Taxation BSA 3 C

1.
The following are the Inherent Limitations of the Taxation Power EXCEPT
a. Territoriality of taxation
b. International comity
c. Public Purpose
d. Non delegation of taxing power
e. Due process of law
Answer: E- Due process of law
2. Which of the following may elect the installment basis of reporting?
I. Dealers in Personal Property

II.Casual seller of personal property
III. Seller of real property
IV. Individual sellers of real property considered as capital asset
a. I only
b. II & IV
c. III only
d. I & III
e. I, II, III & IV
Answer : E- I, II, III & IV
3. Topic: Tax Environment

This is a form of backward shifting whereby real taxes on property sold are capitalized at the
time of purchase and deducted in lump sum from the selling price
a.) Tax Exemptions
b.) Tax Capitalization
c.) Tax Avoidance
d.) Transformation
e.) Tax Evasion
Answer: b.) Tax Capitalization
4. Topic: Tax Accounting Concept

This method is applicable only to farmers engaged in the production of crops which take
more than a year from the time of planting to the process of gathering and disposal. What
method of accounting recognized by the tax code is this?
a.) Percentage of Completion basis

b.) Leasehold improvements
c.) Deffered Payment Sales
d.) Crop-Year basis
e.) Cash basis
Answer: d.) Crop-Year basis

5. Tax environment:
Q: which of the following powers is inherent or co-existent with the creation of the
government?
a. Police power
b. Eminent domain
c. Taxation
d. All of the above
e. None of the above
A: d. All of the above
6. Tax account concepts

Q: It is the amount which the purchaser contracts to pay the seller in cash.
a. Initial payment
b. Selling price
c. Contract price
d. Full payment
e. None of these
A: c. Contract price
7. Tax environment:
It doesn't originate in the legislative department but is near interpretation of the law.
a. Inherent Power
b. Constitution
c. Doctrine
d. Eminent Domain
e. Situs
ANSWER: C. DOCTRINE
8. Tax accounting concepts:

Which statement is true:
I. Accounting period is the taxable year which consist of 12 months.
II. Taxpayer cannot adopt an accounting system that his judgement suits his need and
purpose.
a. Statement I only
b. Both Statement I and II
c. Statement II only
d. Neither Statement I or II
e. Either Statement I and II
ANSWER: A. Statement I only
9. TAX ENVIRONMENT:
Which of the following fundamental doctrines describes "The power to tax involves the power
to destroy"?
a. Doctrine of Estoppel
b. Imprescriptibility in taxation
c. Marshall Doctrine
d. Holme's Doctrine
e. Judicial Non- interference
Answer: c. Marshall Doctrine
10. TAX ACCOUNT CONCEPTS:

It is the amount which the purchaser contracts to pay the seller in cash.
a. Initial Payment
b. Contract Price
c. Mortgage
d. Selling Price
e. Debt Payment
Answer: b. Contract Price
11. TAX ENVIRONMENT

What is the purpose of Police Power?
a) For public use

b) To protect the general welfare of the people
c) For the support of the government
d) For private use
e) None of the above
ANSWER: B
12. TAX ACCOUNTING CONCEPTS

Those who make a sale or disposition on installment if the initial payments do not exceed
25% the selling price.
a) Dealers in personal property

b) Individual seller of real property
c) Sellers of real property
d) Casual seller of personal property
e) None of these
ANSWER: C
13. Tax Environment

The use of illegal means to defeat or lessen the payment of the tax. It is also known as "Tax
Dodging" and it is also punishable by law.
A. Tax Capitalization
B. Tax Evasion
C. Tax Avoidance
D. Tax Exemptions
E. Tax Shifting
Answer:
B Tax Evasion
14. Tax Accounting Concepts
It is issued in the form of a promissory note and is taxable at the same rate as cash
dividend.
A. Property Dividend
B. Stock Dividend
C. Scrip Dividend
D. Liquidating Dividend
E. Indirect Dividend
Answer:
C Scrip Dividend
15. TAX ENVIRONMENT

Which of these tax exemption is irrevocable?
A. Tax exemption based on Constitution

B. Tax exemption based on law
C. Tax exemption based on contract
D. Both A and C
E. All of the Above
Answer: D. Both A and C

Those who regularly sell or otherwise dispose of personal property on the installment plan.
A. Dealers in personal property

