L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINALS EXAMINATION – ACCTG 26 Income Taxation

1st Semester, AY 2019– 2020
Prepared by: Amie Jane R. Miranda, CPA

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

I. MULTIPLE CHOICES. Choose the best answer from the choices and encircle your answer. Strictly “NO
ERASURES”. Show your solution.

1. The normal tax of an ordinary corporation starting January 1, 2018 is:

a. 30%
b. 32%
c. 33%
d. 35%
2. “Taxable income received during the year from all sources” is the tax base for income tax
purposes of this class of taxpayer:
a. Domestic Corporation
b. Resident foreign corporation
c. Non-resident alien
d. Non-resident foreign corporation
3. One of the following is subject to final tax on gross income:
a. Domestice corporation
b. Resident foreign corporation
c. Non-profit cemetery
d. Non-resident foreign corporation
For the items 4-6 are based on the following information:
A corporation, in its first year of operations, had the following data in 2019:
Philippines Foreign
Gross Income 400,000 300,000
Expenses 200,000 200,000
4. If the taxpayer is a domestic corpoartion and the data are on business, the taxable income is:
a. 200,000
b. 300,000
c. 100,000
d. 400,000
5. If the taxpayer is a resident foreign corporation and the data are on business, the taxable
income is:
a. 200,000
b. 300,000
c. 100,000
d. 400,000
6. If the taxpayer is a non-resident foreign corporation and the income and expenses are on an
isolated transaction, the gross income subject to final tax is:
a. 200,000
b. 300,000
c. 100,000
d. 400,000
7. A corporation, engaged in business in the Philippines and abroad, has the following data in its
first year of operations in 2019:
Gross income, Philippines 975,000
Expenses, Philippines 750,000

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 Gross income, U.S.A 770,000
Expenses, U.S.A 630,000
Interest on bank deposit, Philippines 25,000
The income tax payable is the corporation is:
Domestic Resident foreign Non-resident foreign
a. 116,800 72,000 320,000
b. 127,750 78,750 350,000
c. 109,500 67,500 300,000
d. 120,450 74,250 330,000
For items 8-9 are based on the following information:
A domestic corporation had the following data for 2019 (first year o operations):
Gross profit from sales 2,000,000
Dividend from domestic corporation 20,000
Capital gain on land in the Philippines held for
Two years (sold at 1,000,000) 200,000
Capital gain on shares of domestic corporation held
For two months (direct sale to buyer) 120,000
Business expenses 1,100,000
8. The total capital gains taxes for the year:
a. 64,000
b. 54,000
c. 67,000
d. None of the above
9. The normal tax of the corporation at the end of the year:
a. 315,000
b. 270,000
c. 288,000
d. 231,000
10. Aside from the ordinary corporate income tax of 30% (effective January 1, 2018), what other tax
may be imposed on corporations under the income tax law?
a. Minimum corporate income tax
b. Paasive income tax
c. Capital gains tax
d. All of these
11. A tax imposed whenever a corporation has zero or negative taxable income or whenever the
minimum income tax is greater than the normal income tax due from such corporation:
a. Improperly Accumulated Earnings Tax (IAET)
b. Gross income tax (GIT)
c. Capital gains tax (CGT)
d. Minimum Corporate Income Tax (MCIT)
12. A corporation which was registered with the Bureau of Internal Revenue in May 2018 shall be
covered by MCIT in:
a. 2019
b. 2020
c. 2021
d. 2022
13. The minimum corporate income tax of a domestic or resident trading or manufacturing
corporation is:
a. 2% of gross income
b. 5% of gross sales
c. 15% of gross income
d. 15% of gross sales
14. The minimum corporate income tax of a domestic or resident service corpoartion is:
a. 2% of gross income
b. 5% of gross sales
c. 15% of gross income
d. 15% of gross sales

