Green = Di sure

1. As the new Accountant, you were reviewing the payroll system of the company. You noticed that supplementary
compensation is mingled with regular compensation. Which should form of regular compensation?
a. Fixed transportation allowance of Php 50.00 per day
b. Commission of 5% based on collections
c. Profit-sharing
d. Overtime pay ranging from Php 1,000 to Php 10,000

2. If Nicanor, a CPA, established a partnership with Inday, a Certified Internal Auditor, to engaged in business
consultancy service, the partnership is:
a. A general professional partnership
b. Is not allowed by law
c. Is exempted from taxation as the partners are the ones liable for the tax
d. Taxable as a corporation
3. The following are your clients as a Consultant:
● S1 – an online seller of cakes and pastries whose gross sales amounted to Php 300,000
● S2 – an employee whose gross compensation income amounted to Php 3 Million
● S3 – a VAT-registered seller of goods whose gross receipts amounted to Php 1 Million

Who among them is qualified to use 8% optional income tax?

a. S1
b. S3
c. S2
d. All are qualified
4. Direct tax can be shifted to another taxpayer
a. True
b. False
5. The process of reducing the allowable deduction of interest expense by a certain percentage is called?
a. Tax Minimization
b. Tax Avoidance
c. Tax Arbitrage
d. Tax Limitation
6. General professional partnership (GPP) are exempted from taxation because:
● S1 – Partners are liable in their own capacity
● S2 – GPP is a pass-through entity only
● S3 – GPP is not a corporation

Which is false?

a. None are false

b. S3
c. S2
d. S1
7. Real Property tax is an example of:
a. Privilege tax
b. Property tax
c. Excise tax
d. Capitation tax
8. Income of on-line sellers are generally taxable
a. True
Green = Di sure

b. False
9. Who is considered self-employed?
● S1 – Nicanor who is a plumber whose clients are corporations
● S2 – Nicanor who is engaged by the Office of the Governor of a province under Job Order Contract
● S3 – Nicanor who is a social media influencer

a. S3
b. S2
c. All are self-employed
d. S1
10. S1 - If fringe benefit is given to non-rank and file employees, fringe benefit is generally subject to FBT
S2 – If fringe benefit is given to rank and file employees, fringe benefit is subject to withholding tax on
compensation
a. Both are false
b. S1 is true
c. Both are true
d. S2 is true
11. The Congress of the Philippines enacted a law exempting the compensation and/or allowance or payments given
to frontliners in consideration of their efforts in combating COVID-19. This power exercised by the legislative
department in keeping with?
a. Military power
b. Power of Taxation
c. Power of eminent domain
d. Police power
12. ABC Corp., a pharmaceutical company registered in 2020 had made available the following financial information
for TY2021:
Balance Sheet:
Asset – Php 500,000
Liability – Php 100,000
Stockholders Equity – Php 400,000

Income Statement:
Gross Sales – Php 5,000,000,000
Cost of Sales – Php 4,000,000,000
Operating Expenses – Php 500,000,000

How much is the income tax due under CREATE Law?

a. Php 150,000,000
b. Php 125,000,000
c. Php 100,000,000
d. Php 10,000,000
13. The following persons are your clients: Who is allowed to claim deduction?
● Nicanor, an employee of ABC Corp.
● ABC Corp, a foreign corporation doing business in the Philippines
● XYZ Corp, a foreign corporation based in Europe
● Inday Manoban, a Thai-Korean and member of the PinkBlack K-Pop Group based in Korea
a. ABC Corp.
b. Nicanor
Green = Di sure

c. Inday
d. XYZ Corp.
14. In order to help fast-track development, the Government of the Philippines expropriated properties along the
proposed national rail track. This power exercised by the State in keeping with?
a. Police Power
b. Power of eminent domain
c. Military power
d. Power of Taxation
15. With the intention of limiting contact by taxpayers when dealing with the BIR and at the same time saving time
and money, the Bureau allowed on-line filing of returns and other reports. This is in keeping with:
a. Fiscal Adequacy
b. Administrative Feasibility
c. Theoretical Justice
d. Uniformity in Taxation
16. In 2021, ABC Corp., established in 2015 reported the following information:
Balance Sheet:
Asset – Php 50,000,000
Liability – Php 30,000,000
Stockholders Equity – Php 20,000,000

Income Statement:
Gross Sales – Php 50,000,000
Cost of Sales – Php 40,000,000
Operating Expenses – Php 20,000,000

Until when can ABC Corp carry-over the loss against its gross income?
a. 2025
b. 2023
c. 2024
d. 2026
17. The legislative body cannot impose tax upon income of certain persons outside Philippine jurisdiction due to this
principle.
a. Reciprocity
b. Territoriality
c. Inherent limitation of taxation
d. International comity
18. The BIR issued Revenue Memorandum Circular No. 97-2021 inre: Taxation of Any income received by social
media influencers. Which is false?
a. Income of Social Media influencers prior to issuance of RMC are not taxable
b. Social Media Influencers’ income are generally subject to income and business taxes
c. If social media influencers’ income has been subjected to foreign taxes, the tax paid can be credited
against the tax due or deducted (from gross income) at the option of the taxpayer
d. Social media influencers are generally required to register with the BIR if they earned income even if
their objective is to merely vlog
19. The following are your clients as a consultant: who among them is qualified to use 8% optional income tax?
a. A duly registered Barangay Micro Business Enterprise with gross sales of Php 3 Million
b. An architect who opted got method of deduction and whose gross receipts amounted to Php 23 Million
c. A partner in ABC & Co., CPAs whose share in income of GPP amounted to Php 1 million
Green = Di sure

d. A doctor operating his own clinic with gross receipts of Php 1 and at the same time an employee of ABC
hospital and medical center with a gross salary of PHP 3M
20. If Nicanor, a CPA, established a partnership with Inday, a Certified Internal Auditor, to engaged in business
consultancy service, the partnership is:
a. A general professional partnership
b. Is not allowed by law
c. Is exempted from taxation as the partners are the ones liable for the tax
d. Taxable as a corporation
21. Professional tax collected by Treasurers of local government units is an example of:
a. Direct tax
b. Specific tax
c. Privilege tax
d. Income tax
22. A taxpayer made available the following financial information:

