Boxworth's stock on December 31, 2005, was $7 per share.
Adler should report what amount in 2005 related to Boxworth Co.?
a. Revenue of $ 6,000
b. Revenue of $ 12,000
c. A $ 1,000 decrease in the investment account
d. A $ 1,000 increase in the investment account
52. Martin Co. purchased the following portfolio of available-for-sale securities during 2005 and
reported the following balances at December 31, 2005. No sales occurred during 2005. All
declines are considered to be temporary.
Security Cost Market Value at 12/31/05

X $ 80,000 $ 82,000
Y 140,000 132,000
Z 32,000 28,000
Martin Co. should report what amount related to the securities transactions in its 2005 income
statement?
a. $ 0 c. $ 10,000 unrealized loss
b. $ 2,000 unrealized loss d. $ 12,000 unrealized loss
X. INVESTMENT PROPERTY
53. Which of the following terms does this statement define: “the amount of cash or cash
equivalents paid or the fair value of other consideration given to acquire an asset at the time
of its acquisition or construction”?
a. Cost c. Fair Value

b. Deemed Cost d. Present Value
54. Which of the following does not define investment property?
a. Property held to earn rentals

b. Property held for capital appreciation
c. Property used in the production or supply of goods or services
d. A and C
55. Investment property whose fair value cannot be measured reliably without undue cost or
effort on an ongoing basis is accounted for after initial recognition:
a. as inventory in accordance with Section13.

b. as property, plant and equipment in accordance with Section 17.
c. as a financial asset in accordance with Section 11.
d. as an intangible asset with a finite useful life in accordance with Section 18.
56. Which of the following statements is true with regards to an investment property?
a. An investment property generates cash flows largely independently of the other assets
held by an entity
b. The value in use of investment property is significantly higher than of owner-occupied
property
c. An investment property unlike owner-occupied property shall not be depreciated over its
useful life
d. An investment property unlike owner-occupied property shall always be measured at its
historical cost
57. On 1 January 20X1 an entity acquired a building for CU95,000, including CU5,000 non-
refundable purchase taxes. The purchase agreement provided for payment to be made in full
on 31 December 20X1. Legal fees of CU2,000 were incurred in acquiring the building and
paid on 1 January 20X1.
The building is held to earn lease rentals and for capital appreciation.
An appropriate discount rate is 10 per cent per year.
The entity shall measure the initial cost of the building at:
(a) CU88,364 (c) CU102,000
(b) CU97,000 (d) CU107,000
XI. NON-CURRENT ASSETS HELD FOR SALE

58. An entity accounted for noncurrent assets using the cost model on July 1, 2021 the entity
classified an equipment as held for sale. At the date, the carrying amount was P 5,000,000.
The fair value was estimated at P 3,500,000 and thee cost of disposal at P 100,000. On
December 31, 2021, the equipment was sold for net proceeds of P2,500,000.
What amount should be reported as an impairment loss for 2021?

a. 1,600,000 c. 1,500,000
b. 2,500,000 d. 900,000
Use the following information for answering questions 57 to 60:

An entity purchased an equipment for P5,000,000 on January 1, 2022. The equipment had a
useful life of 5 years with no residual value. On December 31, 2022, the entity classified the
equipment as held for sale. On such date, the fair value less cost of disposal of the equipment
was P3,500,000.
On December 31, 2023. The entity believed that the criteria for classification as held for sale can
no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use
it. On December 31, 2023, the fair value less cost of disposal of the equipment was P 2,700,000.
59. What is the carrying amount of the equipment on December 31, 2022 before classification
as held for sale?
a. 5,000,000 c. 3,500,000
b. 4,000,000 d. 4,500,000
60. What amount of impairment loss should be recognized in 2022?

a. 1,500,000 c. 500,000
b. 1,000,000 d. 0
61. What amount should be included in profit or loss in 2023 as a result of the reclassification of
the equipment to property, plant and equipment?
a. 800,000 gain c. 300,000 gain

b. 800,000 loss d. 300,000 loss
62. What is the carrying amount of the equipment on December 31, 2024?
a. 2,700,000 c. 2,000,000
b. 1,800,000 d. 3,000,000
An entity accounted for land using the revaluation model. On October 1, 2019, the entity classified
a land as held for sale. At the date, the carrying amount of the land was P 5,000,000 and the
balance in the revaluation surplus was P 1,500,000. At the same date, the fair value of the land
was estimated at P 5,500,000. The estimated cost of disposal is P 100,000.
On December 31, 2019, the fair value less cost of disposal of the land did not change. On October
1, 2020, the land was sold for P 7,000,000.
63. What is the impairment loss in 2019?
a. 100,000 c. 400,000
b. 500,000 d. 0
64. What amount should be reported as gain on disposal of land in 2020?
a. 1,600,000 c. 3,600,000
b. 1,500,000 d. 3,500,000
65. What amount of OCI is reclassified to retained earnings in 2020?
a. 1,500,000 c. 500,000
b. 2,500,000 d. 0
XII. CURRENT LIABILITIES
66. Which of the following items is a current liability?

a. Bonds (for which there is an adequate sinking fund properly classified as a long-term
investment) due in three months.
b. Bonds due in three years.
c. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven
months.
d. Bonds to be refunded when due in eight months, there being no doubt about the
marketability of the refunding issue.
67. Which of the following is a current liability?
a. Preferred dividends in arrears
b. A dividend payable in the form of additional shares of stock
c. A cash dividend payable to preferred stockholders
d. All of these
68. A Which of the following is a current liability?

a. A long-term debt maturing currently, which is to be paid with cash in a sinking fund
b. A long-term debt maturing currently, which is to be retired with proceeds from a new debt
issue
c. A long-term debt maturing currently, which is to be converted into common stock
d. None of these
69. Holbert Corporation has $ 2,500,000 of short-term debt it expects to retire with proceeds from
the sale of 75,000 shares of common stock. If the stock is sold for $ 20 per share subsequent
to the balance sheet date, but before the balance sheet is issued, what amount of short-term
debt could be excluded from current liabilities?
a. $ 1,500,000 c. $ 1,000,000
b. $ 2,500,000 d. $ 0
70. Grogan Corporation has $ 1,800,000 of short-term debt it expects to retire with proceeds from
the sale of 60,000 shares of common stock. If the stock is sold for $ 20 per share subsequent
to the balance sheet date, but before the balance sheet is issued, what amount of short-term
debt could be excluded from current liabilities?
a. $ 1,200,000 c. $ 600,000
b. $ 1,800,000 d. $ 0
71. On January 1, 2007, Didde Co. leased a building to Ellis Corp. for a ten-year term at an annual
rental of $ 80,000. At inception of the lease, Didde received $ 320,000 covering the first two
years' rent of $ 160,000 and a security deposit of $ 160,000. This deposit will not be returned
to Ellis upon expiration of the lease but will be applied to payment of rent for the last two years
of the lease. What portion of the $ 320,000 should be shown as a current and long-term
liability, respectively, in Didde's December 31, 2007 balance sheet?
Current Liability Long-term Liability
a. $ 0 $ 320,000
b. $ 80,000 $ 160,000
c. $ 160,000 $ 160,000
d. $ 160,000 $ 80,000
XIII: PROVISION AND CONTINGENCIES
72. Which of the following is the proper way to report a gain contingency?
a. As an accrued amount.
b. As deferred revenue.
c. As an account receivable with additional disclosure explaining the nature of the
contingency.
d. As a disclosure only.
73. Which of the following contingencies need not be disclosed in the financial statements or the
notes thereto?
a. Probable losses not reasonably estimable

b. Environmental liabilities that cannot be reasonably estimated
c. Guarantees of indebtedness of others
d. All of these must be disclosed.
74. Which of the following sets of conditions would give rise to the accrual of a contingency under
current generally accepted accounting principles?
a. Amount of loss is reasonably estimable and event occurs infrequently.

b. Amount of loss is reasonably estimable and occurrence of event is probable.
c. Event is unusual in nature and occurrence of event is probable.
d. Event is unusual in nature and event occurs infrequently.
75. A contingency can be accrued when
a. it is certain that funds are available to settle the disputed amount.

b. an asset may have been impaired.
c. the amount of the loss can be reasonably estimated and it is probable that an asset has
been impaired or a liability incurred.
d. it is probable that an asset has been impaired or a liability incurred even though the
amount of the loss cannot be reasonably estimated.
76. Vernon Co. is being sued for illness caused to local residents as a result of negligence on the
company's part in permitting the local residents to be exposed to highly toxic chemicals from
its plant. Vernon's lawyer states that it is probable that Vernon will lose the suit and be found
liable for a judgment costing Vernon anywhere from $1,200,000 to $6,000,000. However, the
lawyer states that the most probable cost is $3,600,000. As a result of the above facts, Vernon
should accrue
a. a loss contingency of $1,200,000 and disclose an additional contingency of up to
$4,800,000.
b. a loss contingency of $3,600,000 and disclose an additional contingency of up to
$2,400,000.
c. a loss contingency of $3,600,000 but not disclose any additional contingency.
d. no loss contingency but disclose a contingency of $1,200,000 to $6,000,000.
77. Information available prior to the issuance of the financial statements indicates that it is
probable that, at the date of the financial statements, a liability has been incurred for
obligations related to product warranties. The amount of the loss involved can be reasonably
estimated. Based on the above facts, an estimated loss contingency should be
a. accrued.
b. disclosed but not accrued.
c. neither accrued nor disclosed.
d. classified as an appropriation of retained earnings.
78. Mayberry Co. has a loss contingency to accrue. The loss amount can only be reasonably
estimated within a range of outcomes. No single amount within the range is a better estimate
than any other amount. The amount of loss accrual should be
a. zero. c. the mean of the range.

b. the minimum of the range. d. the maximum of the range.
79. On January 3, 2007, Alton Corp. owned a machine that had cost $200,000. The accumulated
depreciation was $120,000, estimated salvage value was $12,000, and fair market value was
$320,000. On January 4, 2007, this machine was irreparably damaged by Reed Corp. and
became worthless. In October 2007, a court awarded damages of $320,000 against Reed in
favor of Alton. At December 31, 2007, the final outcome of this case was awaiting appeal and
was, therefore, uncertain. However, in the opinion of Alton’s attorney, Reed’s appeal will be
denied. At December 31, 2007, what amount should Alton accrue for this gain contingency?
a. $320,000. c. $200,000.
b. $260,000. d. $0.
XIV. NOTES PAYABLE
80. Among the short-term obligations of Lance Company as of December 31, the balance sheet
date, are notes payable totaling $250,000 with the Madison National Bank. These are 90-day
notes, renewable for another 90-day period. These notes should be classified on the balance
sheet of Lance Company as
a. current liabilities. c. long-term liabilities.

b. deferred charges. d. intermediate debt.
81. Which of the following is not true about the discount on short-term notes payable?
a. The Discount on Notes Payable account has a debit balance.

b. The Discount on Notes Payable account should be reported as an asset on the balance
sheet.
c. When there is a discount on a note payable, the effective interest rate is higher than the
stated discount rate.
d. All of these are true.
82. What is a discount as it relates to zero-interest-bearing notes payable?
a. The discount represents the lender's costs to underwrite the note.

b. The discount represents the credit quality of the borrower.
c. The discount represents the cost of borrowing.
d. The discount represents the allowance for uncollectible amounts.
83. On February 10, 2010, after issuance of its financial statements for 2009, House Company
entered into a financing agreement with Lebo Bank, allowing House Company to borrow up
to $4,000,000 at any time through 2012. Amounts borrowed under the agreement bear interest
at 2% above the bank's prime interest rate and mature two years from the date of loan. House
Company presently has $1,500,000 of notes payable with First National Bank maturing March
15, 2010. The company intends to borrow $2,500,000 under the agreement with Lebo and
liquidate the notes payable to First National. The agreement with Lebo also requires House
to maintain a working capital level of $6,000,000 and prohibits the payment of dividends on
common stock without prior approval by Lebo Bank. From the above information only, the
total short-term debt of House Company as of the December 31, 2010 balance sheet date is
a. $0. c. $2,000,000.
b. $1,500,000. d. $4,000,000.
84. On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February
14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows
Irey to borrow up to $1,500,000 at one percent above the prime rate for three years. On
February 2, 2011, Irey borrowed $1,200,000 from County Bank and used $500,000 additional
cash to liquidate $1,700,000 of the short-term notes payable. The amount of the short-term
notes payable that should be reported as current liabilities on the December 31, 2010 balance
sheet which is issued on March 5, 2011 is
a. $0. c. $500,000.
b. $300,000. d. $800,000.
85. Included in Vernon Corp.'s liability account balances at December 31, 2010, were the
following:
7% note payable issued October 1, 2010, maturing September 30, 2011 $250,000
8% note payable issued April 1, 2010, payable in six equal annual
installments of $150,000 beginning April 1, 2011 600,000
Vernon's December 31, 2010 financial statements were issued on March 31, 2011. On
January 15, 2011, the entire $600,000 balance of the 8% note was refinanced by issuance of
a long-term obligation payable in a lump sum. In addition, on March 10, 2011, Vernon
consummated a noncancelable agreement with the lender to refinance the 7%, $250,000 note
on a long-term basis, on readily determinable terms that have not yet been implemented. On
the December 31, 2010 balance sheet, the amount of the notes payable that Vernon should
classify as short-term obligations is
a. $175,000. c. $50,000.
b. $125,000. d. $0.
XV. BONDS PAYABLE

86. An early extinguishment of bonds payable, which were originally issued at a premium, is made
by purchase of the bonds between interest dates. At the time of reacquisition
a. any costs of issuing the bonds must be amortized up to the purchase date.
b. the premium must be amortized up to the purchase date.
c. interest must be accrued from the last interest date to the purchase date.
d. all of these.
On October 1, 2010 Macklin Corporation issued 5%, 10-year bonds with a face value of
$1,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts
amortized on a straight-line basis.
87. The entry to record the issuance of the bonds would include a credit of
a. $25,000 to interest Payable.

b. $40,000 to Discount on Bonds Payable.
c. $960,000 to Bonds Payable.
d. $40,000 to Premium on Bonds Payable.
88. Bond interest expense reported on the December 31, 2010 income statement of Macklin
Corporation would be
a. $11,500 c. $13,500
b. $12,500 d. $23,000

On October 1, 2010 Bartley Corporation issued 5%, 10-year bonds with a face value of $500,000
at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a
straight-line basis.
89. The entry to record the issuance of the bonds would include a
a. credit of $12,500 to interest Payable.

b. credit of $20,000 to Premium on Bonds Payable.
c. credit of $480,000 to Bonds Payable.
d. debit of $20,000 to Discount on Bonds Payable.
90. Bond interest expense reported on the December 31, 2010 income statement of Bartley
Corporation would be
a. $6,750 c. $5,750
b. $11,500 d. $6,250
XVI. LIABILITIES
91. Liabilities are
a. any accounts having credit balances after closing entries are made.
b. deferred credits that are recognized and measured in conformity with generally accepted
accounting principles.
c. obligations to transfer ownership shares to other entities in the future.
d. obligations arising from past transactions and payable in assets or services in the future.
92. Which of the following is not considered a part of the definition of a liability?
a. Unavoidable obligation.
b. Transaction or other event creating the liability has already occurred.
c. Present obligation that entails settlement by probable future transfer or use of cash, goods,
or services.
d. Liquidation is reasonably expected to require use of existing resources classified as current
assets or create other current liabilities.
93. A liability for compensated absences such as vacations, for which it is expected that
employees will be paid, should
a. be accrued during the period when the compensated time is expected to be used by
employees.
b. be accrued during the period following vesting.
c. be accrued during the period when earned.
d. not be accrued unless a written contractual obligation exists.
94. During 2006, Younger Co. introduced a new line of machines that carry a three-year warranty
against manufacturer’s defects. Based on industry experience, warranty costs are estimated
at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after
sale. Sales and actual warranty expenditures for the first three-year period were as follows:
Sales Actual Warranty Expenditures

2006 $ 600,000 $ 9,000
2007 1,500,000 45,000
2008 2,100,000 135,000
$4,200,000 $189,000
What amount should Younger report as a liability at December 31, 2008?
a. $0 c. $204,000
b. $15,000 d. $315,000
95. Milner Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3
boxtops from Milner Frosted Flakes boxes and $1.00. The company estimates that 60% of
the boxtops will be redeemed. In 2007, the company sold 675,000 boxes of Frosted Flakes
and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Milner
Company $2.50 each, how much liability for outstanding premiums should be recorded at the
end of 2007?
a. $25,000 c. $62,500
b. $37,500 d. $87,500
XVII. EQUITY
96. Which dividends do not reduce stockholders' equity?
a. Cash dividends c. Property dividends

b. Stock dividends d. Liquidating dividends
97. Which one of the following disclosures should be made in the equity section of the balance
sheet, rather than in the notes to the financial statements?
a. Dividend preferences c. Call prices

b. Liquidation preferences d. Conversion or exercise prices
98. Presented below is information related to Hale Corporation:

Common Stock, $1 par $4,300,000
Paid-in Capital in Excess of Par—Common Stock 550,000
Preferred 8 1/2% Stock, $50 par 2,000,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000
The total stockholders' equity of Hale Corporation is
a. $8,600,000. c. $7,100,000.
b. $8,750,000. d. $7,250,000.
99. The total paid-in capital (cash collected) related to the common stock is
a. $4,300,000. c. $5,250,000.
b. $4,850,000. d. $4,700,000
100. Winger Corporation owned 900,000 shares of Fegan Corporation stock. On December 31,
2010, when Winger's account "Investment in Common Stock of Fegan Corporation" had a
carrying value of $5 per share, Winger distributed these shares to its stockholders as a
dividend. Winger originally paid $8 for each share. Fegan has 3,000,000 shares issued and
outstanding, which are traded on a national stock exchange. The quoted market price for a
Fegan share was $7 on the declaration date and $9 on the distribution date.
What would be the reduction in Winger's stockholders' equity as a result of the above
transactions?
a. $3,600,000. c. $7,200,000.
b. $4,500,000. d. $8,100,000.
XVIII. LEASES
Use the following information for questions 101 to 105.