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15. One of the following statements is correct. Which is it? The minimum corporate income tax of a
corporation is computed:
a. In the quarterly and the annual returns of the corporation.
b. In the annual income tax return only of the corporation.
c. In the quarterly return only of the corporations.
d. In all the taxable years of operations of the corporation.
Items 16-20 are based on the following information:
A domestic sorporation’s computed NCIT and MCIT and creditable income taxes withheld at
source from 1st to 4th quarters, including excess MCIT and excess withholding taxes from
prior year/s, are as follows:
Quarter NCIT MCIT Taxes Excess Excess
Withheld MCIT/NCIT withholding
perior year tax prior
year/s
1st 100,000 80,000 20,000 30,000 10,000
2nd 120,000 250,000 30,000
3rd 250,000 100,000 40,000
4th 200,000 100,000 35,000
16. The income tax due at the end of the first quarter is:
a. 40,000
b. 50,000
c. 70,000
d. 80,000
17. The income tax due at the end of the second quarter is:
a. 120,000
b. 230,000
c. 260,000
d. 270,000
18. The income tax due at the end of the third quarter is:
a. 30,000
b. 40,000
c. 60,000
d. 70,000
19. The income tax due at the end of the year is:
a. 235,000
b. 220,000
c. 165,000
d. 205,000
20. Suppose the NCIT and MCIT in the 4 th quarter are 50,000 and 120,000 respectively, the income
tax due at the end of the year is:
a. 75,000
b. 85,000
c. 105,000
d. 210,000
Items 21-22 are based on the following information:
A domestic corporation which commenced business operations in 2014 has the following data:
2018 2019
Sales 1,700,000 2,300,000
Cost of sales 1,050,000 1,425,000
Operating expenses 615,000 480,000
21. The income tax payable in 2018 is:
a. 13,000
b. 12,250
c. 11,200
d. 10,500
22. The income tax payable in 2019 is:
a. 15,700

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 b. 17,500
c. 116,000
d. 137,500
23. The imposition of minimum corporate income tax shall not be suspended whenever the
corporation suffers losses due to:
a. Prolonged labor dispute
b. Force majeure
c. Legitimate business reverses
d. Mismanagement
24. The Bulalacao Corporation had the following historical MCIT and RCIT data:
2011 2012 2013 2014
MCIT 120,000 200,000 190,000 170,000
RCIT 110,000 220,000 0 180,000
Based solely on the information provided, what is the tax due and payble in 2011 and 2012,
respectively?
a. 120,000; 220,000
b. 120,000; 100,000
c. 120,000; 210,000
d. 110,000; 220,000
25. In the immediately preceding problem, what is the tax due and payable in 2013 and 2014,
respectively?
a. 190,000; 0
b. 190,000; 180,000
c. 0; 0
d. 170,000; 0
26. A corporation which started operations in 2010 had the following results of operations:
2012 2013 2014
Gross income 3,500,000 5,000,000 7,000,000
Less: Business expenses 3,400,000 5,300,000 6,400,000
Net income 100,000 (300,000) 600,000
What is the income tax due in 2013?
a. 0
b. 60,000
c. 90,000
d. 100,000
27. In the immediately preceding problem, what is the tax due in 2014?
a. 80,000
b. 90,000
c. 140,000
d. 180,000
28. A corporation which started operations in 2009 reported the following:
2013 2014
Gross income from operations 500,000 1,000,000
Rent income 200,000 200,000
Less: Business expenses 820,000 850,000
What is the tax due in 2013?
a. 0
b. 10,000
c. 14,000
d. 60,000
29. In the immediately preceding problem, what is the tax due and payable in 2014?
a. 105,000
b. 95,000
c. 69,000
d. 55,000
30. Enteng Unlimited started operations in 2007. The following shows details of its income in 2015:
2013 2014 2015
Gross income 1,000,000 2,000,000 8,000,000

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 Expenses 2,000,000 2,500,000 6,000,000
Operations had been profitable since the start of operation except that a major strike in 2013
and 2014 caused majot problems in business operations. Enteng Unlimited requested for lifting
of the MCIT whicg was granted for the years 2013 and 2014. Compute the income tax payable in
2015.
a. 450,000
b. 160,000
c. 150,000
d. 0

ajmiranda
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Goodluck and Godbless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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