B. Casual seller of personal property
C. Either B or D
D. Sellers of real property
E. Individual seller of real property
Answer: A. Dealers in personal property
17. TAX ENVIRONMENT

Which of the following inappropriately describes the nature of taxation?
A. Subject to inherent and constitutional limitation

B. Generally fo public purpose
C. Essentially a legislative function
E. Government Practice
Answer: B Generally for public purpose

These are accounting techniques or conventions used to measure income.
A. Accounting Periods
B. Accounting Methods
C. Accrual Basis
D. Cash Basis
E. Installment Basis
Answer: B Accounting Methods

TAX ENVIRONMENT
19. Which of the following is an example of Indirect Tax?
1. Excise Tax
2. Gas Tax
3. Power Tax
4. Taxation
A. 1 is true and 2 is false

B. 1 is false and 2 is true
C. 3, 4 are true and 1, 2 are false
D. 1 and 2 only
E. 1, 2, and 3
Answer: D

Which of the following properties when classified as capital asset is subject to capital gains
tax?
A. Real Property
B. Domestic Stocks Sold directly to buyer
C. International Stocks
D. Both a or b
E. All of the above
Answer: D
21. TAX ENVIRONMENT

I. Declaring bankruptcy and restarting company under a different name
II. Setting up a company and pay dividends rather than income to avoid paying national
insurance
III. Filling Income Tax Return annually
IV. Keeping Two sets books and making false entries in books and records
Which statement above is not an example of Escape in Taxation?
a. I only
b. Either II or IV
c. III only
d. Both I and II
e. I, II and IV
Correct Answer: C III only

Payments received in cash or property excluding evidences of indebtedness in which the sale
or other disposition is made.
a. Installment basis
b. Contract Price
c. Cash basis
d. Initial Payment
e. Selling Price
Correct Answer: D Initial Payment

23. TAX ENVIRONMENT
What doctrine describes taxation as "Taxation power is not the power to destroy while the
court sits"?
A.) Prospectivity of tax laws

B.) Imprescriptibility in taxation
C.) Marshall Doctrine
D.) Doctrine of Estoppel
E.) Holme's doctrine
Answer: E. Holme's Doctrine

Under this method, the amount of income to be reported by the taxpayer during a taxable
year from the sale on installment is only that proportion of the installment payments actually
received.
A.) Installment method

B.) Crop Year Basis
C.) Deferred Payment Method
D.) Accounting Method
E.) Accrual Basis
Answer: A. Installment Method
25. Which of the following may not raise money for the government and inherent the power
may be exercised even by public utility companies.
A. Taxation
B. Police Power
C. Eminent Domain
D. Free worship rule
E. B and C
Answer: C
Explanation: The Eminent Domain has no imposition as to amount, and it is the power of the
state that takes private property for public use which the government pays just compensation
for the property has been taken.
26. The seller is willing to lower the price of the commodity provided the taxes will be
shouldered by the buyer
A. Transformation
B. Exemption
C. Shifting
D. Evasion
E. Capitalization
Answer: E
Explanation: Because the Capitalization pertains to the adjustment of the value of an asset to
cause by changes in tax rates
27. This does not result to loss of government revenue that pertains to the elimination of
wastes or losses by the taxpayer to form savings to compensate for the tax imposition or
increase in taxes.
A. Shifting
B. Capitalization
C. Transformation
D. Tax evasion
E. None of the above
Answer: C. Transformation
28. Which of the following is the prescribed method of accounting for tax payers.
A. Cash method
B. Accrual method
C. Hybrid method
D. Crop-year basis
Answer: E. None of the above
29. Below are the inherent power of the state EXCEPT :
A. Power of Taxation
B. Power of the Government
C. Power of Eminent Domain
D. Power of the Congress
E. Both B and D.
Answer: E
30. Below are the Tax Accounting method that is recognized in Income Taxation, EXCEPT:
A. Principal Method
B. Crop year basis
C. Accrued payment sales
D. Leasehold improvement
E. Percentage of completion basis
Answer: C.
31. Activity 1: Tax Environment

Can the International comity / Tax treaties enter to minimize the harshness of international
double Taxation?
A. Yes
B. No
C. Maybe
D. Either A, B or C
E. Neither A or B
Suggested Answer:
A Yes, the International Tax Comity / Tax Treaties can enter to minimize the harshness of
international double taxation.
32. Activity 2: Tax Accounting Concepts
What is an Initial Payment?
A. Total payments by the buyer, in cash or property, in the taxable year the sale was made.
B. The Entire Amount for which the buyer is obligated to the seller.
C. It is where the gross income is recognized and reported in proportion to the collection
from the installment sales.
D. Either A, B or C
E. All of the Above.
Suggested Answer:
A Total payments by the buyer, in cash or property, in the taxable year the sale was made.