Bohl Co. purchases land and constructs a service station and car wash for a total of $360,000. At
January 2, 2007, when construction is completed, the facility and land on which it was constructed
are sold to a major oil company for $400,000 and immediately leased from the oil company by
Bohl. Fair value of the land at time of the sale was $40,000. The lease is a 10-year, noncancelable
lease. Bohl uses straight-line depreciation for its other various business holdings. The economic
life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Bohl
at termination of the lease. A partial amortization schedule for this lease is as follows:
Payments Interest Amortization Balance
Jan. 2, 2007 $400,000.00
Dec. 31, 2007 $65,098.13 $40,000.00 $25,098.13 374,901.87
Dec. 31, 2008 65,098.13 37,490.19 27,607.94 347,293.93
Dec. 31, 2009 65,098.13 34,729.39 30,368.74 316,925.19
101. From the viewpoint of the lessor, what type of lease is involved above?
a. Sales-type lease c. Direct-financing lease
b. Sale-leaseback d. Operating lease
102. What is the discount rate implicit in the amortization schedule presented above?
a. 12% c. 8%
b. 10% d. 6%
103. The total lease-related expenses recognized by the lessee during 2008 is which of the
following? (Rounded to the nearest dollar.)
a. $64,000 c. $73,490
b. $65,098 d. $61,490
104. What is the amount of the lessee's liability to the lessor after the December 31, 2009
payment? (Rounded to the nearest dollar.)
a. $400,000 c. $347,294
b. $374,902 d. $316,925
105. The total lease-related income recognized by the lessee during 2008 is which of the
following?
a. $ -0- c. $4,000
b. $2,667 d. $40,000
- END OF FINANCIAL ACCOUNTING (FAR) QUESTIONNAIRE-

ANSWER KEY FOR FINANCIAL ACCOUNTING
I. Cash and Cash Equivalents

1. C. debit Cash, P450 and Service Revenue, P490; credit Accounts Receivable, P940
2. D. debit Accounts Receivable P550 and credit Unearned Service Revenue, P550
3. A. P 365,000
4. D. P 7,150,000
5. C. P 4,700,000
II. Bank Reconciliation
6. D. P 927,600
7. B. P 9,000
8. A. P 276,000
9. B. P 600,000
10. B. Disbursements per bank is overstated
III. Receivables
11. B. P 47,513
12. D. P 50,000
13. C. II and III
14. B. P 5,805,000
15. B. P 140,611
IV. Inventories
16. C. P 240,000
17. B. P 12,284
18. D. P 12,432
19. D P 1,466,890
20. B. P 2,327,000
V. Biological Assets
21. D. P 194,000
22. D. P 456,000
23. D. P 1,265,000
24. C. P 781,000
25. D. P 240,000
VI. Property, Plant and Equipment
26. D. deducted from the cost of the land.
27. C. double declining balance
28. D. less than book value
29. B. P 240,000
30. A. P 0
31. B. P 4,000
32. A. P 0
VII. Wasting Assets
33. A. is usually part of cost of goods sold.
34. D. units-of-production method.
35. C. Tangible equipment costs associated with machinery used to extract the natural resource
36. C. $4.80
- ($9,000,000 + $1,800,000 – $1,200,000) ÷ 2,000,000 = $4.80.
37. C. $840,000
- [($3,400,000 – $200,000 + $1,000,000) ÷ 2,000,000] × 400,000 = $840,000.
VIII. Intangible Assets
38. B. P 6,870
39. C. P 6,000
40. D. P 6,000
41. C. P 61,830
42. A. P 42,000
43. B. P 99,000
44. D. cost minus accumulated impairment losses and accumulated amortization.
45. B. should be expensed in the period incurred unless contractually reimbursable.
IX. Investment in Debt and Equity Securities
46. C. trading securities
47. C. trading securities
48. D. Held-to-maturity securities
49. C. the net unrealized holding gain to date.
50. C. $ 5,000.
51. A. Revenue of $6,000
52. A. $ 0
X. Investment Property
53. A. Cost
- Cost is the amount of cash or cash equivalents paid or the fair value of other consideration
given to acquire an asset at the time of its acquisition or construction or, where applicable,
the amount attributed to that asset when initially recognised in accordance with the specific
requirements of other IFRSs, eg IFRS 2 Share-based Payment. [IAS 40.5]
54. C. Property used in the production or supply of goods or services
- Investment property is property (land or a building—or part of a building—or both) held (by
the owner or by the lessee as a right-of-use asset) to earn rentals or for capital appreciation
or both, rather than for:
 (a) use in the production or supply of goods or services or for administrative purposes;
or
 (b) sale in the ordinary course of business. [IAS 40.5]
55. B. as property, plant and equipment in accordance with Section 17.
56. A. An investment property generates cash flows largely independently of the other assets held
by an entity
- Investment property is held to earn rentals or for capital appreciation or both. Therefore, an
investment property generates cash flows largely independently of the other assets held by
an entity. [IAS 40.7]
57. A. CU 88,364
- (a) calculation—(CU95,000 purchase price excluding refundable taxes) ÷ 1.1 = CU86,364
- present value of the purchase price + CU2,000 direct costs (legal fees) = CU88,364
XI. Non-current assets held for sale
58. D. 900,000
59. B. 4.000,000
60. C. 500,000
61. B. 800,000 loss
62. B. 1,800,000
63. A. 100,000
64. A. 1,600,000
65. B. 2,500,000
XII. Current Liabilities
66. C. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven
months.
67. C. All of these
68. D. None of these
69. A. $ 1,500,000
- 75,000 × $20 = $1,500,000.
70. A. $ 1,200,000
- 60,000 × $20 = $1,200,000.
71. B. $80,000 and $160,000.
XIII. Provision and Contingencies
72. D. As a disclosure only.
73. D. All of these must be disclosed.
74. B. Amount of loss is reasonably estimable and occurrence of event is probable.
75. C. the amount of the loss can be reasonably estimated and it is probable that an asset has been
impaired or a liability incurred.
76. B. a loss contingency of $3,600,000 and disclose an additional contingency of up to $2,400,000.
77. A. accrued
78. B. the minimum of the range
79. D. $0, gain contingencies are not accrued.
XIV. Notes Payable
80. A. current liabilities
81. B. The Discount on Notes Payable account should be reported as an asset on the balance sheet
82. C. The discount represents the cost of borrowing.
83. B. $1,500,000.
84. D. $800,000
- $2,000,000 – $1,200,000 = $800,000.
XV. Bonds Payable
85. D. $0
- both notes have been refinanced by long-term obligations
86. D. All of these
87. D. $40,000 to Premium on Bonds Payable.
- ($1,000,000 × 1.04) – $1,000,000 = $40,000 premium.
88. A. $11,500
- [($1,000,000 × .05) × 3/12] – [($40,000 ÷ 10) × 3/12] = $11,500.
89. B. credit of $20,000 to Premium on Bonds Payable.
- ($500,000 × 1.04) – $500,000 = $20,000 premium.
90. C. $5,750
- [($500,000 × .05) × 3/12] – [($20,000 ÷ 10) × 3/12] = $5,750.
XVI. Liabilities
91. D. obligations arising from past transactions and payable in assets or services in the future.
92. D. Liquidation is reasonably expected to require use of existing resources classified as current
assets or create other current liabilities.
93. C. be accrued during the period when earned.
94. D. $315,000
- ($4,200,000 × .12) – $189,000 = $315,000.
95. B. 37,500
- {[(675,000 × .60) – 330,000] ÷ 3} × $1.50 = $37,500.
XVII. Equity
96. B. Stock dividends
97. B. Liquidation preferences
98. A. $8,600,000
- $4,300,000 + $400,000 + $550,000 + $2,000,000 + $1,500,000 – $150,000 = $8,600,000.
99. B. $4,850,000
- $4,300,000 + $550,000 = $4,850,000.
100. B. $4,500,000
- (900,000 × $7) – [($7 – $5) × 900,000] = $4,500,000.
XVIII. Leases
101. C. Direct Financing Lease
102. B. 10%
$40,000 $400,000
———— = 10% or ————— = 6.1446*
$400,000 $65,098.13
- *6.1446 = PV factor of ordinary annuity of $1 for 10 years at 10%.
103. D. $61,490
- [($400,000 – $40,000) ÷ 15] + $37,490 = $61,490.
104. D. $316,925 (See amortization table.)
105. B. $2,667
- ($400,000 – $360,000) ÷ 15 = $2,667.
Caloocan
COST ACCOUNTING
COMPREHENSIVE EXAM REVIEWER
SUBJECT COVERAGE:
 Cost Accounting and Control  Process Costing
 Introduction to Costs Concepts and  Allocation of Joint Costs and Accounting
Classifications for By-Product/Scrap
 Normal Costing Vs. Actual Costing  Activity Based Costing System
 Cost of Goods Sold Statement  Economic Order Quantity
 Job Order Costing  Standard Costing
I. COST ACCOUNTING AND CONTROL
1. The following is also known as overhead costs or on costs.

a. Cost of direct labor c. Direct expenses
b. Cost of indirect labor d. Indirect expenses
2. Cost accounting is a specialized branch of accounting which deals with

a. Classification, recording, allocation and control of costs
b. Classification, processing, allocation and directing
c. Classification, recording, planning and control of costs
d. Classification, recording, allocation and directing
3. To calculate the probable cost of the product, knowledge of following factors involves
a. Production time required
b. Use of previous estimates of comparable parts
c. Effect of change in facilities on costing rates
d. All of the above
4. Expenditure incurred on material, labor, machinery, production and inspection are summed up to
find the?
a. Total cost of product c. Factory cost of product
b. Selling price of product d. None of the above
5. Which of the following calculate the actual cost of product?

a. Cost estimation c. Both (A) and (B)
b. Costing d. None of the above
6. Cost of preparing drawings for the manufacture of a particular product is

a. Cost of direct labor c. Direct expenses
b. Cost of indirect labor d. Indirect expenses
II. INTRODUCTION TO COSTS CONCEPTS AND CLASSIFICATIONS
7. It is a foregoing, measuring in monetary terms, incurred or potentially to be incurred to achieve a
specific objective.
a. Cost c. Receivable
b. Income d. Management
8. Joss Co. has the option to choose whether to choose Tay Co., which they can possibly gain
P200,000, and Mild Co., which the can possibly gain P120,000. If Joss Co. chose the option from
Tay Co. based on the possible benefits that they can earn, the cost that Josh Co. is considering is:
a. Differential Costs c. Sunk Costs
b. Opportunity Costs d. Common Costs
9. Manufacturing costs consists of the following EXCEPT:

a. Direct Materials c. Manufacturing Overhead
b. Direct Labor d. Product Costs
10. The following are the ONLY relevant costs for decision-making EXCEPT:
a. Differential Costs c. Sunk Costs
b. Opportunity Costs d. ALL are relevant for decision-making
11. These costs are also referred to as order-getting and order-filling costs.
a. Administrative Costs c. Marketing Costs
b. Period Costs d. Product Costs
III. NORMAL COSTING VS. ACTUAL COSTING

12. It is a method of cost accounting that records the cost on the actual basis, means cost of labor,
material and overhead are recorded at their actual value. This method is important to reduce
wastage at workplace.
a. Normal Costing c. Marginal Costing
b. Actual Costing d. Absorption Costing
13. It is a method in cost accounting, wherein the accountant finds production cost that is based on the
estimated price of input which is multiplied by the actual quantity of material and other input used
by the company.
a. Normal Costing c. Marginal Costing
b. Actual Costing d. Absorption Costing
14. Which of the following is not a component of normal costing?

a. Actual cost of materials
b. Actual cost of labor
c. Actual overhead costs incurred allocated using the actual quantity of the allocation base
experienced during the reporting period.
d. A standard overhead rate that is applied using the product's actual usage of whatever allocation
base is being used (such as direct labor hours or machine time)
15. The manufacturing overhead cost allocated to individual jobs is classified as?
a. Manufacturing overhead allocated c. Manufacturing overhead applied
b. Cost overhead applied d. Both A and C
16. In normal costing, the manufacturing overhead allocated is also called?

a. Manufacturing overhead applied c. Cost overhead applied
b. Labor overhead applied d. Budget overhead applied
IV. COST OF GOODS SOLD STATEMENT
17. If the raw material consumed is P90, 000; the opening and closing stock of the raw material is
P50,000 and P30,000, respectively. What would be the value of purchases?
a. P10,000 c. P70,000
b. P20,000 d. P60,000
18. Perry Company had the following account balances and operations for the month of July: Direct
materials consumed, P10,400; Direct labor, P8,000; Factory Overhead, P8,800; Work in process
inventory, beg., P2,400; Work in process inventory, end., P1,800; Finished goods inventory, beg.,
P1,200; Finished goods inventory, end., P1,000. The total manufacturing cost for the month of July
was:
a. P27,200 c. P28,000
b. P27,800 d. P28,200
19. Refer to no.18, what is the total cost of goods sold?

a. P27,200 c. P28,000
b. P27,800 d. P28,200
20. Refer to no.18, what is the total cost of goods manufactured?

a. P27,200 c. P28,000
b. P27,800 d. P28,200
21. At the beginning of the year, Manuel Company had a finished goods inventory of P3,000,000. During
the year, its cost of goods sold was P19,000,000; sales were P2,000,000 with a 20% gross profit.
Compute for the ending cost of finished goods inventory.
a. P4,000,000 c. 16,000,000
b. P6,000,000 d. None of the above
22. A company had a beginning finished gods inventory of P15,000, ending finished goods inventory of
P20,000 and cost of goods sold of 80,000. What was the cost of goods manufactured?
a. P80,000 c. P75,000
b. P85,000 d. P65,000
23. Identify the missing amount from the given data of Company Gamma:
Finished goods, May 1…………………………………... P 400,000
Cost of Goods Manufactured…………………………… 2,600,000
Sales………………………………………………………. 3,500,000
Gross Profit on sales……………………………………... 35%
Finished goods, May 31………………………………….. ?
a. 725,000 c. 5,275,000
b. 4,475,000 d. 7,725,000
24. The largest expense of most manufacturing firms is?

a. Salaries expense c. Cost of Sales
b. Amortization Expense d. Rent Expense
V. JOB ORDER COSTING
25. In a job order cost accounting system, which account would be debited in recording a purchase
invoice for raw materials?
a. Raw Materials Inventory c. Factory Overhead
b. Goods in Process Inventory d. Finished Goods Inventory
26. In a job order cost accounting system, which account would be debited in recording a materials
requisition for direct materials?
a. Raw Materials Inventory c. Raw Materials Purchases
b. Factory Overhead d. Goods in Process Inventory
27. The predetermined overhead rate is $6.10 per direct labor hour. Job 213 required 210 direct labor
hours of which 150 hours were incurred during the current accounting period. How much overhead
should be applied to Job 213 during the current accounting period?
a. $ 366 c. $1,218
b. $ 915 d. $1,281
28. Use the following information for answering the question:

Direct materials used: $20,000
Factory overhead: $40,000
Beginning goods in process: $0
Ending goods in process: $12,000
Cost of goods manufactured: $65,000
What was the amount of direct labor?

a. $17,000 c. $ 5,000
b. $77,000 d. $48,000
29. Job 21 was unfinished at the end of the accounting period. The total cost assigned to the job is
$12,000 of which $3,000 is direct material. Factory overhead is allocated to goods in process at
150% of direct labor cost. What was the amount of direct labor charged to Job 21?
a. $9,000 c. $4,000
b. $3,600 d. $3,000
VI. PROCESS COSTING
30. It is a method of costing used mainly in manufacturing where units are continuously mass-
produced through one or more processes.
a. Job order Costing c. Standard Costing
b. Process Costing d. Standard Process Costing
31. This is when a loss occurs over and above the normal expected loss. This may be due to reasons
such as faulty machinery or errors by laborers.
a. Normal gain c. Abnormal gain
b. Abnormal loss d. Normal loss
32. A method of costing is based on the assumption of that the opening work-in-progress units are the
first to be completed.
a. LIFO method c. FIFO Method
b. Average Cost Method d. Weighted Average Cost Method
33. In process costing, costs follow

a. Price rise c. Price declines
b. Product flow d. Finished goods
34. When average costing is used, the opening inventory costs are
a. Kept separate from the costs for the new period
b. Added to the costs of the new period
c. Subtracted from the new costs
d. Averaged with other costs to arrive at total cost.
VII. ALLOCATION OF JOINT COSTS AND ACCOUNTING FOR BY PRODUCT/SCRAP

35. Joint Costs are allocated to joint products to…
a. Obtain a cost per unit for financial statement purposes.
b. Provide accurate management information on production costs of each type of product.
c. Compute variances from expected costs for each joint product.
d. Allow the use of high-low analysis by the company.
36. Which of the following components of production are allocable as joint costs when a single
manufacturing process produces several salable products?
a. Direct material and direct labor only
b. Direct labor and overhead only
c. Direct material, direct labor, and overhead
d. Direct material and overhead only
37. Which of the following statements is true regarding by-products or scrap?
a. Process costing is the only method that should result in by-products or scrap.
b. Job order costing systems will never have by-products or scrap.
c. Job order costing systems may have instances where by-products or scrap result from the
production process.
d. Process costing will never have by-products or scrap from the production process.
38. Waste created by a production process is

a. Accounted for in the same manner as defective units.
b. Accounted for as an abnormal loss.
c. Material that can be sold as an irregular product.
d. Discarded rather than sold.
39. Which of the following is a false statement about scrap and by-products?
a. Both by-products and scrap are salable.
b. A by-product has a higher sales value than does scrap
c. By-products and scrap are the primary reason that management undertakes the joint process.
d. Both scrap and by-products are incidental outputs to the joint process.
40. The split-off point is the point at which

a. Output is first identifiable as individual products.
b. Joint costs are allocated to joint products.
c. Some products may first be sold.
d. All of the above.
41. The definition of sunk cost is…

a. A cost that cannot be recovered regardless of what happens
b. A cost that relates to money poured into the ground
c. Considered the original cost of an item.
d. Also known as opportunity cost.
42. For the purposes of allocating joint costs to joint products using the relative sales value at split-off
method, the costs beyond split-off…
a. Are allocated in the same manner as the joint costs.
b. Are deducted from the relative sales value at split-off.
c. Are deducted from the sales value at the point of sale.
d. Do not affect the allocation of the joint costs.
VIII. ACTIVITY BASED COSTING SYSTEM

43. Activity-based costing is a costing method that assigns overhead and indirect costs to related
products and services.
a. True
b. False
44. Which of the following IS not a feature of Activity-Based Costing?
a. Recognizes several levels of costs
b. Accumulates costs into related cost pools
c. Uses multiple cost drivers to assign costs to products and services
d. None of the above
45. Which of the following situations where Activity-Based Costing is not advisable to be used by a
company?
a. They have a wide variety of products or services
b. High overhead costs are proportional to the unit volume of individual products
c. Profit margins are difficult to explain
d. None of the above
For numbers 46 and 47:

Meade Company uses activity-based costing. The company produces two products: computers
and PDA’s. The annual production and sales volume of computers is 8000 units and of PDA’s is 6000
units. There are three activity cost pools with the following expected activities and estimated total costs:
Expected
Activity Cost Estimated Cost Activity Expected Total
Pool computers Activity PDA’s
Activity 1 P20,000 100 400 500
Activity 2 P37,000 800 200 1,000
Activity 3 P91,200 800 3,000 3,800
*The activity rate for activities 1, 2, and 3 are 40, 37, and 24 respectively.
46. Using Activity-Based Costing, the cost per unit of computers is approximately:
a. P2.40 c. P6.60
b. P3.90 d. P10.59
47. Using Activity-Based Costing, the cost per unit of PDA’s is approximately:
a. P2.40 c. P12.00
b. P3.90 d. P15.90
IX. ECONOMIC ORDER QUANTITY
48. Which of the following is an assumption of the economic-order-quantity decision model?

a. The quantity ordered can vary at each order point.
b. Demand ordering costs and carrying costs fluctuate.
c. There will be timely labor costs.
d. No stockouts occur.
49. The economic order quantity ignores:
a. Purchasing costs c. Stockout costs
b. Relevant ordering costs d. Both A and C
50. The purchase-order lead time is the:

a. Difference between the times an order is placed and delivered.
b. Difference between the products ordered and the products received.
c. Discrepancies in purchase orders.
d. Time required to correct errors in the products received.
51. Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs
plus relevant:
a. Carrying costs c. Quality costs
b. Stockout costs d. Purchasing costs
The following information applies to Labs Plus, which supplies microscopes to laboratories
throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a
reputation for very high quality in its manufacturing operation.
Annual demand (weekly demand = 1/52 of annual demand) 20,800 units

Orders per year 20
Lead time in days 15
Cost of placing an order $100
52. What is the reorder point?

a. 1,040 units c. 1,560 units
b. 857 units d. 2,080 units
The Wood Furniture company produces a specialty wood furniture product, and has the following
information available concerning its inventory items:
Relevant ordering costs per purchase order $300

Relevant carrying costs per year:
Required annual return on investment 10%
Required others costs per year $2.80
Annual demand is 20,000 packages per year. The purchase price per package is $32
53. What is the economic order quantity?

a. 2,000,000 units c. 150,000 units
b. 1,414.21 units d. 3,464.00 units
54. What are the relevant costs at the economic order quantity?
a. $1,414.21 c. $8,485.28
b. $4,242.65 d. $9,000
55. What are the relevant costs, assuming the quantity ordered equals 1,000 units?
a. $3,000 c. $6,000
b. $500 d. $9,000
X. STANDARD COSTING
56. A primary purpose of using a standard cost system is

a. To make things easier for managers in the production facility.
b. To provide a distinct measure of cost control.
c. To minimize the cost per unit of production.
d. B and C are correct.
57. Standard costs may be used for

a. Product costing c. Controlling
b. Planning d. All of the above
58. A total variance is best defined as the difference between total

a. Actual cost and total cost applied for the standard output of the period.
b. Standard cost and total cost applied to production.
c. Actual cost and total standard cost of the actual input of the period.
d. Actual cost and total cost applied for the actual output of the period.
59. A large labor efficiency variance is prorated to which of the following at year-end?
Work-In-Progress Final Goods
Cost of Goods Sold Inventory Inventory
a. No No No
b. No Yes Yes
c. Yes No No
d. Yes Yes Yes
For items 60-63, the following July information is for Marley Company:
Standards:
Material 3.0 feet per unit @ $4.20 per foot
Labor 2.5 hours per unit @ $7.50 per hour
Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ $4.50 per foot
Labor 7,000 direct labor hours @ $7.90 per hour
(Round all answers to the nearest dollar.)
60. Refer to Marley Company. What is the material price variance (calculated at point of purchase)?
a. $2,700 U c. $2,610 F
b. $2,700 F d. $2,610 U
61. Refer to Marley Company. What is the material quantity variance?

a. $3,105 F c. $3,105 U
b. $1,050 F d. $1,890 U
62. Refer to Marley Company. What is the labor rate variance?

a. $3,480 U c. $2,800 U
b. $3,480 F d. $2,800 F
63. Refer to Marley Company. What is the labor efficiency variance?

a. $1,875 U c. $1,877 U
b. $938 U d. $1,125 U
- END OF COST ACCOUNTING QUESTIONNAIRE -

ANSWER KEY OF COST ACCOUNTING
I. Cost Accounting and Control

1. D. Indirect Expenses
2. A. Classification, recording, allocation and control of costs.
3. D. All of the above
4. C. Factory cost of product
5. B. Costing
6. C. Direct Expenses
II. Introduction to Cost Concepts and Classifications
7. A. Cost
8. B. Opportunity Cost
9. D. Product Cost
10. C. Sunk Costs
11. D. Product Costs
III. Normal Accounting Vs. Actual Costing
12. B. Actual Costing
13. A. Normal Costing
14. C. Actual Overhead costs incurred allocated using the actual quantity of the allocation base
experienced during the reporting period.
15. D. Both A and C
16. A. Manufacturing overhead applied
IV. Cost of Goods Sold Statement
17. C. P 70,000
18. A. P 27,200
19. C. P 28,000
20. B. P 27,800
21. D. None of the above
22. B. P 85,000
23. A. 725,000
24. C. Cost of Sales
V. Job Order Costing
25. A. Raw Materials Inventory
26. D. Goods in Process Inventory
27. B. $ 915
28. A. $17,000
29. B. $3,600
VI. Process Costing
30. B. Process Costing
31. B. Abnormal loss
32. C. FIFO Method
33. B. Product flow
34. A. Kept separate from the costs for the new period.
VII. Allocation of Joint Costs and Accounting for by Product/Scrap
35. A. Obtain a cost per unit for financial statement purposes.
36. C. Direct material, direct labor and overhead.
37. C. Job order costing systems may have instances where by-products or scrap result from the
production process.
38. D. Discarded rather than sold.
39. C. By-products and scrap are the primary reason that management undertakes the joint
process.
41. A. A cost that cannot be recovered regardless of what happens.
42. D. Do not affect the allocation of the joint costs.
VIII. Activity Based Costing System
43. A. True
44. D. None of the above
45. B. High overhead costs are proportional to the unit volume of individual products.
46. C. P 6.60
47. D. P 15.90
IX. Economic Order Quantity
48. D. No stockouts occur
49. D. Both A and C
50. A. Difference between the times an order is placed and delivered.
51. A. Carrying Costs
52. B. 857 units
53. B. 1,414.21 units
54. C. $ 8,485.28
55. D. $ 9,000
X. Standard Costing
56. B. To provide a distinct measure of cost control.
58. D. Actual cost and total cost applied for the actual output of the period.
59. D. Yes—Yes—Yes
60. A. $ 2,700U
61. D. $ 1,890U
62. C. $ 2,800U
63. B. $ 938U
Caloocan
TAXATION
SUBJECT COVERAGE:
INCOME TAXATION
 Basic Concepts and Introduction about Tax  Value Added Tax
 Individual  Percentage Tax
 Corporation  Estate Tax
 Donors Tax
 Partnership
 Gross Income (exclusions and deductions)
I. INTRODUCTION TO TAXATION
1. Which of the following is defined as a state power, a legislative process, and a mode of government
cost distribution?
a. Tax c. Taxation
b. Tax System d. Tax Amnesty
2. It is the initial package of the Comprehensive Tax Reform Program (CTRP) signed into law on
December 19, 2017.
a. Republic Act no. 9504 c. Republic Act no. 8424
b. Republic Act no. 10963 d. Republic Act no. 9337
3. Which of the following is not an example of situs of taxation?

a. Regular Tax Situs c. Personal Tax Situs
b. Business Tax Situs d. Property Tax Situs
4. It occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing.
a. Judicial Non-interference c. Prospectivity of tax laws
b. Marshall Doctrine d. Double Taxation
5. It refers to any act or trick that tends to illegally reduce or avoid the payment of tax.
a. Tax avoidance c. Tax evasion
b. Tax exemption d. Tax condonation
6. Which of the following is also known as "tax holiday", refers to the immunity privilege or freedom from
being subject to a tax which other are subject to?
a. Tax amnesty c. Tax evasion
b. Tax exemption d. Tax condonation
7. Which refers to any act or trick that reduces or totally escapes taxes by any legally permissible means?
a. Tax avoidance c. Tax evasion
b. Tax amnesty d. Tax condonation
8. Statement 1: Taxation is an enforced proportional contribution levied by the lawmaking body of the
state to raise a revenue for public purpose.
Statement 2: Tax is generally payable in money.
a. Statement 1 is true and statement 2 is false. c. Both statements are true.
b. Statement 1 is false and statement 2 is true. d. Both statements are false.
9. These are tax imposed by the national government expect for one
a. Regressive Tax c. Excise Tax
b. Income Tax d. Donor's Tax
10. Which refers to the methods or schemes of imposing, assessing, and collecting taxes?
a. Tax c. Taxation
b. Tax System d. Tax Amnesty
II. INCOME TAXATION: INDIVIDUAL TAX PAYER

11. An individual can be considered as non-resident alien engaged in business when he stays here in
the Philippines for:
a. at least 183 days d. more than 1 year

b. more than 180 days e. none of the above
c. less than 180 days
12. Which is not subject to regular/basic tax?
a. Salary/compensation d. Income from business or profession

b. Ordinary gains e. None of the above
c. Prize
13. What is the basis of Graduated Tax Table?
a. Net profit d. Income

b. Gross profit e. None of the above
c. Expense
14. How much is the tax rate of resident citizen’s interest income bank deposit for 3 years and 3 months?
a. None d. 20%
b. 5% e. None of the above
c. 12%
15. What is the capital gains tax rate for real property?
a. 6% d. 20%
b. 15% e. None of the above
c. 10%
Use the following information for the next two questions:

Carmelita, a businesswoman, earned a sale of P3,000,000 and had an expense of P1,300,000.
16. How much is the basic income tax of Carmelita?
a. 220,000 d. 400,000
b. 240,000 e. None of the above
c. 420,000
17. How much is the basic income tax of Carmelita if she opted to be tax at 8%?
a. 220,000 d. 400,000
c. 420,000
Use the following information for the next two question.
Juanito, a resident alien, provided the following information for 2018:
Gross business income, Philippines 3,300,000
Business expense, Philippines 1,400,000
Royalty income on book published in Philippines 40,000
Prize in a contest he joined in Manila 20,000
Dividend received from a domestic corporation 60,000
Interest income, Philippines (4years and 5months) 10,000
18. How much is the passive income of Juanito?
a. 3,430,000 d. 14,000
c. 14,500
19. How much is the final tax of passive income of Juanito?
a. 3,430,000 d. 14,000
c. 14,500
20. During the year 2018, John and Carmela sold their principal residence for P10,000,000 in San
Alfonso. They inherited it from John’s grandfather at a cost of P7,000,000. Within 10 months’ period,
they purchased their new principal house at a cost of P11,000,000 located in Intramuros, Manila.
How much is the capital gains tax?
a. 600,000 c. 450,000
b. 660,000 d. 0
III. CORPORATION
21. A corporation which may be classified as either a Resident Corporation or Non-Resident Corporation
is?
a. Domestic corporation
b. Government owned and controlled corporation
c. Foreign corporation
d. Non-profit hospital
22. For income taxation purposes, the term “Corporation” excludes one of the following:
a. General professional partnership c. Ordinary partnership
b. Business partnership d. An incorporated business organization
23. One of the general principles of income taxation:
a. domestic corporation is taxable on income derived from sources within the Phil. only.
b. domestic corporation is taxable on income derived from sources without the Phil. only.
c. foreign corporation engaged in business in the Phil. is taxable on all income derived from
sources within and without the Phil.
d. A foreign corporation engaged in business in the Phil. is taxable on all income derived
from sources within the Phil. only.
24. The MCIT shall not apply to the following resident foreign corporations, except
a. RFC engaged in business as regional operating headquarters

b. RFC engaged in business as int’l carrier subject to 2 ½ 0/0 of their Gross Phil billings
c. RFC engaged in hotel, motel, and resort operations
d. RFC engaged in business as offensive Banking Units on their income from foreign
e. currency transactions with local commercial banks.
25. Which of the following statements is FALSE?
a. Non-resident foreign corporations are taxed on gross income from within and outside the
Philippines.
b. Resident foreign corporations would be taxed on net income from within the Phil only
c. MCIT is not applicable to non-resident foreign corporations
d. The corporate quarterly return shall be filed within 60 days following the close of each of
the first three quarters of the taxable year
26. The following income are subject to final tax, except?

a. Interest income received by resident foreign corporation from a Phil. bank
b. Cash dividends received by a domestic corporation from a domestic corporation.
c. Cash dividends received by a non-resident foreign corporation from a domestic corp
d. Royalty income received by a domestic corporation from a domestic corporation
27. Which is not one of the characteristics of corporate income tax
a. Progressive tax c. General tax

b. Direct tax d. National tax
28. Which of the following is not correct? The gross income tax
a. Is optional to qualified corporation

b. Is available if the ratio of costs of sales to gross sales or receipts from all sources does
not exceed 55%
c. Is compared with the normal income tax and minimum corporate income tax
d. Shall be irrevocable for three consecutive taxable years that the corporation is qualified
under the scheme
29. Albatross, a C corporation, had P125,000 net income from operations and a P10,000 short-
term capital loss in 2011. Albatross Corporation’s taxable income is P115,000.
a. True
b. False
30. EU University, a private educational institution organized in 2000, had the following data for
2020.
Tuition fees P 850,000
Rental income P 150,000
School related expenses P 820,000
The income tax due for 2020 is:

a. P 9,600 c. P 20,000
b. P 18,000 d. P 57,000
(31-36). The A corporation provided the following data for calendar year ending December 31,
2019 ($ 1= P50).
Philippines Abroad
Gross income P 4, 000, 000 $ 40, 000
Deductions 2, 500, 000 $ 15, 000
Income Tax Paid $ 3, 000
31. If it is a resident corporation, its income tax is
a. P 450,000 c. P 730,000
b. P 480,000 d. P 1,280,000
32. If it is a non-resident corporation, its income tax is
a. P 370,000 c. P 1,200,000
b. P 880,000 d. P 1,280,000
33. If it is a non-profit hospital, its income tax credit is
a. P 150,000 c. P 730, 000

b. P 275,000 d. P 832,000
34. If it is a resident international carrier, its income tax is

a. P 10,000 c. P 100,000
b. P 37,000 d. P 125,000
35. If it is a non-resident cinematographic film owner/lessor, its income tax is
a. P 100,000 c. P 300,000
b. P 128,000 d. P 1,000,000
36. If it is a non-resident lessor of vessels, its income tax is

a. P 100,000 c. P 180,000
b. P 128,000 d. P 300,000
37. If it is a non-resident lessor of aircrafts, machineries and equipment, its income tax is
a. P100,000 c. P180,000
b. P128,000 d. P300,000
Use the following information for answering questions 38 and 39:
A domestic corporation organized in 1998 provided the following information:
2003 2004 2005 2006 2007
Net Sales P4,000,000 P5,000,000 P6,000,000 P7,000,000 P8,000,000
Cost of sales P2,000,000 P2,500,000 P2,800,000 P4,000,000 P5,200,000
Business Expenses P1,900,000 P2,350,000 P2,900,000 P3,100,000 P2,300,000
38. The tax due after-tax credit, if any for 2005

a. P 86,000 c. P 95,000
b. P 87,500 d. P 97,500
39. Using the information above, the tax due after-tax credit, if any for 2007
a. P80,000 c. P140,000
b. P115,000 d. P175,000
IV. PARTNERSHIP
40. For income taxation purposes, the term “corporation” excludes one of the following:
a. Ordinary partnership
b. An incorporated business organization
c. General professional partnership
d. Business partnership
41. If a partner on his own transactions, is on the cash method of accounting while the general
professional partnership is on the accrual method of accounting, in the partner’s determination
of his taxable income for the year, he
a. Must convert his income from the partnership into cash method
b. Must convert his own income into accrual method
c. Does not report his income from the partnership because the partnership is exempt from
income tax
d. Can consolidate his share in the net income of the partnership under accrual method with
his own income under cash method.
42. Statement 1- A CPA and a Dentist may form a GPP or an ordinary partnership
Statement 2- Partnership and Corporations have separate juridical personalities distinct from
the owners, as such partners and stockholders are not liable to creditors of business
a. True, true c. False, true
b. False, false d. True, false
43. Which of the following statements is correct?
a. Partners of a taxable partnership are considered as stockholders and profits distributed to

them by the partnership are considered as dividends.
b. The share of each partner in net income of a taxable partnership shall be based on their
capital contribution.
c. The share of an individual partner in the net income of taxable partnership shall be equal
to the share of a capitalist partner with the least capital contribution.
d. The industrial partner shall contribute money and or property but not services.
44. AB partnership with A and B as partners had a net professional income amounting
toP500,000. Its other income included bank interest income of P8,000, net of final withholding
tax and it received dividend income from a domestic corporation of P10, 000. Ais single and
has compensation income of P200, 000. The net taxable income of A who shares profit and
loss equally with B is
a. P 364,000 c. P 400,000
b. P 440,000 d. P 444,000
45. Using the preceding number, but it is a business partnership, the taxable income of the
partnership is
a. P 518,000 c. P 510,000
b. P 500,000 d. P 508,000
46. The net shares received by a partner in a general co-partnership is
a. Part of his taxable income c. Subject to corporate tax

b. Exempt from income tax d. Subject to final tax
V. GROSS INCOME: FRINGE BENEFITS, DEDUCTIONS, AND EXEMPTIONS

47. All of the following statements are correct, except one. Which is the exception?
a. Rents are considered derived from the country where the property is located
b. Income from personal services is considered derived from the country where the services
were rendered
c. The source of interest income is the country where the debtor resides
d. The source of dividend income is the country where the corporation was incorporated
48. The following items are exclusions from gross income, except
a. Labor union dues c. SSS/GSIS premiums contributions
b. IOU’s d. Pag-ibig premiums contributions
49. If refunded, this is taxable:
a. Fringe benefit tax c. Special assessment

b. Estate tax d. Donor’s tax
50. Gain realized from the sale or exchange or retirement of bonds, debentures or other certificate
of indebtedness is excluded from gross income if with a maturity of…
a. Less than 5 years c. 5 years or more

b. More than 8 years d. More than 10 years
51. The fringe benefit tax is:

1. Imposed on the employer
2. Withheld at source
3. Deductible by the employer
a. 1 and 2 only c. 1 and 3 only

b. 2 and 3 only d. All of the Above
52. These are benefits that have a limitation
a. Fringe benefits c. Salary Benefits

b. De Minimis Benefits d. Investment Benefits
53. For individuals, premiums paid during the taxable year for health and/or hospitalization
insurance taken out by him on himself, including his family shall be allowed as deductions
from gross income, provided that the family has a gross income of
a. More than P250,000

b. Not more than P250,000
c. More than P500,000
d. Not more than P200,000
54. A taxpayer engaged in business incurred a partial loss of property as follows:
Asset 2
Asset 1
Book value of the asset at the time of loss P 200,000
P 200,000
Cost to restore the property back to its normal operating condition 300,000
120,000
Insurance recovery NONE
50,000
Salvage 40,000
NONE
The deductible loss for asset 1 is:

a. P120,000 c. P 80,000
b. P70,000 d. P 30,000
55. One of the following losses cannot be deducted from gross income
a. To construct a bigger warehouse, a corporation demolished an old warehouse which had

a construction cost of P2M and a book value of P300,000.
b. A corporation ascertained that its B Corp. stocks are worthless because of the total
insolvency of B Corp.
c. A corporation retired its machinery from the business because of the increase in the cost
of production and the failure of the machinery to meet the desired number of units of
production.
d. Demolition of a building existing on a land purchased where the corporation has no use
for the building at the time of purchase and it was its intention to remove the building in
order to build its factory.
56. Tobio acquired a machine at a cost of P250,000. Scrap value is P20,000 and the estimated
useful life was 25 years. After depreciating the asset for 20 years using the straight-line
method, it was determined that the remaining life is not five years. The annual depreciation
from the 21st year assuming a remaining life of 10 years without scrap is:
a. P 6,600 c. P 9,200
b. P 10,000 d. P 11,500
57. Tsukki took out a life insurance policy of P1,000,000 naming his wife as beneficiary. The policy
provides that the insurance company will pay Tsukki the amount of P1,000,000 after the 25th
year of the policy and his beneficiary, should he die before this date. The premiums paid on
the policy is P700,000. If Tsukki outlived the policy and received the proceeds of P1,000,000,
such proceeds will be:
a. Taxable in full c. Subject to final tax

b. Exempt from income tax d. Partly taxable, partly exempt
58. A taxpayer had the following:

Year 1 Year 2 Year 3 Year 4 Year 5
Gross income P490,000
P450,000 P450,000 P440,000 P420,000
Allowable 410,000
Deductions 530,000 430,000 410,000 410,000
The income to be reported in year 2 is:
a. P 0 c. P20,000
b. P450,000 d. P60,000
59. Continuation of question #59: The income to be reported in year 5 is
a. P 60,000 c. P 20,000
b. P 80,000 d. P 0
60. As a means of promoting the health, goodwill, and efficiency of his employees, employer
Hinata gave rank and file employee Suga the following fringe benefits in 2009:
1. Monetized unused vacation leave of 15 days P 9,000

2. Rice subsid 24,000
3. Uniform and clothing allowance 8,000
4. Award for length of service in the form of tangible personal property 15,000
5. Gifts given during Christmas and major anniversary celebrations 10,000
6. 13th Month pay
The amount of taxable fringe benefits is:
a. P11,000 c. P30,000
b. P 23,000 d. P25,000
61. Dazai, a dedicated and honest employee of RST Corp. for the past 20 years was advised that
he is to be retrenched as the company was losing heavily but that he would be given the
separation pay provided by law. To avoid implication of inefficiency Dazai was advised to file
a letter of resignation instead of being retrenched. If Dazai files a letter of resignation and
receives the separation pay, such amount is:
a. Subject to Final Tax c. Taxable in Full

b. Exempt from Income Tax d. Partially Taxable, Partially Exempt
62. Retirement pay is always taxable; Salary of a minimum wage earner is taxable
a. Statement 1 is true c. Both statements are true

b. Statement 2 is true d. Both statements are false
63. The following income are excluded in the computation of gross income except:
a. Income by the Philippine government

b. Income already subjected to final tax and CGT
c. Pension of veteran coming from US veteran’s administration
d. Gain on sale of capital asset
64. Mario received Php 120 000 from his employer as his Christmas bonus for that year, how
much is excluded in his gross income?
a. 30,000 c. 100.000
b. 90,000 d. 120.000
65. Amy received Php 50 000 as a gift from her employer, how much is excluded in her gross
income?
a. 20,000 c. 50,000
b. 25,000 d. None of the Above
66. Statement 1: As a rule, retirement benefit is included in the computation of gross income.
Statement 2: Interest income from insurance is excluded in the computation of gross income.

67. Statement #1: Property insurance is included in the gross income;

Statement #2: Separation Pay is not mandatory in a business

68. Kira received a separation pay amounting to Php 20,000 because of her sickness, how much
is included in her gross income?
a. 0 c. 10,000
b. 5,000 d. 15,000
69. Statement #1: Proceeds from SSS, GSIS, Philhealth & Pag-ibig is included in the gross
income.
Statement #2: Separation pay is always included in the gross income

VI. VALUE ADDED TAX
70. In the case of importation of taxable goods, who shall be liable to VAT?
a. Importer, whether an individual or corporation and whether or not made in the course of his
trade or business.
b. Importer if corporation and only when made in the course of trade or business.
c. Importer if made in the course of trade or business only.
d. None of the choices.
71. A taxpayer is the proprietor/lessor of one commercial building. He leased its spaces at the
following monthly rates:
Ground floor- P12,000
Second floor- 10,000
Third floor- 8,000
The taxpayer is liable to pay the
a. 12% VAT c. 3% percentage tax
b. 0% VAT d. None of the choices are correct
72. Mr. Mark Yabut is engaged in the following:
Trucking business, gross annual receipts 500,000

Lease of apartment house (monthly rental 2,000,000
is P12,800 per unit), gross receipts
Practice of accountancy, gross receipts 900,000
Mr. Mark Yabut is not VAT-registered. Which of the following statements is correct?
a. He is not subject to VAT.
b. He cannot optionally register under the VAT system.
c. He is considered a VAT-registrable taxpayer.
d. He is mandatorily required to register under the VAT system.
73. The taxpayer is a VAT-registered owner of an eatery place. Data on gross receipts follow:
Food 3,360
Beverages 420
Service charge 378
City Tax 54.60
What shall the official receipt show?
a. 4,617.60 c. 4,658.10
b. 4,666.20 d. 4,711.56
74. A VAT-registered domestic carrier operating air, land and sea transport equipment acquired
vehicles for use in its operation to transport goods and cargoes. The domestic carrier:
a. can claim input taxes on the said acquisition.
b. cannot claim input taxes on the said acquisitions.
c. can claim input taxes only on the acquisitions of air and sea transport vehicles.
d. can claim input taxes only on the acquisition of land transport vehicles.
75. Where a VAT-registered person purchases or imports capital goods, which are depreciable
assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT)
exceeds P1,000,000 in a calendar month regardless of the acquisition cost of each capital
good, shall be claimed as credit:
a. in full in the month acquired, if the estimated life is less than 5 years..
b. in full in the quarter acquired unless the estimated life is less than 5 years, in which case
over the actual number of months compromising the estimated life.
c. over a period of 60 months regardless of the estimated life.
d. over a period of 60 months unless the estimated life is less than 5 years in which case
76. For VAT purposes in connection with deferred payment sale of real property, the term initial
payments shall include:
a. Mortgage on the real property sold not exceeding the cost thereof
b. Down payment only made at the time of sale.
c. Payments made in the year of sale in addition to the down payment
d. Evidence of indebtedness issued by the purchaser to the seller at the time of sale
77. The input tax credit on importation of goods or local purchases of goods, properties or
services by a VAT-registered person shall be creditable to which of the following?
a. To the purchaser of the domestic goods or properties upon consummation of the sale.
b. All of the choices.
c. To the importer upon payment of VAT prior to the release of goods from customs
custody.
d. To the purchaser of services or the lessee or licensee upon payment of the
compensation, rental, royalty, or fee.
78. The following events happened in a VAT enterprise:
June Performance of service

July Received invoice in the amount of
P112,000
August Paid the services
When and how much input VAT can be claimed?

a. July, P12,000 c. August, P13,440
b. July, P13,400 d. August, P12,000
79. A VAT-registered trader has the following transactions in the second month of a taxable
quarter:
Sales of goods to private entities, gross of 2,800,000
VAT
Purchases of goods sold to private entities, 800,000
net of VAT
Sales to a Government Owned or Controlled 1,120,000
Corporation (GOCC), gross of VAT
Purchases of goods sold to GOCC, net of 672,000
VAT
How much is the standard input tax on sales to the government?

a. 70,000 c. 56,000
b. 78,400 d. 84,000
VII. PERCENTAGE TAX
80. A taxpayer is engaged in VAT-subject transactions but his annual gross sales do not exceed
the VAT threshold. Hence, he did not register under VAT system. However, during the current
year, his quarterly gross sales follow:
First quarter P1,000,000

Second quarter 1,000,000
Third quarter 1,000,000
Fourth quarter 1,000,000
How much is the percentage tax due?
a. 90,000 c. 120,000
b. 480,000 d. None of the choices
81. A jeepney operator has the following receipts during a particular month:
Jeepney No. 1 (net of P5,000 gasoline expenses) 20,000

Jeepney No. 2 (gross of P4,000 gasoline expenses) 16,000
How much is the common carriers tax due for the month?
a. 1,230 c. 1,407
b. none of the choices d. 1,080
82. Air Asia is an international carrier doing business in the Philippines. It has the following data
for the current month:
A. Gross receipts from transport of cargo and/or mail, originating from the
Philippines in a continuous and uninterrupted flight, passage documents sold
outside the Philippines
B. Gross receipts from transport of passengers originating from the Philippines in
a continuous and uninterrupted flight, passage documents sold in the Philippines
C. Gross receipts from transport of cargo and/or mail, originating from outside the
Philippines in a continuous and uninterrupted flight, passage documents are sold
in the Philippines.
You are consulted by its CFO as to which of the above shall be subject to the Philippine common
carriers tax. What will your answer be?
a. None of the choices are correct c. A and C only
b. A only d. A, B and C
83. Liwanag Company is a holder of franchise. Aside from its receipts from the use of franchise,
it also leases its auditorium and theatre. In a particular month, its gross receipts from the use
of franchise amount to P2,000,000. The gross receipts from the lease of its auditorium and
theater amount to P800,000.
Assuming Liwanag Company is a franchise grantee of gas utilities, how much is the franchise
tax?
a. 56,000 c. 60,000
b. 40,000 d. 84,000
84. A news service, has used communication facilities to send its news to its head office in Paris,
France. During the current month, it paid a total of P500,000 for its overseas communications
originating from the Philippines. How much is the overseas communications tax due?
a. 25,000 c. None
b. 60,000 d. 50,000
85. Gross receipts tax is a business tax paid by a:
a. franchise holder c. insurance company

b. bank d. hotel operator
86. Philam Life, a domestic insurance company, has the following data for the current month:
Premiums collected on life insurance 2,000,000

policies
Premiums refunded within 6 months 500,000
after the payment on account of
rejection of risk (part of the total
premiums collected)
Reinsurance premium (tax has already 200,000
been paid)
Premiums collected by a branch doing 300,000
business outside the Philippines from
nonresident policy holders
How much is the tax on life insurance premiums?
a. 30,000 c. 150,000
b. 40,000 d. 200,000
87. The Minyong Promotions, Inc. is a sports promoter which leases the Manila Coliseum at a
monthly rental of 800,000. It conduct boxing exhibitions and professional basketball games in
the coliseum. In a month, it had the following gross receipts from professional basketball
games:
Gate receipts 5,000,000

Sales of food at stands maintained it in the coliseum 900,000
Sale of television rights 1,000,000
Rent expense 2,400,000
The percentage tax is:
a. 750,000 c. 936,000
b. 1,035,000 d. None of the above
88. Dimple invested P500,000 in shares of stock in Manila Trading Corp., a publicly-listed
company. The corporations shares were listed and were traded in the local stock exchange.
Dimple sold her shares in the local stock exchange through Ryan, a direct buyer for P550,000.
How much was the percentage tax on the sale?
a. P 2,500 c. None
b. P 2,750 d. P42,000
89. A closely held corporation has initially offered its shares in the Philippines Stock Exchange.
The following data pertain to the initial public offering:
Number of shares sold in IPO 500,000 shares

Total outstanding shares, after the listing the Philippine Stock Exchange 2,000,000 shares
Gross value in money of the IPO P 10,000,000
How much is the percentage tax due?

a. 50,000 c. 400,000
b. 100,000 d. 200,000
VIII. ESTATE TAX
90. Mr. Rio, a citizen of the Philippines, single, died a resident of the United States, leaving the
following properties:
Real property in the United States, inherited from the father 2,000,000
one and one-half years ago
Personal property in the Philippines inherited from the father 1,600,000
Family home in the United States
and incurred/paid the following expenses: 1,400,000
Actual funeral expenses paid in the United States 100,000
Other obligations contracted within the last two years 250,000
The taxable gross estate is:
a. 1,600,000 c. 3,000,000
b. 3,400,000 d. 5,000,000
91.
FMV, Date of FMV, Date of Consideration
Death Transfer received
Revocable transfer
Land P5,200,000 P4,000,000 P3,000,000
Automobile 1,000,000 1,500,000
Shares of stock 200,000 500,000 400,000
Bond certificates 400,000 300,000 350,000
Transfer under power
of appointment
Farm land, limited power 1,300,000 1,500,000
Land and building, 1,800,000 2,000,000 1,000,000
general power
Additional gross estate (if still any) is:
a. 4,300,000 c. 0
b. 3,500,000 d. 3,000,000
92. The decedent was married at the time of death.

Cash owned before the marriage P10,000,000
Real property inherited during the marriage 12,000,000
Personal property by the wife received as gift before the marriage 800,000
Property acquired with cash owned before the marriage 1,200,000
Clothes of the decedent purchased with the exclusive money of the wife 1,000,000
Jewelry purchased with exclusive cash 2,000,000
Property unidentified when and by whom acquired 2,400,000
Cash income during the marriage 4,000,000
The gross estate under the system of conjugal partnership of gains is:
a. 33,400,000 c. 32,600,000
b. 33,400,000 d. 31,600,000
93. For proceeds of life insurance not to constitute part of the gross estate must have
a. designated the estate of the decedent as irrevocable beneficiary
b. been taken out by the decedent upon his life.
c. designated a third person as, the decedents executor or administrator as the irrevocable
beneficiary
d. designated a third person other than the estate, the decedents executor or administrator
as irrevocable beneficiary
94. Fe died with a claim against Titoy. Titoy has properties worth P250,000 and obligations of
P350,000. Included in the obligations of Titoy are P50,000 unpaid taxes owed to the
Government of the Philippines and P90,000 payable to Ms. Fe.
The estate of Fe has a deductible claim against an insolvent debtor amounting to
a. 90,000 c. 60,000
b. 30,000 d. None of the choices.
95. Which one of the following is wrong?

a. Medical expenses must be paid or incurred within 1 year prior to the decedents death to
be deductible.
b. Taxes to be deductible must accrue before the decedents death.
c. Transfer for public purposes in order to be deductible must be mortis causa and
testamentary in character.
d. Losses must occur also before the decedents death to be deductible.
96. Fe, married on June 5, 2014 died on April 29, 2016 with the following data: Gross estate -
conjugal, P3 million; exclusive, P2 million. Said amount includes a land which she received
as gift from her father two months before the marriage, valued at P540,000. Her father
mortgaged the land for P20,000 which was paid by Fe. Fe mortgaged also the said land for
P50,000 but was able pay only P20,000 until his death. ELIT claimed (excluding the unpaid
mortgage) amounted to P170,000. The vanishing deduction is
a. 399,360 c. 384,000
b. 299,520 d. 288,000
97. Mr. Edwin, a citizen and resident of the Philippines, died on June 1, 2019, survived by his
wife. The property relationship in the marriage was the conjugal partnership of gains. He left
the following properties and charges thereon:
Cost Fair Market
Value
Residential house, constructed during the P 400,000 P 900,000
marriage
Residential lot, TCT # 318, inherited 10 years ago 200,000 450,000
Furniture and appliances in the residential house 600,000 490,000
Receivable from insolvent friend 10,000
Cash, owned before the marriage 150,000
Other properties owned before the marriage 1,000,000
Actual funeral expenses 100,000
Judicial expenses 120,000
Unpaid mortgage 50,000
Unpaid taxes 20,000
Legacy (per will) of P50,000 cash to DSWD 50,000
Loss of household furniture and appliances on 12,000
December 9, 2019
The deduction for family home amounts to:
a. 450,000 c. 900,000
b. 1,350,000 d. 1,000,000
98. Mr. Goran, a citizen and resident of the Philippines, died on October 5, 2018. He was married
and the property relationship during the marriage was the absolute community of property. He
left the following properties, with their market values, and obligations and charges:
Agricultural land P100,000
House and lot acquired by inheritance before the marriage and 41/2 500,000
years ago, used as family home (with a fair market value of P420,000
and a mortgage of P120,000 when acquired; P20,000 was paid by Mr.
Goran before he died)
Jewelry of Mrs. Goran, acquired during the marriage with the exclusive 50,000
money of Mrs. Goran
Clothes acquired during the marriage from income earned during 130,000
(P60,000 for use of Mr. Goran, and P70,000 for use of Mrs. Goran)
Cash on hand and in banks: income from unidentified sources 300,000
Cash in bank:
From sale at a loss of exclusive property 1,500,000
Received as gift six years ago and before the marriage (current account) 40,000
Other properties:
Owned before the marriage 90,000
Acquired during the marriage 20,000
Deductions and other information:
Total funeral expenses of P300,000. Paid from the estate
Judicial expenses 58,000
Unpaid mortgage (already on the property at the time acquired): 120,000
On agricultural land 20,000
On house and lot 100,000
Other obligations 20,000
Legacy to the Government of the Philippines from the current account 10,000
The net taxable estate is:
a. 857,310.34 c. 0
b. 767,310.34 d. 698,620.70
99. When is the time for filing of the estate tax return?
a. Thirty (30) days from the decedent’s deathth c. Six (6) months from the decedent’s death
b. Two (2) months from the decedent’s death d. Two (2) years from the decedent’s death
IX. DONORS TAX
100. Which of the following is/are the purpose of donors tax?

I. To supplement and prevent circumvention of estate tax.
II. To prevent avoidance of income through a devise of splitting income to numerous
donees to escape the effect of progressive rates of income taxation.
III. To tax the act of receiving a gift.
IV. To subject properties wherever situated to donors tax
a. II only c. I only
b. I and II only d. All of the answers are correct
101. On January 15, 2015, Mr. Jose de Leon executed a Deed of Donation covering a piece of
land which is part of the common property owned by him and his wife with the latters consent.
The donation was made to his niece, Jenilyn. Jenilyn accepted the donation on February 14,
2015. The land had an assessed value of P1 million and zonal value of P800,000 at the time
of donation. It was also encumbered with an unpaid mortgage of P300,000 which was
assumed by the donee. In addition, the donee agreed to pay the applicable donors tax of
P210,000.
For donors tax purposes, what value shall be used as gross gift of Mr. Jose de Leon?
a. 1,050,000 c. 400,000
102. Every donation or grant of gratuitous advantage, direct and indirect, between the spouses
during the marriage shall be void, except:
a. All of the choices are correct exceptions.
b. Donation propter nuptias which are given before the marriage.
c. Moderate gifts which the spouses may give each other on the occasion of any family
rejoicing.
d. Donation mortis causa.
103. LA Corporation donated P1,000,000 to a government agency which was created to generate
profit to the government. The agencys total expenses amounted to P15,000,000, 30% of
which were for administrative purposes? How much was the exempt gift?
a. none of the choices c. 1,000,000
b. 3,000,000 d. 4,500,000
104. Which of the following is an exemption for donors tax purposes not found in the Tax Code?
a. donation to a religious organization
b. none of the choices
c. donation to Philippine Inventors Commission
d. donation to non-profit educational institutions
105. Which of the following will result to a net taxable gift of P300,000?
a. The daughter of Al was married to his boyfriend. As a gift, Al donated P320,000 to them.
b. A property worth P300,000was donated Peping to City of Tarlac for use as a site of a
Barangay Hall
c. Rianne requested Bryan to pay the formers liability to Metro Bank in the amount of
P100,000. In return, Rianne will donate a property to Bryan worth P400,000.
d. Wally donated a property to Jose valued at P360,000. The property is subject to a
mortgage indebtedness amounting to P60,000 which was paid by Wally at the time of
donation
106. On March 1, 2018, Ms. Samira Aquino donated a piece of land to her best friend, Mar Roxas.
She also donated to a non-profit religious organization. The donation to her friend was a
piece of land which had an assessed value of P1,000,000 and zonal value of P800,000 at
the time of donation. The donations to a non-profit religious organization were cash
amounting to P200,000 and an automobile with a purchase of P700,000. The piece of land
was encumbered with an unpaid mortgage of P300,000 which was not assumed by the
donee. In addition, the donee agreed to pay the applicable donors tax of P210,000.
How much was the donors tax due?
a. 114,000 c. 60,000
107. Filing of the donors tax for a donation of real property which is subject to the donors tax shall
be done within:
a. 30 days from the grant of the donation by the donor

b. 30 days from the transfer of title of the real property.
c. 30 days from the acceptance of the donation in writing by the donee
d. 30 days from the notarization of the donation document
108. When a donor with several donations during the year fails to file the donors tax return for
each of the dates that donations were made (select the wrong statement):
a. None of the answers are correct.

b. Each failure is subject to penalties for non-filing of return and nonpayment of the tax on
time.
c. He can voluntarily file late the donors tax return for each date that donations were made
and make payments on the tax due shown on each return, with penalties.
d. Such failure shall be cured by filing a donors tax return at the end of the year reflecting
all donations made within the year and paying the taxes shown in that one return.
109. On April 1, JJ donated his 1-hectare farm land in Quezon to Apollo with a condition that
three years from the date of donation, Apollo will construct a waiting shed for commuters
adjacent to the farm land, and that failure to comply with the condition shall be sufficient
ground for the cancellation of donation. The applicable donors tax was paid by JJ on April
30 which is within the prescribed period allowed in the tax code. Which of the following is
correct?
a. The payment of donors tax is appropriate even if the donation may be revoked in the
future due to non-fulfillment of the condition.
b. Both of the answers are correct
c. In case of revocation, the donors tax paid by JJ should be refunded by the BIR if he
files for refund within 2 years from revocation.
d. Neither of the answers are correct
- END OF TAXATION QUESTIONNAIRE –

ANSWER KEY FOR TAXATION
I. Income Taxation: Individual Tax Payer

1. C. Taxation
2. B. Republic Act no. 10963
3. A. Regular Tax Situs
4. D. Double Taxation
5. C. Tax Evasion
6. B. Tax Exemption
7. A. Tax Avoidance
8. B. Statement 1 is false and statement 2 is true.
9. A. Regressive Tax
10. B. Tax System
II. Individual
11. B. More than 180 days
12. C. Prize
13. A. Net Profit
14. C. 12%
15. A. 6%
16. D. 400,000
17. A. 220,000
18. B. 130,000
19. C. 14,500
20. D. 0
III. Corporation
21. C. Foreign Corporation
22. A. General professional partnership
23. D. A foreign corporation engaged in business in the Phil. is taxable on all income derived
from sources within the Philippines only.
24. C. RFC engaged in hotel, motel, and resort operations
25. A. Non-resident foreign corporations are taxed on gross income from within and outside
the Philippines
26. B. Cash dividends received by a domestic corporation from a domestic corporation.
27. A. Progressive Tax
28. C. Is compared with the normal income tax and minimum corporate income tax
29. B. False
30. B. 18,000
31. A. 450,000
32. C. 1,200,000
33. A. 150,000
34. C. 10,000
35. D. 1,000,000
36. C. 180,000
37. D. 300,000
38. B. 87,500
39. A. 80,000
IV. Partnership
40. C. General professional partnership
41. A. Must convert his income from the partnership into cash method
42. B. False, False
43. A. Partners of a taxable partnership are considered as stockholders and profits
distributed to them by the partnership are considered as dividends.
44. C. 400,000
45. B. 500,000
46. D. Subject to Final Tax
V. Gross Income: Fringe Benefits, Deductions, and Inclusions
47. D. The source of dividend income is the country where the corporation was incorporated
48. B. IOUs
49. A. Fringe Benefit Tax
50. C. 5 Years of More
51. D. All of the Above
52. B. De Minimis Benefits
53. B. Not More than P250,000
54. B. 70,000
55. D. Demolition of a building existing on a land purchased where the corporation has no
use for the building at the time of purchase and it was its intention to remove the building
in order to build its factory.
56. A. P6,600
57. D. Partly taxable. Partly exempt
58. A. P 0
59. B. P80,000
60. A. 11,000
61. C. Taxable in Full
62. D. Both statements are FALSE
63. D. Gain on sale of capital asset
64. B. 90,000
65. C. 50,000
66. A. Statement #1 is TRUE
67. C. BOTH statements are TRUE
68. A. 0
69. D. BOTH statements are FALSE
VI. Value Added Tax
70. A. Importer, whether an individual or corporation and whether or not made in the course of
his trade or business.
71. A. 12% VAT
72. A. He is not subject to VAT.
73. B. 4,666.20
- Solution:
Sale of food P 3,360.00
Sale of beverages 420.00
3,780.00
VAT at 12% of P3,780 453.60
Service charge (part of output tax) 378.00
City tax 54.60
Total P 4,666.20
74. A. can claim input taxes on the said acquisition.

75. D. over a period of 60 months unless the estimated life is less than 5 years in which case
76. C. Payments made in the year of sale in addition to the down payment.
77. B. All of the choices
78. D. August, P12,000
- Solution:
Invoice Amount, gross of VAT 112000
Less: Invoive amount, net of (100000)
VAT (112000/1.12)
VAT 12000
79. A. 70,000
- Solution:
Sales to a Government Owned or Controlled 1000000
Corporation (GOCC), net of VAT
Standard input tax rate 7%
Standard input tax 70000
VII. Percentage Tax

80. A. 90,000
- Solution:
Maximum allowable income subject to OPT 3000000
OPT Tax Rate 30%
OPT Tax 90000
81. C. 1,407
- Solution:
Gross receipts - Jeepney no. 1 (P20,000 + P5,000) (actual is higher) 25,000
Gross receipts - Jeepney no. 2 (minimum is higher) 21,900
Total 46,900
Tax rate 3%
Common carriers tax 1,407
82. B. A only
83. B. 40,000
- Solution:
Gross receipts (sale of gas) 2,000,000
Tax rate 2%
Franchise tax 40,000
84. C. None
85. B. bank
86. A. 30,000
- Solution:
Premiums collected on life insurance 2,000,000
Less: Premiums refunded (500,000)
Net 1,500,000
Tax rate 2%
Tax on life insurance premium 30,000
87. B. 1,035,000
- Solution:
Gate receipts 5,000,000
Sales of food at stands 900,000
Sale of television rights 1,000,000
Taxable gross receipts) 6,900,000
Amusement tax (6,900,000 x 15%) 1,035,000
88. C. None
89. C. 400,000
- Solution:
Gross value in money P10,000,000
Tax rate 4%
Stock transaction tax P 400,000
VIII. Estate Tax
90. D. 5,000,000
- Solution:
Real property in the United States, inherited 2,000,000
from the father one and one-half years ago
Personal property in the Philippines 1,600,000
inherited from the father
Family home in the United States 1,400,000
Gross Estate 5,000,000
91. D. 3,000,000
- Solution:
Insufficient Consideration, Land 2200000
Transfer under General Power, Land and Building 800000
Additional Gross Estate 3000000
92. D. 31,600,000
- Solution:
Cash owned before the marriage P10,000,000
Real property inherited during the marriage 12,000,000
Property acquired with cash owned before the marriage 1,200,000
Jewelry purchased with exclusive cash 2,000,000
Property unidentified when and by whom acquired 2,400,000
Cash income during the marriage 4,000,000
Gross Estate 31,600,000
93. D. designated a third person other than the estate, the decedents executor or administrator
as irrevocable beneficiary.
94. B. 30,000
- Solution:
Properties of Titoy 250,000
Less: Property applied to preferred creditor (Philippine government) (50,000)
Properties available to other creditors 200,000
Obligations of Titoy 350,000
Less: Obligations to preferred creditor (50,000)
Obligations to other creditors 300,000
Amount of claims of Fe 90,000
Amount that can be collected (2/3 x 90,000) (60,000)
Amount that cannot be collected 30,000
95. D. Losses must occur also before the decedents death to be deductible.
96. B. 299,520
- Solution:
Initial value to take P540,000
Less: Mortgage indebtedness paid 20,000
Balance P520,000
Less: P520,000/P5,000,000 x 200,000 20,800
Basis of vanishing deduction P499,200
Vanishing deduction at 60% P299,520
97. C. 900,000
- Solution:
Residential house (900000/2) P450,000
Residential lot 450,000
Family home deduction 900,000
98. C. 0
99. C. Six (6) months from the decedent´s death.
IX. Donors Tax
100. B. I and II only.
101. B. 500,000
- Solution:
 (1000000/2= 500000)
102. A. All of the choices are correct exceptions.
103. A. none of the choices
104. C. donation to Philippine Inventors Commission
105. C. Rianne requested Bryan to pay the former liability to Metro Bank in the amount of
P100,000. In return, Rianne will donate a property to Bryan worth P400,000.
106. B. 45,000
- Solution:
Gross gift 1,000,000
Less: Exempt gifts (250,000)
Net taxable gift 750,000
Tax due: 750,000*6% 45,000
107. C. 30 days from the acceptance of the donation in writing by the donee.
108. D. Such failure shall be cured by filing a donors tax return at the end of the year reflecting
all donations made within the year and paying the taxes shown in that one return.
109. C. In case of revocation, the donors tax paid by JJ should be refunded by the BIR if he files
for refund within 2 years from revocation.
Caloocan
BUSINESS LAWS
SUBJECT COVERAGE:
 Obligations  Negotiable Instruments
 Contracts  Special Laws
 Partnership  Sales
 Corporations  Agency
 Cooperatives  Credit Transactions
I. OBLIGATIONS
1. The person who has the duty of giving, doing or not doing
a. Obligor c. Obligee
b. Creditor d. Active subject
2. Source of obligation which is a rule of conduct, just and obligatory, promulgated by legitimate
authorities for common good, benefit and observance.
a. Quasi-delict d. Quasi-contract
b. Delict e. Law
c. Contracts
3. Alfred obliged himself to deliver specific car to Arnold on February 1, 2018. However, Alfred failed
to deliver the car on February 1, 2018. In this case Alfred is already?
a. Ordinary delay c. Mora solvendi ex persona
b. Mora solvendi ex re d. Mora Accipendi
4. A promised to deliver to B 100 sacks of palay from the former summer harvest. A failed to deliver
what was promised due to floods which destroyed the crops before the harvest season. Is the
obligation extinguished?
a. No, the generic thing is delimited.

b. Yes, the generic thing is delimited
c. No, A can still raise the same from future crops.
d. Yes, the contract is void due to non-existing object at the time of perfection of contract.
5. A owes B sum of money evidenced by a promissory note which has prescribed. X, without the
knowledge of A, paid B his debt. Later A reimbursed X for the payment of the latter to B although he
has no obligation to do so.
a. A cannot recover because he has the civil obligation to reimburse X for the latter paid his debt
B.
b. A can recover his reimbursement to X to prevent unjust enrichment on Xs part at the expense of
A.
c. A cannot recover since there was reimbursement by mistake.
d. A cannot recover because the payment partakes of natural obligation.
6. One where the whole liability is to be paid or fulfilled proportionately by the different debtors and/or
is to be demanded also proportionately by the different creditors.
a. Facultative Obligation c. Joint Obligation
b. Divisible Obligation d. Alternative Obligation
7. Which of the following is an obligation with a period for the benefit of both the debtor and the creditor?
a. Payable if I like
b. Payable when you like
c. Payable on or before December 25, 2013
d. Payable on December 24, 2013
8. In which of the following is the debtor still liable despite the fortuitous event causing the loss of the
thing?
a. The nature of the obligation does not require the assumption of risk.
b. The thing lost is a specific thing.
c. When the law or the obligation expressly so provides.
d. The performance of the obligation has become impossible.
9. A, B, and C are solidary debtors sharing 1:2:3 of solidary creditors Wand Y sharing at 1:2. The
obligation is P12,000. If B is a minor and C is insolvent and W condones the obligation of A without
the consent of Y, how much can W collect from A?
a. 8,000 c. 0
b. 6,000 d. 2,000
10. DR promised to give DE, his grandson, a car if the latter will pass the bar examinations. When his
grandson passed the said examination, which of the following statements is true?
a. Both the obligation and the condition are ineffective because they depend upon the sole will of
the donor.
b. The obligation is valid although potestative because they depend upon the sole will of the donee.
c. DR may refuse to deliver because the condition is purely a potestative one.
d. The obligation is valid because the condition depends upon the sole will of the donor.
11. A owes B P20,000 which became due and payable last June 23,2019. On the date, A offered B
P10,000, the only money he then had, but B refused to accept the payment. A, thereafter met C, B's
23 year old son, to whom he gave the P10,000 with the request that he turn the money over to B.
The money was stolen while C's possession. How much may B still recover from A?
a. 10,000 c. 20,000
b. 0 d. 15,000
12. Insolvency of the debtor is required in:

a. Application of payment c. dacion in payment
b. Tender of payment and consignation d. Payment by cession
13. Which of the following is not a ground for the extinguishment of an obligation?
a. Compensation d. Merger
b. None of the above e. Death of creditor
c. Remission
14. On June 1, 2019 Anne was indebted to Charlie for P500,000 for a 30-day period. Anne proposed
to Charlie that Sofia will pay Anne’s debt, and that Anne will be free from all liabilities. Charlie
and Sofia agreed to the proposal. On July 1,2019, when Charlie tries to collect from Sofia, he
finds that Sofia is insolvent. At the time of delegation, Sofia was insolvent but this was not known
to Anne. The insolvency is not of public knowledge. So Charlie sue Anne on the ground that it
was Anne who made the proposal and that Anne really guaranteed Sofia’s solvency. Decide.
a. Anne is liable because she is presumed to have guaranteed Sofia’s solvency

b. Anne is not liable because Anne does not know the insolvency of Sofia at the time of
delegation and neither was the insolvency of public knowledge
c. Anne is liable because Sofia agreed to the proposal to make himself solidarily liable for the
obligation
d. Anne is liable because she did not exercise due diligence in determining the insolvency of
Sofia
15. B, F and T are solidary debtors of A. Twelve (12) years after the obligation became due and
demandable, B paid A and later and later on asked for reimbursement of F and T shares. Is
B correct? Why?
a. No, because in solidary obligation any one of the solidary debtors can pay the entire debt
b. Yes, because the obligation is solidary
c. Yes, because F and T will be unduly enriched at the expense of B
d. No, because the obligation has already prescribed
II. CONTRACTS
16. The following are solemn contracts, except
a. Construction contract of building

b. Sale of land through an agent (authority must be in writing)
c. Donation of real estate or of movables if the value exceeds P5,000
d. Stipulation to pay interest in loans
17. Which of the following statement is not correct?
a. The validity or compliance of the contract cannot be left to the will of one of the contracting
parties.
b. The contracting parties are bound by the determination of performance by a third person
from the moment a third person decided
c. The contracting parties are not bound by the determination of a third person if it is evidently
inequitable as when the third person acted bad faith or under mistake.
d. The determination of the performance may be left to a third person
18. The point where the parties have performed their respective obligation and the contract is
terminated
a. Preparation c. Conception
b. Perfection d. Consummation
19. Although validly agreed upon, courts can nullify this contract because of damages to one of
the parties or to a third person and its enforcement may cause injustice by reason of some
external facts
a. Voidable contract c. Unenforceable contract

b. Void contract d. Rescissible contract
20. A sold to B his only car with a fair market value of P500,000 for only P370,000. The status of
the contract of sale is:
a. Voidable, because mistake or fraud are presumed
b. Void ab initio because the price are considered simulated
c. Rescissible because the vendor suffers a lession of more than one fourth of the value of
the thing sold
d. Valid because lesion or inadequacy of cause as a rule does not invalidate contract, unless
there is vices of consent.
21. To defraud his creditor, A sold his house to X. When however the creditor wanted to collect
his credit, somebody lent A enough money. Is the sale rescissible?
a. Yes, because the debtor was in bad faith when he sold the house to X
b. Yes, because it was entered into a fraud of creditor.
c. No, because the debtor has become in good faith when he was lent enough money to pay
his debts
d. No, because the creditor can collect the credit due to him
22. A was forced by B to sign a contract. C a creditor of A wants to annul the contract. Is C allowed
by law to do so?
a. No, because a third person cannot assail a contract.
b. Yes, a third person can annul a rescissible contract.
c. Yes, because the contract is voidable and C is damaged.
d. No, because a third person cannot assail a voidable contract.
23. Paul entered into a written agreement to sell a parcel of land to Steve. At the time the
agreement was executed, Paul had consumed alcoholic beverages. Paul’s ability to
understand the nature and terms of the contract was not impaired. Steve did not believe that
Paul was intoxicated. The consent is:
a. Void as a matter of law c. Voidable at Steve’s option
b. Legally binding on both parties d. Voidable at Paul’s option
24. A bought 100 box of ballpen at P1,500 per box from B. However, the contract mistakenly
showed a total contract price of 210,000 because of arithmetical computation. Which of the
following statement is correct?
a. A may ask for its correction
b. A may ask for the reformation of the instrument
c. The contract between between A and B has no binding legal effect
d. A may rescind the contract
25. When both parties to the contract are minors, the contract is
a. unenforceable c. void
b. rescissible d. voidable
26. Which of the following need not be in writing to be enforceable?
a. An agreement for the sale of goods, chattels, or things in action at a price not less than
P500
b. An agreement for the leasing for a period longer than one year, or for the sale of real
property or of an interest thereon
c. A mutual promise to marry
d. A representation as to the credit of a third person
27. A and B agreed on June 3, 2012 that B will construct the house of A on March 2014. The
contract was orally entered into. B received a down payment from A with the balance payable
after completion of the house. The contract is?
a. Void because it is not in writing as required by law.