In what aspect of due process where in tax must be imposed only for public purpose,
collected only under authority of a valid law and only by the taxing power having jurisdiction?
A. Equal Protection of the Law

B. Uniformity rule in taxation
C. Procedural due process
D. Substantive due process
E. Progressive system of taxation
Answer: SUBSTANTIVE DUE PROCESS

Where did the computation of gross income under deferred payment method is based on?
A. Interest-bearing note
B. Discount interest of the note that is being amortized
C. Selling price of the materials used
D. Present value of a note receivable from the contract
E. Casual sale of the property made by the taxpayer
Answer: Present value (discounted vale) of a note receivable from the contract
35. Statement 1: Taxation is the rule, exemption is the exception.

Statement 2: Each state is sovereign to itself.
Statement 3: Double taxation is legal but discouraged and minimized.
Statement 4: Government-owned and controlled corporation is exempted from paying taxes.
a. Only statements 1, 2, and 3 are correct

b. Only statements 2, 3, and 4 are correct
c. Only statements 1, 3, and 4 are correct
d. Only statements 1, 2, and 4 are correct
e. All statements are correct
Answer:
a. Only statements 1, 2, and 3 are correct
36. Which is not an accounting method used to measure income?

a. Accrual basis
b. Cash basis
c. Percentage of completion method
d. Outright and spread-out method
e. All of these are accounting methods used to measure income
Answer:
e. All of these are accounting methods used to measure income
37. ACTIVITY 1
The inherent power to tax is limited to the following except:
A. Territoriality
B. Public Purpose
C. Free Worship Rule
D. Exemption of the Government
Answer: C. Free Worship Rule
38. ACTIVITY 2
The following may elect the installment basis of reporting Income:
A. Those who regularly sell or otherwise dispose of personal property on the installment plan.
B. Those who make a sale or disposition on installment if the initial payments do not exceed
25% of the selling price.
C. Individual seller of real property considered as capital asset.
D. Those who make a casual sale or other casual disposition of personal property on the
installment plan provided the following requisites are present.
E. All of the above
Answer: E. All of the above
39. TAX ENVIRONMENT

These are the implication of the lifeblood doctrine in taxation EXCEPT:
a. Tax is imposed even in the absence of a Constitutional grant

b. The government reserves the right to choose the objects of taxation
c. The courts are allowed to interfere with the collection of taxes
d. Claims for tax exemption are construed against taxpayers
e. All are correct
Answer:
c. The courts are allowed to interfere with the collection of taxes

The following may elect the installment basis of reporting Income:
I. Dealers in personal property. Those who regularly sell or otherwise dispose of personal
property on the installment plan.
II. Casual seller of personal property. Those who make a casual sale or other casual
disposition of personal property on the installment plan provided the following requisites are
present:
III. Sellers of real property. Those who make a sale or disposition on installment if the initial
payments do not exceed 25% of the selling price.
IV. Individual seller of real property considered as capital asset. If otherwise qualified to
report the gain therefrom under the installment method, he may pay the capital gains in
installment.
a. I & II only
b. I, II, III only
c. I & III only
d. I, II, III & IV
e. None of the above
Answer:
d. I, II, III & IV
41. Tax Environment

What is the theory of taxation?
A. Necessity
B. Public Purpose
C. Reciprocal duties of support and protection
D. Constitutionality
E. Doctrine
Answer: A
42. Tax Accounting Concepts

Which of the following accounting methods is the most consistent with the lifeblood doctrine?
A. Crop Year Method

B. Cash Basis
C. Installment Method
D. Accrual Method
E. Deffered Payment Basis
Answer: D
43. Tax Environment

What inherent power of the states exercising authority in both government and private
utilities?
A. Taxation
B. Police Power
C. Eminent domain
D. Both A and B
E. Both B and C
answer: C
44. Tax Accounting Concept