b. Voidable because it is not in public instrument
c. Unenforceable because it is not in writing and yet performance there is after one year
d. Enforceable even if not in writing, having been ratified
28. In three of the following contract is cleansed of its defect by ratification. Which is not so
ratified?
a. Sale of chattels orally entered into for a price not less than five hundred pesos.
b. Lease of real property for more than one year orally entered into.
c. Contract entered into by a person incapable of giving consent.
d. Contract where the creditor was damaged by the act of the debtor who intended to defraud
him.
29. Characteristic of void contracts, except
a. Cannot be ratified
b. Defense of illegality cannot be waived
c. The inexistence can be assailed by third person
d. Action for declaration of inexistence does not prescribe
30. S and M agreed in print that S, debtor for P30,000, will work as a servant of M without pay
until she could find money with which to pay her debt. S failed to comply with her obligation.
Under this premise, which of the following statement is correct?
a. The agreement to work as a servant is void because it is immoral
b. To act as a servant without pay is unconstitutional because this is equivalent to involuntary
servitude
c. The contract to work without pay as a servant until the debt is paid is void
d. The agreement to work without pay since written is enforceable.
III. PARTNERSHIP
31. A and B are co- owners of a parcel of land from which they derive profits in equal sharing
being co- heirs in inheritance. Is there a partnership?
a. There is partnership they being co- owners and co-possessors.
b. There is no partnership since in partnership division of profits is not always necessary
among partners.
c. There is a partnership because of the equal sharing of profits.
d. There is no partnership because co-ownership by itself does not establish a partnership
despite the sharing of profits.
32. One of the following is not a characteristic of contract of partnership.

a. Onerous, because the parties contribute money, property, industry to the common fund
b. Preparatory, because it a means by which other contracts will be entered into
c. Real, in that the partners must deliver their contributions in order for the partnership
contract to be perfected
d. Principal, because it can stand by itself
33. Partner who manages actively the firm’s affairs

a. Liquidating c. Dormant
b. Managing d. Silent
34. Partners A,B, and C contributed: A-P1M; B-P2M; and C-service. After exhausting the
partnership assets, the creditors still have a claim for P.3M. For how much are the partners
liable to the creditors for the partnership liability?
a. Only A and B are liable at 1/3 and 2/3 respectively.
b. C is not liable an industrial partner who is exempt from losses.
c. All of A, B, and C are liable pro rata to the creditors.
d. Only A and B are liable equally to the creditors being capitalists.
35. A partnership which comprises all the profits that the partners may acquire by their work or
industry during the existence of the partnership is called:
a. Universal partnership of all present property

b. Partnership at will
c. Universal partnership of profits
d. Particular partnership
36. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received
from D a share of P1,500 ahead of partners B and C, giving D a receipt for his share only.
When B and C were collecting from D, the latter was already insolvent. Which of the following
is correct?
a. B and C can automatically deduct from the capital contribution of A in the partnership, their
respective share in the P1,500
b. Partner A can be required to share the P1,500 with B and C
c. B and C should automatically exhaust first all remedies to collect from D
d. A cannot be required to share the P1,500 with B and C
37. Which of the following is not correct about limited partnership?
a. The limited partnership is void if one of the partners contributes an immovable property
and there is no inventory of the real property attached to the public instrument.
b. To form a limited partnership, there must be a sworn certificate which comply all the
requirements set forth by law and filed with SEC.
c. If the partnership name of a limited partnership has no Ltd or limited, the partnership is a
non-existing partnership.
d. Limited partnership consists of at least one general partner and at least one limited
partner.
38. Which of the following is not a prohibition on a limited partner?
a. Limited partner may not contribute service.

b. Surname of a limited partner may not appear in the partnership name.
c. Limited partner may not constitute his assignee as substituted limited partner.
d. Limited partner may not take part in the control of the business.
39. A and B orally agreed to form a partnership two years from today, each one to contribute
P1,000. If at the arrival of the period, one refuses to go ahead with the agreement, can the
other enforce the agreement?
a. No, because the agreement was merely oral and executory

b. Yes, because the partnership contract is not governed by the Statute of Frauds
c. Yes, because the prior agreement was voluntarily made
d. No, since the agreement is to be enforced after one year from the making thereof, the
same should be in a public instrument to be enforceable
40. A partners interest in the partnership is his?
a. Answer not given.

b. Right to participate in the management
c. Right to inspect partnership books
d. Right to share in the profit and surplus.
41. A stipulation which excludes one or more partners from any shares in the profits or losses is
a. Valid c. Void
b. Unenforceable d. Voidable
42. The partnership will bear the risk of loss of three of the following things, except
a. Things contributed to be sold

b. Fungible things or those that cannot be kept without deteriorating
c. Things brought and appraised in the inventory
d. Non-fungible things contributed so that only their use and fruits will be for the common
benefit
43. When the manner of management has not been agreed upon, who shall manage the affairs
of the partnership?
a. Capitalist-industrial partners c. Industrial partners

b. Capitalist partners d. All of the partners
44. A partnership begins from the moment of

a. Distribution of profits c. Issuance of certificate by the SEC
b. Consent d. Delivery of contributions
45. Which of the following is not an obligation of a partner?
a. To give his capital contribution.
b. To pay partnership for damages suffered by it through his fault.
c. To inspect and copy partnership books.
d. Not to engage in unfair competition with the partnership.
IV. CORPORATION
46. A, B, C, D, E, F, G and H entered into an agreement to form “Malaya Corporation” on

December 26, 2010. After fixing all the requirements needed, they prepared their articles of
incorporation submit it with Securities and Exchange Commission on March 1, 2011. On April
1, 2011, they received a notice of the issuance of the certificate of incorporation. Then on May
3, 2011, SEC issued their certificate of incorporation. After 6 years, Mr. Yoso, their potential
investor, asked when the corporation does acquired its judicial personality. A, B, C, D, E, F,
G and H are arguing with one another as to when is the birthday of their corporation. Which
is correct on the following statements?
a. Corporation Code of the Philippines (Batas Pambansa Blg. 68) took effect on May 1, 1980.
Therefore, all corporations acquire their judicial personality on the said date.
b. Malaya Corporation acquired its judicial personality on the execution of their agreement
to form a corporation which is on December 26, 2010.
c. The corporation is created when SEC issue its certificate of incorporation on May 3, 2011.
d. The SEC issues a notice of issuance of the certificate of incorporation, in which the
corporation obtained its judicial personality.
47. What is the required vote for declaration of stock dividends?

a. Approval by at least majority vote of the Board of Directors
b. Approval by at least majority vote of the Board of Directors and ratification by stockholders
representing at least majority of the outstanding capital stock.
c. Approval by stockholders representing at least 2/3 of the outstanding capital stock.
d. Approval by at least majority vote of the Board of Directors and ratification by stockholders
representing at least 2/3 of the outstanding capital stock.
48. A, B, C, D, E, W, X, Y, and Z are the directors of Teudoong Corporation. If Z abandoned his

office, W’s term expired, X died, and Y was removed by 2/3 votes of OCS, who will fill up the
vacancies?
a. Z – BOD; W – OCS; X – BOD; Y – OCS
b. Z – OCS; W – BOD; X – OCS; Y – BOD
c. Z – OCS; W – OCS; X – BOD; Y – BOD
d. Z – BOD; W – BOD; X – OCS; Y – OCS
e. None of the above.
49. Statement 1 – A corporation can be an incorporator.
Statement 2 – A partnership can be a corporator.
Statement 3 – An existing corporation can be a stockholder of another corporation.
a. Statement 1 is false; Statement 2 is true; Statement 3 is false.
b. Statement 1 is true; Statement 2 is false; Statement 3 is true.
c. All statements are true.
d. All statements are false.
50. In which of the following instances is TRUE regarding having the right to a stock certificate?
a. A stockholder is not entitled to have a stock certificate if his/her stocks is considered
delinquent stocks.
b. If a stockholder fully paid his/her subscription, only then he/she is entitled to a stock
certificate.
c. Stock certificate is given to a stockholder on the date of his/her subscription even if not
yet fully paid.
d. None of the above.
51. Director may be given compensation through any of the following ways, except by:
a. The vote of the stockholders representing at least a majority of the outstanding capital
stock.
b. A provision in the by-laws.
c. The vote of the board of directors if the compensation is a reasonable per diem.
d. The vote of the board of directors if the compensation is other than per diems.
52. X Corp. operates a call center that received orders for pizzas on behalf of Y Corp. which
operates a chain of pizza restaurants. The two companies have the same set of corporate
officers. After 2 years, X Corp. dismissed its call agents for no apparent reason. The agents
filed a collective suit for illegal dismissal against both X Corp. and Y Corp. based on the
doctrine of piercing the veil of corporate fiction. The latter set up the defense that the agents
are in the employ of X Corp. which is a separate judicial entity. Is this defense appropriate?
a. Yes, it is not shown that one company completely dominates the finances, policies, and
business practices of the other.
b. No, the real employer is Y Corp., the pizza company, with X Corp, serving as an arm for
receiving its outside orders for pizzas.
c. No, since the doctrine would apply, the two companies having the same set of corporate
officers.
d. Yes, since the two companies perform two distinct businesses.
53. A doctrine in corporation wherein the corporation will be estopped from denying the agents
authority if it knowingly permits one of its officers or any other agent to act within the scope of
an apparent authority and it holds him out to the public as possessing the power to do those
acts.
a. doctrine of apparent authority c. doctrine of equity

b. doctrine of estoppel d. trust fund doctrine
54. How many shares are needed to elect 3 directors and assure each of them a seat in the board
of directors assuming that the articles of incorporation provide for 11 directors and the
corporation has 5,000 shares outstanding and entitled to vote?
a. 1,251 shares c. 1,667 shares

b. 5,000 shares d. 1,364 shares
55. A group of Malaysians wanted to invest in the Philippines, insurance business. After
negotiations, they agreed to organize “FIMA Insurance Corp.” with a group of Filipino
businessmen. FIMA would have a PHP 50 Million paid-up capital, PHP 40 Million of which
would come from the Filipino group. All corporate officers would be Filipinos and 8 out of its
10-member Board of Directors would be Filipinos. Can FIMA operate an insurance business
in the Philippines?
a. No, since an insurance company must have at least PHP 75 Million paid-up capital.
b. Yes, since there is substantial compliance with our nationalization laws respecting paid-
up capital and Filipino dominated Board of Directors.
c. Yes, since FIMA’S paid-up capital more than meets the country’s nationalization laws.
d. No, since an insurance company should be 100% owned by Filipinos.
56. In three of the following corporate proposals, a dissenting stockholder has the right to
surrender his shares of stock to the corporation and demand for the payment of their fair
market value. Which is the exception?
a. Entering into management contract with another corporation

b. Investment of corporate funds in another corporation or business
c. Shortening or extending the corporate term
d. Sale, mortgage or disposition of all or substantially all of the corporate assets
57. SD Corp. has a corporate term of 40 years under its Article of Incorporation or from June 1,
1960 to June 1, 2000. On June 1, 1991 it amended its Articles of Incorporation to extend its
life by 10 years from June 1, 2000 to June 1, 2010. The extension was made earlier than 5
years prior to its original expiration date, but SEC approved its amendment because it has a
justifiable reason. On June 1, 2009, however, SD Corp. decided to extend its term by 2 years
or until June 1, 2012. Both 1991 and 2009 amendments were approved by majority vote of its
Board of Directors and ratified in a special meeting by its stockholders representing at least
2/3 of its outstanding capital stock. The SEC, However, disapproved the 2009 amendment on
the ground that it was made 1 year prior instead of 5 years prior to its expiration. What is the
reason SEC’s disapproval?
a. Because SD Corp. had already extend its term before and it cannot extend more than
once throughout its corporate existence.
b. Any amendment affecting corporate term cannot be made later than 5 years prior to the
corporation’s expiration date.
c. Since a corporation can only have a corporate life of 50 years in any one instance.
58. Sana, a director of KDY Corporation, issued a stock to Dahyun, her best friend, amounting to
PHP 100,000.00. Dahyun paid only PHP 80,000.00 for the share of stocks and told Sana to
consider that her shares to be fully paid as they were best friends. Sana, as told by her best
friend, considered Dahyun’s shares to be fully paid. But a few months after the transaction,
the agreement between the two was detected. In such case, Dahyun is liable for the difference
in amount of PHP 20,000.00. But Dahyun insisted that Sana should also be liable. Is Dahyun
correct with her statement?
a. Yes, because any director or officer of a corporation consenting to the issuance of wanted
stocks shall be solidarily liable with the stockholder.
b. No, because Sana did not pay the amount according to the fair value and that she should
be the only one liable.
c. No, only Sana should be liable because she consented the issuance of stock for a
consideration less than its par value and considered it as fully paid.
59. The articles of incorporation of SaiDa Corporation provide for an authorized capital stock of
PHP 1,000,000.00 divided into 10,000 share each having a par value of PHP 100.00. At the
time of incorporation, 25% of the authorized capital stock was subscribed of which 25% was
paid. In its first year of operation the corporation obtained a loan of PHP 400,000.00 which it
used to buy equipment of the same amount. During the same period, the corporation posted
a net profit of PHP 100,000.00. How much is the Legal Capital of the corporation?
a. PHP 100,000 c. PHP 350,000
b. PHP 400,000 d. PHP 250,000
60. Statement 1 – A “De jure” corporation is also called the legitimate corporation.
Statement 2 – The Corporate President is the repository of the corporate powers.
a. Statement 1 is false; Statement 2 is true.
b. Statement 1 is true; Statement 2 is false.
c. Both statements are true.
d. Both statements are false.
V. COOPERATIVES
61. Which of the following does not necessarily characterize a cooperative?

a. Voluntary involvement c. Autonomy
b. A common bond of interest d. Absence of capital
62. A cooperative organized by minors shall be considered a ________ cooperative.

a. Youth c. Laboratory
b. Minor d. Young
63. Duly registered cooperatives shall have what extent of liability?

a. Limited c. None at all
b. Unlimited d. To the extent fixed by its by-laws
64. A single-purpose cooperative may transform into a multi-purpose cooperative only after at
least how many years of operations?
a. 5 c. 4
b. 3 d. 2
65. Which of the following is not a qualification for membership to a primary cooperative?
a. Natural born resident citizen
b. Residing or working in the intended area of operation
c. A common bond of interest
d. Of legal age
66. What is the maximum limit on the share ownership of a member in a cooperative?
a. 25% of the share capital of the cooperative
b. 5% of the share capital of the cooperative
c. 10% of the share capital of the cooperative
d. 20% of the share capital of the cooperative
67. What is the required vote for termination of membership of a member of a cooperative?
a. At least vote of all cooperative members with voting rights
b. At least the majority vote of all members of the board of directors and ratification by at
least 3/4 of cooperative members with voting rights
c. At least the majority vote of all members of the board of directors
d. At least majority vote of all members of the board of directors and ratification by at least
2/3 of cooperative members with voting rights
68. Any merger or consolidation of cooperatives shall be effective upon:

a. The date indicated in the articles of merger and consolidation
b. The issuance of the certificate of merger and consolidation by the CDA
c. The election of the directors of the merged and consolidated cooperatives
d. The filling of the articles of merger and consolidation with the CDA
69. What is the required vote for the amendment of the provisions of Articles of Cooperation of a
Cooperative?
a. At least of all members with voting rights
b. At least 2/3 of all members with voting rights
c. At least a majority of all members with voting rights
d. At least 2/3 of all regular members and associate members
70. Cooperatives with accumulated reserves and undivided net savings of not more than shall be
exempt from all national, city, provincial, municipal or barangay taxes of whatever name and
nature
a. P1 million c. P10 million
b. P3 million d. P5 million
71. It is a cooperative the members of which are secondary cooperatives

a. Tertiary c. Federation
b. Union d. Primary
72. It is where the direction and management of the affairs of the cooperative shall be vested
a. Office of the President c. General assembly
b. Executive committee d. Board of directors
73. A cooperative is intended to be established with authorized capital stock P100,000 and actual
subscribed capital stock of P40,000. What is the minimum paid up capital of this proposed
cooperative?
a. 10,000 c. 25,000
b. 15,000 d. 5,000
74. Which of the following is an objective of a cooperative?
a. To teach members of inefficient ways of doing things in a cooperative manner
b. To provide minimal social and economic benefits to its members
c. To provide goods and services to its members to enable them to attain increased income,
savings, investments, productivity, and purchasing power, and promote among
themselves equitable distribution of net surplus through maximum utilization of economies
of scale, cost-sharing, and risk-sharing
d. To allow the higher income and more privileged groups to increase their ownership in the
wealth of the nation
75. Where no creditors are affected, the cooperative may be voluntarily dissolved by a ___ vote
of the board of directors and by a resolution duly adopted by the affirmative vote of at least
___ of all the members with voting rights, present and constituting a quorum at a meeting to
be held upon call of the directors.
a. 2/3; 3/4 c. Majority; 2/3
b. Majority; 3/4 d. 3/4; 3/4
VI. NEGOTIABLE INSTRUMENTS
76. The following is not a requisite of a negotiable instrument

a. It must be in writing signed by the maker or drawer
b. Must be payable to order or bearer
c. Must be payable on demand or at a fixed future time
d. Must contain an unconditional promise or order to pay a sum certain money
77. A check differs from a bill of exchange because a check;

a. Is required to be presented for acceptance in certain cases
b. Is always payable on demand
c. May be drawn against a person other than a bank
d. Does not require the drawer to have funds with the drawee
78. Which of the following is a valid address to a drawee so as to make the instrument negotiable?
a. “To Jasmine Walter and another drawee named Warren.”
b. “To Jasmine Walter or Warren Mars.”
c. “To Jasmine Walter, or in his absence, Warren Mars.”
d. “To Jasmine Walter and Warren Mars.”
79. The following constitute material alterations, except for one:
a. Alteration of the medium of currency in which payment is to be made
b. Alteration on the serial number of a check
c. Alteration of the date
d. Alteration of the sum payable either principal
80. Who of the following is party with primary liability?