Income is reported by reference to the extent of project completion in?
A. Deferred Payment Method

B. Installment Method
C. Percentage of Completion Method
D. Complete Contract Method
E. None
answer: C
45. Tax Environment

This refers to any act or trick that reduces or totally escapes taxes by any legally permissible
mean.
a. Tax Exemption
b. Tax Avoidance
c. Shifting
d. Capitalization
e. Tax Evasion
Answer: b. Tax Avoidance

This is an accounting method which expenses in the production of crops are deducted in the
year in which the gross income from crop has been realized.
a. Installment Basis
b. Cash Basis
c. Crop-year Basis
d. Hybrid Method
e. Accrual Basis
Answer:
c. Crop-year Basis
47. Tax Environment

Which of the following statements is true?
A. The power of taxation and eminent domain are both exercisable only by the government
and its political subdivision.
B. In police power, the property taken is preserved for public use.
C. The power of eminent domain is created by the constitution.
D. The exercise of the power of eminent domain and police power can be expressly delegated
to the local government units by the law making body.
E. All statements are false.
Answer: D

Which of the following cases may be taxable income be computed not on the basis of the
calendar year?
I. Taxpayer has no accounting period

II. Taxpayer does not keep books of accounts
III. Taxpayer is an individual taxpayer
IV. Taxpayer is a corporation
V. Taxpayer is a general partnership
A. IV only
B. IV & V only
C. III, IV, & V only
D. All of the above
E. Either IV or V
Answer : B
49. TAX ENVIRONMENT

This occurs when atleast of the secondary elements of double taxation is NOT common for
both impositions
A. Tax Exemption
B. Direct Double Taxation
C. Indirect Double Taxation
D. Capitalization
E. Income Tax Exemption
Suggested Answer: Indirect Double Taxation ©

It is a method of accounting for income in the perio it is earned regardless of whether it has
been received or not. Under this method, net income is being measured by the excess of
income earned during the period over the expenses incurred.
A. Cash basis
B. Accrual basis
C. Installment basis
D. Crop year basis
E. Percentage of Completion basis
Suggested Answer: Accrual Basis (B)
51. . Which of these categories does not result a loss to government’s revenue?
I. Transformation
II. Shifting
III. Tax Evasion
IV. Capitalization
V. Tax Avoidance
A. I, III, and V C. I, II and IV

B. II, IV, and V D. I, III, IV and V
E. II, III, IV and V
Answer: C. ( I, II, and IV )

It is a method in which the expenses of the production of crops are deducted in the year in
which the gross income from the crops has been realized.
A. Principal Method
B. Income in the year of completion basis
C. Crop-Year Basis
D. Accrual Basis
E. Installment Basis
Answer: C ( Crop-Year Basis )
53. Tax environment

All of these are constitutional limitations except:
A. Exemption of the government

B. Due process of law
C. Progressive system of taxation
D. Free worship rule
E. Exemption of religious or charitable entities, non-profit cemeteries, churches and mosque
from taxes
Answer:
Exemption of the government
This payment include the down payment plus all other payments received by the seller during
taxable year of sale.
A. Initial payment
B. Selling price
C. Contract price
D. Deferred payment sales
E. Installment basis
Answer:
A. Initial payment

It is also know as tax minimization and it refers to any act or trick that reduces or totally
escapes taxes by any legally permissible means.
a) Tax avoidance
b) shifting
c) tax avoidance
d) tax exemption
e) capitalization
Answer: c) tax avoidance

It is the taxable year and it is a fixed period of time consisting 12 months upon the basis of
which the taxable income is computed and the income tax imposed.
a) accounting period
b) long-term contracts
c) initial payment
d) cash basis
e) accrual basis
Answer: a) accounting period
57. Activity 1: Tax environment
The basis of taxation is found in the reciprocity duties of protection and
support between the state and its inhabitants. What does this reciprocity
means?
a) To protect and to conquer

b) Protection for support and support for protection
c) support for protection and payment for support
d) benefit for support and protection from government
e) Tax for the people and protection by the government
Correct answer: B. Protection for support and support for the government.
(The basis of taxation is found in the reciprocity duties of protection and
support between the state and its inhabitants. In return for his contribution,
the taxpayer receives the general advantages and protection which the
government affords the taxpayer and his property. This is so-called benefits
receives principle. One is compensation or consideration for the other:
protection for support and support for protection)

Income is recognized when earned regardless of when received.
a) Cash basis
b) Accrual basis
c) Instalment method
d) Percentage of completion
e) Crop year basis
Correct answer: B. Accrual basis
59. Activity 1 tax environment

Which of the following is/are the nature of the power of taxation?
I. It is an inherent attribute of sovereignty
II. It is legislative in character
III. It is regarded as comprehensive, unlimited, plenary & supreme
a. I only
b. II & III only
c. I & III only
d. I & II only
e. All are the nature of the power of taxation
Answer: d. I & II only
60. TAXATION ENVIRONMENT

Which of the following may not raise money for the government?
A. Power of taxation
B. Police power
C. Power of Eminent domain
D. Privatization of government's capital assets
Answer: C. Power of Eminent Domain

It is the amount receivable in cash or other property from the buyer.
A. Cash Basis
B. Initial Payment
C. Selling Price
D. Contract Price
E. Cash Downpayment
Answer: D. Contract Price

62. Tax Environment
The following are the similarities of three power of the state, except
a. They are all ways in which the state interferes with private rights and
properties.
b. They are all legislative in nature.
c. They all exist dependent on the constitution and constitutional grant is
required to exercise the power.
d. They all presuppose an equivalent form of compensation received by the
persons affected by the exercise of the power.
e. They are all necessary attributes of sovereignty.
Answer: c. they all exist dependent on the constitution and constitutional

grant is require to exercise the power.
63. Tax Accounting

It is the total amount or price of the sale including the cash or property
received and including all the notes of the buyer or mortgages assumed by
him.
a. Selling price
b. Initial payment
c. Contract price
d. Installment basis
e. Deferred sales method
Answer: a. selling price

Taxation BSA 3 C

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1.

Answer: E- Due process of law

2. Which of the following may elect the installment basis of reporting?

I. Dealers in Personal Property

Answer : E- I, II, III & IV

3. Topic: Tax Environment

Answer: b.) Tax Capitalization

4. Topic: Tax Accounting Concept

a.) Percentage of Completion basis

Answer: d.) Crop-Year basis

A: d. All of the above

6. Tax account concepts

8. Tax accounting concepts:

ANSWER: A. Statement I only

10. TAX ACCOUNT CONCEPTS:

Answer: b. Contract Price

11. TAX ENVIRONMENT

a) For public use

12. TAX ACCOUNTING CONCEPTS

a) Dealers in personal property

13. Tax Environment

15. TAX ENVIRONMENT

A. Tax exemption based on Constitution

Answer: D. Both A and C

16. TAX ACCOUNTING CONCEPTS

A. Dealers in personal property

Answer: A. Dealers in personal property

17. TAX ENVIRONMENT

A. Subject to inherent and constitutional limitation

Answer: B Generally for public purpose

18. TAX ACCOUNTING CONCEPTS

Answer: B Accounting Methods

A. 1 is true and 2 is false

20. TAX ACCOUNTING CONCEPTS

21. TAX ENVIRONMENT

Which statement above is not an example of Escape in Taxation?

Correct Answer: C III only

22. TAX ACCOUNTING CONCEPTS

Correct Answer: D Initial Payment

A.) Prospectivity of tax laws

Answer: E. Holme's Doctrine

24. TAX ACCOUNTING CONCEPTS

A.) Installment method

Answer: A. Installment Method

Answer: E. None of the above

29. Below are the inherent power of the state EXCEPT :

31. Activity 1: Tax Environment

33. Activity 1: Tax Environment

A. Equal Protection of the Law

Answer: SUBSTANTIVE DUE PROCESS

34. Activity 2: Tax Accounting Concepts

35. Statement 1: Taxation is the rule, exemption is the exception.

a. Only statements 1, 2, and 3 are correct

36. Which is not an accounting method used to measure income?

Answer: C. Free Worship Rule

Answer: E. All of the above

39. TAX ENVIRONMENT

a. Tax is imposed even in the absence of a Constitutional grant

40. TAX ACCOUNTING CONCEPTS

41. Tax Environment

42. Tax Accounting Concepts

A. Crop Year Method

43. Tax Environment

44. Tax Accounting Concept