a. drawer c. person negotiating by mere delivery
b. endorser d. Maker
81. A promissory note which does not have the words “or order” or “or bearer” will render the
promissory note non-negotiable, and therefore?
a. The holder can become holder in due course
b. The note can still be assigned and the maker made liable
c. It will render the maker liable
d. The promissory note can just be delivered and made the maker will still be liable
82. A promissory note which is undated to be

a. dated as of the date of issue
b. promissory note is invalid because there is no date
c. dated as of the date of the first indorsement
d. dated on due date.
83. In a negotiable instrument, when the sum is expressed both in numbers and in words and there is
discrepancy between the words and the numbers
a. This will render the instrument invalid
b. The instrument becomes void because of the discrepancy
c. The sum expressed in words will prevail over the one expressed in numbers
d. The sum expressed in numbers will prevail over the one expressed in words
84. Which of the following is a real defense?

a. Illegality of contract expressly expressly so declared in a statute
b. Illegality of the contract because it was issued for unlawful consideration
c. Renunciation before maturity
d. Fraud in inducement.
85. Which of the following is a common liability of the drawer maker and acceptor?
a. The engagement on the payment of the instrument according to its tenor
b. The admission that instrument covered with sufficient funds
c. The admission of the existence of the payee and his capacity of the payee to indorse
d. The admission of the genuineness of the signature of any indorser
86. A draws a bill payable to B or order with X, as the drawee. The bill was successively endorse to
C, D, E, and F, holder. X does not pay and F has duly protested non-payment. Y pays for the honor
of C. Which of the following statement is wrong?
a. D is discharged c. C is discharged
b. E is discharged d. Y can ask reimbursement from A
87. A makes a promissory note payable to the order of B. B indorses the note specially to C, C indorses
the note in blank and delivers the same to D. D specially indorses the note to E, E specially
indorses the note to F, F indorses the note in blank and delivers it to G, G specially indorses the
note to H, holder. Whose indorsement may H strike out?
a. The special indorsement of G to H c. The special indorsement of B to C
b. The blank indorsement made by C d. The blank indorsement made by F
88. Presentment for acceptance is required when

a. the bill requires it
b. the bill is payable after sight
c. all of them
d. the bill is drawn payable elsewhere than the residence of the drawee
89. Protest is required when this bill is dishonored:

a. domestic/local c. all of the above
b. foreign d. trade acceptance
90. The words are equivalent to bearer except for one.

a. Assignee or holder
b. To X or his collector or to bearer B
c. Possessor or on return of the certificate properly endorsed
d. Order of the bearer
VII. SPECIAL LAWS
91. The following are powers of the PDIC, except for:
a. Power to secure corrective actions from the Monetary Board
b. Power to underwrite and advance costs of litigation
c. Power of examination of banks
d. Power to exercise taxation and eminent domain
92. Which of the following companies is exempted by AMLA from reporting reportable and
suspicious transactions to Anti-Money Laundering Council?
a. Auditing firm rendering assurance engagement
b. Casino
c. Remittance companies
d. Holding companies
93.
Statement No. 1:Any person who makes or draws and issues any check knowing at the time of
issue that he does not have sufficient funds with the drawee bank, or having sufficient funds
but fails to keep sufficient funds to cover full payment of the check presented, shall be punished
by imprisonment or by fine or both such fine and imprisonment at the discretion of the court
Statement No. 2:Where the check is drawn by a corporation, company or entity, the company
manager, secretary, and treasurer shall be deemed liable under B.P. 22
a. Both are false

b. Both are true
c. Second is true, first is false
d. First is true, second is false
94. Violations of the bank secrecy law subject the offender, upon conviction, to which of the
following?
a. Imprisonment of not more than two years or fine of not more than P40,000 or both
b. Imprisonment of not more than five years or fine of not more than P40,000 or both
c. Imprisonment of not more than five years or fine of not more than P20,000 or both
d. Imprisonment of not more than two years or fine of not more than P20,000 or both
95. Banks that are given all such power necessary to engage in commercial banking in addition
to general corporate powers accommodations and guarantees that may be extended by a
bank to any person, partnership, association corporation or other entity shall at no time exceed
____ of the net worth of such bank
a. 30% c. 35%
b. 25% d. 20%
96. Mark manufactured rubber shoes under the brand name of Koby. He did not register it, but it
became popular. Years later, Nelson manufactured rubber shoes using the same design and
color as Koby but named it as Shak. Mark filed a case against Nelson. Nelson contended that
the name Koby is not protected. Rule.
a. Nelson is not liable since the name is not registered
b. Nelson is not liable because he gave it a different name
c. Nelson is liable since the name is already popular
d. Nelson is liable but not for infringement
97. Under Republic Act 6426, Foreign Currency Deposit Act, what is the only exception provided
by such law from the absolute confidentiality of foreign currency deposit?
a. Upon written permission or consent in writing by the depositor.
b. In cases of impeachment of the President, Vice President, members of the Supreme Court
and Ombudsman for culpable violation of the Constitution, treason, bribery or betrayal of
public trust.
c. In cases where the money deposited or invested is the subject matter of the litigation.
d. Upon order of a competent court in cases of bribery.
98. What is a well-known mark?

a. a mark that is popular and known all over the world
b. a mark which is declared as such by a judge based on a certain given criteria
c. a mark that is so declared by a competent and authoritative business based on its
profitability
d. none of the above
99. The prescribed ceilings for SBL shall include:

a. The direct liability of the maker or acceptor of paper discounted with or sold to such bank
and the liability of a general indorser, drawer or guarantor who obtains a loan or other
credit accommodation from or discounts paper with or sells papers to such bank
b. In the case of a corporation, all liabilities to such bank of all subsidiaries in which such
corporation owns or controls a majority interest
c. In the case of an individual who owns or controls a majority interest in a corporation,
partnership, association or any other entity, the liabilities of said entities to such bank
d. All of the answers are correct
100. This occurs whenever a deposit account with an outstanding balance of more than the
statutory maximum amount of insured deposit maintained under the name of persons is
broken down and transferred to two or more accounts in the name of persons or entities who
have no beneficial ownership on transferred deposits in their names within 120 days
immediately preceding or during a bank-declared bank holiday, or immediately preceding a
closure order issued by the Monetary Board to await of the maximum deposit insurance
coverage
a. Inter-branch deposits
b. Insured deposit
c. Transfer deposit
d. Splitting of deposit
101. DOSRI should be in the regular course of business, and the dealings should be upon which
terms?
a. Double those offered to others
b. Not less favorable to the bank than those offered to others
c. Not more favorable to the bank than those offered to others
d. Exactly similar to those offered to others
102. __________ Include credits or deposits of money, bullion, security or other evidence of
indebtedness of any kind, and interest thereon with banks, buildings and loan associations,
and trust corporations, as after this defined, in favor of any person known to be dead or who
has not made further deposits or withdrawals during the preceding ten years or more
a. Peso deposits c. Unclaimed balances
b. Deposits insurance d. Foreign currency deposits
103. This means the unpaid balance of money or its equivalent received by a bank in the usual
course of business and for which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account
a. Trust fund c. Deposit
b. Transfer deposit d. Insured deposit
104. Any visible sign capable of distinguishing goods or services of an enterprise and shall include
a stamped or marked container of goods would be a:
a. logo c. geographical indications
b. trademark d. lay-out design
105. Entities engaged in the lending of funds obtained in the form of deposits from the public
a. Investment company c. Banks
b. Pawnshop d. Lending institution
VIII. SALES
106. A clause providing that the mortgage will automatically own the property mortgaged if the
debt is not paid at maturity is
a. Upset price c. Payment by cession
b. Pactum commissorium d. Dacion en pago
107. A sold to B his cow for P 5,000. No date is fixed by the parties for the performance of their
respective obligations. The obligations of A is
a. To deliver the cow within the reasonable time from the perfection of the contract
b. To rescind the contract as there is not time fixed for the delivery and payment
c. To deliver the cow upon the payment by B of P 5,000
d. To deliver the cow immediately as there is a perfected contract
108. If A sells to B a fountain pen, the giving by A to B of the fountain pen is

a. Actual tradition c. Constructive delivery
b. Symbolical tradition d. Tradition longa-manu
109. In a contract of sale executed by S and B, appears S sold his motor vehicle to B for P50,000.
It turned out however, S has three motor vehicles. Gallant valued P80,000, Hi-ace Van valued
P70,000. and a jeep valued at P60,000. Which of the following is correct?
a. The parties can ask for interpretation because the word motor vehicle is ambiguous.
b. The contract shall be reformed because there was mistake.
c. There is no contract.
d. The parties can ask for annulment of the contract.
110. A and B executed a contract on January 12, 2013 where A agreed to sell and B agreed to buy
A’s only fighting cock. The agreement provides that the delivery of the cock is to be made on
June 24, 2013 at which time B would pay the agreed price of P2,000. On June 9, 2013, A sold
the same fighting cock to C. B asks for your advice, assuming there is no delivery yet of the
cock to C
1st Advice: B may sue for damages, on June 9, 2013 without the need of demanding delivery
because it is useless, the object was sold to a third person acting in good faith
2nd Advice: B may sue for damages after the arrival of the stipulated period, that is June 24, 2013
because the right of B to sue will only accrue on June 24, 2013
a. First is wrong, second is correct

b. Both advice are wrong
c. Both advice are correct
d. First is correct, second is wrong
111. In a true pacto de retro sale, the title and ownership of the property sold are immediately
vested in the vendee a retro subject only to the resolutory condition of repurchase by the
vendor a retro within the stipulated period. This is known as
a. equitable mortgage c. legal redemption
b. equity of redemption d. conventional redemption
112. When things are delivered to the buyer on approval, trial, or satisfaction, the ownership passes
to the buyer:
a. Upon the return of the things to the seller. c. Upon delivery of the things
b. Upon conception of the sale d. Upon meetings of minds
113. Dacion en pago as distinguished from sale:

a. There is no pre-existing obligation.
b. The object is always existing and specific.
c. The cause is the price.
d. There is greater freedom in fixing the price.
114. A, B and C are co-owners of A parcel of land pro-indiviso. A sold his share to B in an absolute
deed of sale. Which is correct?
a. C may exercise his right of redemption on the interest of A sold to B.
b. C may redeem only 1/2 of the share sold by A to B.
c. C cannot exercise the right of redemption since the sale was made to a co-owner.
d. The deed of sale between A and B is void since it was not made in favor of a third person
115. In June 2015, A obtained a loan from B and executed with C as solidary co-maker a
promissory note in favor of B for the sum loaned which shall be payable ten equal monthly
payments with interest. To secure the payment of the loan, A put up as security a chattel
mortgage on his car. Because of the failure of A and C to pay the loan, the mortgage was
extrajudicially foreclosed. B acquired the car as the highest bidder at P1 million although the
loan was P1.5 million is now demanding payment from C. Is C liable for said deficiency?
a. C is not liable because of the provision on Recto Law
b. C is liable for the deficiency he being a solidary debtor.
c. C is liable only after A has failed to pay the deficiency.
d. C is liable but only one half of the deficiency as co-maker.
116. Analyn advertised in the newspaper her parcel of land wanting to sell the same for P1M.
Banny personally went to the former with cash in hand to buy the subject parcel of land. In
this case,
a. Analyn cannot evade her obligation as seller to Banny
b. Analyn can still reject Banny as an offered in the purchase of land
c. Analyn cannot anymore reject Banny as buyer of her land
d. Analyn can reject the offer of Banny unless she properly consigns with the court her
payment for the land
117. Which phrase most accurately completed the statement-if at the time the contract of sale is
perfected, the thing which is the object of the contract has been entirely lost:
a. The buyer bears the risk of loss.
b. The buyer may withdraw from the contract,
c. The contract shall be without any effect.
d. The seller bears the risk of loss.
118.
If the price is simulated, the sale is void, but the act maybe shown to have been in reality a
donation, or some other act of contract.
The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price,
or if no period for the payment has been fixed in the contract.
a. True, true c. True, false

b. False, True d. False, false
119. The right of the creditor to exercise all the rights of his debtor to satisfy his claim, except rights
which are inherent and personal on the part of the debtor
a. action redhibitoria c. action subrogatoria
b. accion pauliana d. accion qunti minoris
120. Atoy sold to Bitoy a residential lot to be containing an area of 1,000 square meters at P1,000
per square meter. In this connection, which of the following statements is correct?
a. If the lot should contain 950 sq. meters only, B can ask for a proportionate reduction of
the price and rescission.
b. If the lot should contain 900 sq. meter, B can choose between proportionate reduction of
the price but not rescission of the sale.
c. If the lot should contain 1,200 sq. meters, B cannot reject the excess and must pay
additional price at P1,000 per square meter
d. If the lot should contain 900 sq. meters, B can choose between proportionate reduction
of the price or rescission of the contract
IX. AGENCY
121. An agent acting in the name of the principal shall not be liable to third person with whom he
contracts:
a. When he exceeds the limit of his authority without giving the third person sufficient notice
of his powers.
b. When the third person knew of the agent’s lack of authority but the agent did not undertake
to get the principal’s ratification.
c. When the third person knew of the agent’s lack of authority and the agent undertook to
get the principal’s ratification but failed to get the same.
d. When he expressly binds himself.
122. Consider the following statements:
I. An agency may be constituted in the common interest of the principal and the agent.
II. An agency may be constituted in the interest of the third person who has accepted the
stipulation in his favor.
The death of the principal extinguishes the agency, as a note. However, the death of the
principal does not extinguish and agency if the reason why the agency was created is:
a. Reason II only c. Either Reason I or Reason II
b. Reason I only d. Neither Reason I or Reason II
123. P, 25 years old, appointed A, 17 years old, as his agent to sell certain goods for P20,000.00.
Thereafter, A sold the goods to B for the said amount. P, however, learned that the price of
the goods had increased to P22,000.00 so he sought to disaffirm the sale made by A to B,
and brought an action to recover the goods from B on the ground that A’s act was voidable,
A being a minor, and hence, could not be an agent. Decide,
a. The sale is valid because the principal is capable.
b. The sale is voidable, because A is a minor.
c. The sale is void, because A is a minor and therefore, cannot be an agent.
d. The sale is unenforceable, because A exceeded his authority.
124. An agency couched in general terms comprises:

a. Both acts of administration and ownership
b. Acts of ownership
c. Acts of management
d. Acts of strict dominion
125. P and M appointed A to sell the land they own in common with the stipulation that A will
advance the necessary funds to execute the agency. Who is liable to A for reimbursement of
all the funds?
a. P and M will share equally and therefore A may demand one-half only from either.
b. P and M shall not be liable because the expenses were incurred as a consequence of
the performance of the agent’s obligation.
c. Neither shall be liable since it was stipulated that A shall advance the funds to execute
the agency.
d. Either or both shall be liable for the entire amount.
126. A, a duly authorized agent of P, wrote a letter to X on March 1, 2013 offering to sell P’s car
for P200,000.00 cash. On March 3, 2013, X wrote a letter to A stating that he accepted all the
terms of the offer, which letter was received by A on March 5, 2013. Before A could relay such
acceptance to P. P died in a vehicular accident on March 6, 2013.
a. The contract was not perfected because P, the real party to the sale, died before the
acceptance came to his knowledge.
b. The contract was perfected on March 5, 2013.
c. The contract was perfected on March 3, 2013.
d. The contract was perfected on March 1, 2013.
127. If both principal and agent sold the land of the principal to two buyers, which of the latter shall
be the owner?
a. First possessor in good faith
b. First registrant in good faith
c. Prior date contract
d. Oldest title in good faith
128.
When a sale of a piece of land or any interest therein is through an agent, the authority of the
latter shall be in a public instrument, otherwise the sale shall be void
Agency is presumed to be without compensation unless there is proof to the contrary.
a. Both are true c. Only the first statement is true

b. Both are false d. Only the second statement is true
129. When two or more principals appoint an agent for a common transaction, neither may revoke
the power without the consent of the other.
If the principal fails to pay the agent his commission, the latter may retain pledge the things
belonging to the principal.
a. First is false, second is true c. Both are true

b. First is true, second is false d. Both are false
130. A contract whereby a person binds himself to render some service or to do something in
representation or in behalf of another, with the consent and authority of the latter is known:
a. Contract of agency c. Contract for lease of service
b. Contract for a piece of work d. Contract of agency to sell
131. Not a mode of extinguishing an agency

a. Death of the principal, and the agency is for the interest of either the principal or agent
b. Dissolution of the firm or corporation which entrusted or accepted the agency
c. Insanity of the principal or agent
d. Accomplishment of agency
132. X, Y and Z, co-owners of a house and lot, appointed A to sell the house and lot at a price of
not less P1,500,000 cash with A being entitled to a commission of 10% of the selling price. A
was able to sell the house for P1,800,000 cash. How much commission may A collect from
X?
a. 60,000 c. 50,000
b. 150,000 d. 180,000
133. Miguel appointed Michael as commission agent to sell Miguel’s goods for P10,000.00 cash.
Michael, however, sold the goods on credit for P11,000.00 without Miguel’s consent. Based
on the foregoing facts, which of the following options are available to Miguel?
I. Miguel may demand immediate payment in P11,000 cash.
II. Miguel may demand immediate payment in P10,000 cash. However, Michael shall be entitled
to keep the excess of P1,000 when he collects the price of P11,000
III. Miguel may ratify the sale on credit for P11,000 and wait for the amount to be collected.
a. Either I or II c. I only
b. Either II or III d. Either I or III
134. P authorized A in a special power of attorney to sell his parcel of land. A sold the land to C
without having knowledge that prior to sale to C, P had already been dead for a week. C also
was not aware of the extinguishment of the agency by the principal’s death. Decide:
a. The sale is void because the agent had no more authority to sell the land due to the
principal’s death.
b. The sale is valid but annullable by the heirs of the principal because the death of the
principal has extinguished the agency.
c. The sale is valid although the principal has died before the contract was entered into by
the agent in the name of the principal.
d. The sale is valid but unenforceable because of the agent acting without authority from
his principal who has died.
135. P, a singer, authorized A, also a singer, to look for a nightclub where P could sing. A presented
herself, not P, as a singer to the X club which engaged her services to sing nightly for two
months. Based on the foregoing information, which of the following statements is correct?
a. X Club has a right of action against P.
b. P has a right of action against X Club.
c. The contract between A and X Club is void because P was not a party thereto.
d. The contract is between A and X Club and is valid.
X. CREDIT TRANSACTIONS
136. Commodatum as distinguished from mutuum

a. Ownership is transferred to the borrower
b. Maybe gratuitous or onerous
c. Object or thing loaned must be returned by the borrower
d. Object is money or consumable or fungible thing
137. Amador obtained a loan of P300,000 from Basilio payable on March 25, 2016. As security for the
payment of his loan, Amador constituted a mortgage on his residential house and lot in Basilios
favor. Cacho, a good friend of Amador, guaranteed and obligated himself to pay Basilio, in case
Amador fails to pay his loan at maturity.If Amador fails to pay Basilio his loan on March 25, 2016,
can Basilio compel Cacho to pay?
a. Yes, Basilio can compel Cacho to pay because the nature of Cachos undertaking indicates that
he has bound himself solidarily with Amador.
b. No, Basilio cannot compel Cacho to pay because as guarantor, Cacho can invoke the principle
of excussion, all the assets of Basilio must first be exhausted.
c. No, Basilio cannot compel Cacho to pay because Basilio has not exhausted the available
remedies against Amador.
d. Yes, Basilio can compel Cacho who bound himself to unconditionally pay in case Amador fails
to pay; thus the benefit of excussion will not apply.
138. Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to Homer for delivery
within a month, although the period for delivery was not guaranteed. Despite Garrys efforts to deliver
on time, transportation problems and government red tape hindered his efforts and he could only
deliver after 30 days. Homer refused to accept the late delivery and to pay on the ground that the
agreed term had not been complied with. As lending investor, Gary granted a P1,000,000 loan to
Isaac to be paid within two years from execution of the contract. As security for the loan, Isaac
promised to deliver to Gary his Toyota Innova within 7 days, but Isaac failed to do so. Gary was thus
compelled to demand payment for the loan before the end of the agreed two-year term. Can Gary
compel Isaac to pay his loan even before the end of the two-year period?
a. No. Gary cannot compel Isaac to immediately pay the loan. The delivery of the car as security
for the loan is an accessory contract; the principal contract is still in the P1 million loan. Thus,
Isaac can still make use of the period.
b. No, Gary cannot compel Isaac to immediately pay the loan. Equity dictates that Gary should
have granted a reasonable extension of time for Isaac to deliver his Toyota Innova. It would be
unfair and burdensome for Isaac to pay the P1 million simply because the promised security was
not delivered.
c. Yes, Gary can compel Isaac to immediately pay the loan. Non-compliance with the promised
guaranty or security renders the obligation immediately demandable. Isaac lost his right to make
use of the period.
d. Yes, Gary can compel Isaac to immediately pay the loan. The delivery of the Toyota Innova is a
condition for the loan. Isaacs failure to deliver the car violated the condition upon which the loan
was granted. It is but fair for Gary to demand immediate payment.
139. In real estate mortgage, the mortgagor can sell the mortgaged property
a. With the consent of the mortgagee in writing

b. Even without the consent of the mortgagee
c. Only with the consent of the mortgagee in writing or orally
d. Only after paying his obligation to the mortgagee
140. The following are considered elements of the contracts of pledge and mortgage. Which is the
exception?
a. Both are accessory contracts

b. The thing maybe appropriated if the debtor cannot pay
c. The pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged
d. The pledgor or mortgagor must have the free disposal of the thing pledged or mortgaged
141. Lyra maintains a savings deposit in the amount of P2,000,000 with PNB Bank. Lyra also has
obtained a loan from PNB Bank in the amount of P2,000,000. In the case of default,
a. Deposit accounts are usually earmarked for specific purpose hence off setting is not legally
possible.
b. Set-off is not possible because legal compensation is not allowed in banking transaction.
c. PNB Bank can set-off the loan from the savings account being maintained by Lyra with PNB
Bank
d. Offsetting is not possible because the obligation of Lyra is a simple loan.
142. A pledged his watch to B for P20,000. A failed to pay his obligation. B sold it at public auction for
P18,000. Can B recover the deficiency?
a. Yes, if there is stipulation c. Yes, even without stipulation
b. No, even if there is stipulation d. No, only if there is stipulation
143. Which of the following cannot be the object of mortgage?

a. land owned by the mortgagor
b. apartment to be acquired by the mortgagor
c. car owned by the mortgagor
d. building owned by the mortgagor but under lease contract
144. In 2012, D borrowed P.4M from C, collateralized by a pledge of shares of stock of X corporation
worth P.8M. In 2013, because of the economic crisis, the value of the shares pledged fell to only
P.1M. Can C demand that D surrender the other shares worth P.7M?
a. Yes, because the collateral as security for the loan was worth P.8M and therefore the other
shares of P.7M must be delivered.
b. No, because the right of C is to demand payment of the loan.
c. No, because the right of C is to demand another thing worth P.8M.
d. No, because the only right of C is to sell the shares at the public auction and keep the proceeds
as security for the loan.
145. S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughters tuition
fee, borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B failed to pay C
resulting into the auction sale of the bracelet in favor of D for P10,000 only. Which of the following
statements is correct?
a. If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet from S,
ownership will not pass to him (D).
b. C can no longer recover the deficiency of P5,000 from B. the pledge, together with the sale is
valid. The voidable title of B is valid because it is not yet annulled.
c. The deficiency of P5,000 may still be recovered by C from B if there is a stipulation to this effect.
d. The title of B over the bracelet is not valid, hence the pledge, as well as the sale of said bracelet
is likewise defective. The pledgor must be the owner of the thing pledged.
146. D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid
even if the mortgagor is not the debtor?
a. Yes, provided it is in writing and registered.
b. No, unless the mortgagor is a co-debtor.
c. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the property
mortgaged or pledged.
d. No, the mortgagor/plegdor must be the debtor himself.
147. D is indebted to C in the amount of P200,000 and delivers to C his diamond ring by way of pledge.
If D sells the same diamond ring to T, when will T acquire ownership of the same?
a. From the time T pays the price to D
b. From the time the sale is perfected between D and T
c. From the time T obtains actual possession of the diamond ring
d. From the time C consents to the sale between D and T
148. Objects of pledge, except:

a. Negotiable instruments c. Shares of stocks
b. Piece of land d. Pieces of jewelry
149. Which phrase best completes the statement, A chattel mortgage can be constituted to secure
a. obligations existing at the time the mortgage is constituted
b. obligations both past and future
c. past obligations only
d. future obligations only
150. D borrowed P100,000 from C and entered into a chattel mortgage involving his land to secure
the payment of his loan. D failed to pay the loan at maturity date. Which of the following
statements is correct?
a. C may still foreclose the chattel mortgage on the land on the basis of doctrine of estoppel.
b. Third person directly affected by the contract of chattel mortgage is not allowed to file an
action for declaration of nullity because of relativity of contract.
c. C cannot foreclose the chattel mortgage over the land because the subject matter must
be a movable property.
d. The contract of chattel mortgage is null and void in so far as the contracting parties are
concerned because the subject matter is a land.
- END OF BUSINESS LAW QUESTIONNAIRE -

ANSWER KEY OF BUSINESS LAWS
I. Obligations
1. A. Obligor
2. E. Law
3. A. Ordinary delay
4. B. Yes, the generic thing is delimited
5. D. A cannot recover because the payment partakes of natural obligation.
6. C. Joint Obligation
7. D. Payable on December 24, 2013
8. C. When the law or the obligation expressly so provides.
9. B. 6,000
10. B. The obligation is valid although potestative because they depend upon the sole will of the
donee.
11. C. 20,000
12. D. Payment by cession
13. E. Death of creditor
14. B. Anne is not liable because Anne does not know the insolvency of Sofia at the time of
delegation and neither was the insolvency of public knowledge
15. D. No, because the obligation has already prescribed
II. Contracts
16. A. Construction contract of building
17. B. The contracting parties are bound by the determination of performance by a third person
from the moment a third person decided
18. D. Consummation
19. D. Rescissible contract
20. D. Valid because lesion or inadequacy of cause as a rule does not invalidate contract, unless
there is vices of consent.
21. D. No, because the creditor can collect the credit due to him
22. D. No, because a third person cannot assail a voidable contract.
23. B. Legally binding on both parties
24. A. A may ask for its correction
25. A. Unenforceable
26. C. A mutual promise to marry
27. D. Enforceable even if not in writing, having been ratified
28. D. Contract where the creditor was damaged by the act of the debtor who intended to defraud
him.
29. C. The inexistence can be assailed by third person
30. C. The contract to work without pay as a servant until the debt is paid is void
III. Partnership
31. D. There is no partnership because co-ownership by itself does not establish a partnership
despite the sharing of profits.
32. C. Real, in that the partners must deliver their contributions in order for the partnership contract
to be perfected
33. B. Managing
34. C. All of A, B, and C are liable pro rata to the creditors.
35. C. Universal partnership of profits
36. B. Partner A can be required to share the P1,500 with B and C
37. C. If the partnership name of a limited partnership has no Ltd or limited, the partnership is a
non-existing partnership.
38. C. Limited partner may not constitute his assignee as substituted limited partner.
39. A. No, because the agreement was merely oral and executory
40. D. Right to share in the profit and surplus.
41. C. Void
42. D. Non-fungible things contributed so that only their use and fruits will be for the common
benefit
43. D. All of the partners
44. B. Consent
45. C. To inspect and copy partnership books.
IV. Corporations
46. C. The corporation is created when SEC issue its certificate of incorporation on May 3, 2011.
47. D. Approval by at least majority vote of the Board of Directors and ratification by stockholders
representing at least 2/3 of the outstanding capital stock.
48. A. Z – BOD; W – OCS; X – BOD; Y – OCS
49. E. None of the above
50. B. If a stockholder fully paid his/her subscription, only then he/she is entitled to a stock
certificate.
51. D. The vote of the board of directors if the compensation is other than per diems.
52. C. No, since the doctrine would apply, the two companies having the same set of corporate
officers.
53. A. Doctrine of apparent authority
54. A. 1,251 shares
55. A. No, since an insurance company must have at least PHP 75 Million paid-up capital.
56. A. Entering into management contract with another corporation
57. C. Since a corporation can only have a corporate life of 50 years in any one instance.
58. A. Yes, because any director or officer of a corporation consenting to the issuance of wanted
stocks shall be solidarily liable with the stockholder.
59. D. PHP 250,000
60. B. Statement 1 is true; Statement 2 is false.
V. Cooperatives
61. D. Absence of capital
62. C. Laboratory
63. A. Limited
64. D. 2
65. A. Natural born resident citizen
66. C. 10% of the share capital of the cooperative
67. C. At least the majority vote of all members of the board of directors
68. B. The issuance of the certificate of merger and consolidation by the CDA
69. B. At least 2/3 of all members with voting rights
70. C. P 10 million
71. A. Tertiary
72. D. Board of Directors
73. B. 15,000
74. C. To provide goods and services to its members to enable them to attain increased income,
savings, investments, productivity, and purchasing power, and promote among themselves
equitable distribution of net surplus through maximum utilization of economies of scale, cost-
sharing, and risk-sharing.
75. B. Majority; ¾
VI. Negotiable Instruments
76. C. Must be payable on demand or at a fixed future time
77. B. Is always payable on demand
78. D. “To Jasmine Walter and Warren Mars.”
79. B. Alteration on the serial number of a check
80. D. Maker
81. B. The note can still be assigned and the maker made liable
82. A. dated as of the date of issue
83. C. The sum expressed in words will prevail over the one expressed in numbers
84. B. Illegality of the contract because it was issued for unlawful consideration
85. C. The admission of the existence of the payee and his capacity of the payee to indorse
86. C. C is discharged
87. A. The special indorsement of G to H
88. C. All of them
89. B. Foreign
90. B. To X or his collector or to bearer B
VII. Special Laws
91. D. Power to exercise taxation and eminent domain
92. A. Auditing firm rendering assurance engagement
93. D. First is true, second is false
94. C. Imprisonment of not more than five years or fine of not more than P20,000 or both
95. C. 35%
96. D. Nelson is liable but not for infringement
97. A. Upon written permission or consent in writing by the depositor.
98. B. a mark which is declared as such by a judge based on a certain given criteria
99. D. All of the answers are correct.
100. D. Splitting of deposit
101. B. Not less favorable to the bank than those offered to others
102. C. Unclaimed balances
103. C. Deposit
104. B. Trademark
105. C. Banks
VIII. Sales
106. B. Pactum commissorium
107. C. To deliver the cow upon the payment by B of P 5,000
108. A. Actual tradition
109. C. There is no contract.
110. A. First is wrong, second is correct
111. D. conventional redemption
112. D. Upon meeting of minds
113. B. The object is always existing and specific.
114. C. C cannot exercise the right of redemption since the sale was made to a co-owner.
115. B. C is liable for the deficiency he being a solidary debtor.
116. B. Analyn can still reject Banny as an offered in the purchase of land
117. C. The contract shall be without any effect.
118. A. True, true
119. C. Action subrogatoria
120. D. If the lot should contain 900 sq. meters, B can choose between proportionate reduction of
the price or rescission of the contract
IX. Agency
121. B. When the third person knew of the agent’s lack of authority but the agent did not
undertake to get the principal’s ratification.
122. C. Either Reason I or Reason II
123. A. The sale is valid because the principal is capable.
124. C. Acts of management
125. D. Either or both shall be liable for the entire amount.
126. B. The contract was perfected on March 5, 2013.
127. B. First registrant in good faith
128. B. Both are false
129. D. Both are false
130. A. Contract of agency
131. A. Death of the principal, and the agency is for the interest of either the principal or agent
132. D. 180,000
133. B. Either II or III
134. C. The sale is valid although the principal has died before the contract was entered into by
the agent in the name of the principal.
135. D. The contract is between A and X Club and is valid.
X. Credit Transactions
136. C. Object or thing loaned must be returned by the borrower.
137. C. No, Basilio cannot compel Cacho to pay because Basilio has not exhausted the available
remedies against Amador.
138. C. Yes, Gary can compel Isaac to immediately pay the loan. Non-compliance with the
promised guaranty or security renders the obligation immediately demandable. Isaac lost his
right to make use of the period.
139. B. Even without the consent of the mortgagee
140. B. The thing maybe appropriated if the debtor cannot pay.
141. C. PNB Bank can set-off the loan from the savings account being maintained by Lyra with
PNB Bank
142. B. No, even if there is stipulation.
143. B. apartment to be acquired by the mortgagor.
144. D. No, because the only right of C is to sell the shares at the public auction and keep the
proceeds as security for the loan.
145. B. C can no longer recover the deficiency of P5,000 from B. the pledge, together with the
sale is valid. The voidable title of B is valid because it is not yet annulled.
146. C. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the
property mortgaged or pledged.
147. D. From the time C consents to the sale between D and T
148. B. Piece of land
149. A. obligations existing at the time the mortgage is constituted.
150. A. C may still foreclose the chattel mortgage on the land on the basis of doctrine of estoppel.
- END OF RECENSEO 2020 COMPREHENSIVE EXAMINATION REVIEWER -

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UNIVERSITY OF THE EAST- CALOOCAN

COMPREHENSIVE EXAMINATION SCHEDULE 2020

I. SCHEDULE AND COVERAGE OF EXAMINATION

The Recenseo 2020 Comprehensive Examination Reviewer is comprised of 472

I. FUNDAMENTALS OF ACCOUNTING (45 items)

II. FINANCIAL ACCOUNTING (105 items)

III. COST ACCOUNTING (63 items)

IV. TAXATION (109 items)

V. BUSINESS LAWS (150 items)

I. ACCOUNTING CONCEPTS AND PRINCIPLES

4. Which principle/guideline requires the company's financial statements to have footnotes

5. Which principle/guideline justifies a company violating an accounting principle because the

III. BASIC ACCOUNTING EQUATION

11. Which of the following will cause owner’s equity to increase?

12. Which of the following will cause owner’s equity to decrease?

a. Net Income c. Net Loss

IV. EXPANDED ACCOUNTING EQUATION

20. Owner’s Equity can be expanded to as:

22. It is also known as books of original entry.

23. It is an expense paid or incurred but not yet consumed.

30. Cost of Merchandise Sold would be classified as:

VII. SPECIAL JOURNALS

For questions 32-35:

VII. ACCOUNTING FOR PARTNERSHIP

37. Which is not among the characteristics of a partnership?

- END OF FUNDAMENTALS OF ACCOUNTING QUESTIONNAIRE -

I. Accounting Concepts and Principles

 Cash and Cash Equivalents  Investment Property

I. CASH AND CASH EQUIVALENTS

a. debit Cash, P 940; credit Accounts Receivable, P 940

a. debit Cash, P 550 and credit Unearned Service Revenue, P 550

4. Money Heist Corporation records reveal the following data at year-end:

Commercial paper maturing in four months P 1,200,000

II. BANK RECONCILIATION

Beginning Inventory P 490,000 P 700,000

9. The ending inventory at retail should be

10. Which of the following is false about erroneous bank charges?

a. Cash balance per bank is understated

I. Face value of note > Present value of note

a. I and III c. II and III

Use the following information for answering questions 17 and 18.

Units Unit Cost Total cost

Balance at January 1: 3,000 P 9.77 P 29,310

January 6 2,000 10.30 20,600

January 26 2,700 10.71 28,917

Balance at January 31 1,200

Date and Transaction Units Unit Cost

Age of Animals Jan. 1, 2019 July 1, 2019 Dec. 31, 2019

1.0 year old P 2,500 P 3,000 P 3,500

1.5 year old 3,750 4,500 5,250

2.0 year old 5,000 6,000 7,000

2.5 year old 6,250 7,500 8,750

3.0 year old 7,500 9,000 10,500

0.0 year old 1,000 1,200

0.5 year old 2,000

Use the following information for answering questions 24 and 25.

Fair value of a 3-year old cattle at Jan. 1, 2018 P 4,500