Gross receipts – Php 10,000,000

Cost of Service – Php 6,000,000

Expenses:

Depreciation expense – Php 200,000

Miscellaneous expenses – Php 10,000

Office Supplies – Php 20,000

Rental – Php 240,000

Representation expense – Php 100,000

Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000

How much is the total allowable deduction if the taxpayer is a resident citizen?

a. Php 1,570,000
b. Php 1,500,000
c. Php 1, 590,000
d. Php 7,590,000
23. ABC Corp., a DC, registered in 2010 made available the following financial information for TY2021:
Balance Sheet:
Asset – Php 500,000
Liability – Php 100,000
Stockholder’s Equity – Php 400,000

Income Statement:
Gross Sales – Php 100,000,000
Cost of Sales – Php 60,000,000
Operating Expenses – Php 30,000,000

How much is the excess MCIT which can be carried fo_______? Consider CREATE Law
a. Php 0
Green = Di sure

b. Php 2,100,000
c. Php 800,000
d. Php 400,000
24. A taxpayer earned the following incomes (gross amounts) in 2020: (Assume source is Phils unless stated)

Dividends from ABC Corp. a domestic corp – Php 1,000,000

Dividends from XYZ Corp. a foreign corp* (dominant income is abroad) – Php 1,000,000

Interest Income from long-term investments (6th year) – Php 1,000,000

Interest Income from short-term deposits – Php 1,000,000

Raffle Prize (car) – Php 1,000,000

Royalty – Php 1,000,000

*Assuming tax treaty rate is 10%

Compute the ordinary/active income if taxpayer is a domestic corporation:

a. Php 5,000,000
b. Php 4,000,000
c. Php 3,000,000
d. Php 6,000,000
25. ABC Corp., a non-resident foreign corporation (nfrc) bought 10,000 (PV Php 100) shares of stocks of XYZ Corp., a
Domestic Corporation (DC) in the amount Php 1 million in 2010. On September 12, 2021, ABC Corp. sold the
shares of stock to DEF Corp., a domestic corporation for Php 2 million.
a. Php 250,000
b. 600,000
c. 300,000
d. 150,000
26. Nicanor, a businessman engaged in selling goods and services, reported gross sales of php 1 million and gross
receipts of php 2 million. The company spent php 150,000 for representation expenses. How much is the
non-deductible representation expense?
a. Php 25,000
b. 150,000
c. 105,000
d. 125,000
27. Nicanor, an employee of ABC Corp., suffered an accident at work and dies. The following are information were
made available by the employer:
Basic Salary Php 600,000.00
th
13 month pay and other benefits 100,000.00
Commission 100,000.00
Separation Pay 500,000.00
Gross compensation income Php 1,300,000.00

Question: how much is the total exclusion from gross income?

a. Php 590,000
b. 90,000
c. 600,000
d. 180,000
Green = Di sure

28. A taxpayer registered in 2020 made available the following financial information forTY2021:
Balance Sheet:
Asset – Php 500,000
Liability – Php 100,000
Stockholder’s Equity – Php 400,000

Income Statement:
Gross Sales – Php 10,000,000
Cost of Sales – Php 3,000,000
Operating Expenses – Php 1,000,000

How much is the income tax due under CREATE Law if the taxpayer is a domestic corporation?
a. Php 70,000
b. 1,500,000
c. 1,800,000
d. 1,200,000
29. *missing infos*
Shares of stocks not listed in stock exchange:
Audited Financial Statements of the company disclosed the following:
Balance Sheet: Asset – Php 5 million
Liability – 3 million
SHE – 2 million
Income Statement: Revenue – 2 million
Cost and Expense – 1 million
Net Income – 1 million
Additional information: Outstanding shares of stocks is 10,000

If Nicanor will sell the shares of stocks for Php 2 million and he ask you how much is the capital gains tax, your
answer should be?
a. Php 30,000
b. 270,000
c. 150,000
d. 300,000
e. *missing infos*
Shares of stocks not listed in stock exchange:
Audited Financial Statements of the company disclosed the following:
Balance Sheet: Asset – Php 5 million
Liability – 3 million
SHE – 2 million
Income Statement: Revenue – 2 million
Cost and Expense – 1 million
Net Income – 1 million
Additional information: Outstanding shares of stocks is 10,000

If Nicanor will sell the residential house and lot for Php7 million and he asks you how much is the capital gains
tax, your answer should be?
a. Php 480,000
b. 720,000
Green = Di sure

c. 600,000
d. 540,000
30. *missing infos*
Expenses:
Salaries and wages – php 1,000,000
Transportation and travel – 20,000
Rental – 240,000
Representation expense – 200,000
Depreciation expense – 200,000
Office supplies – 20,000
Miscellaneous expenses – 10,000
Other information:
Asset – 5,000,000
Liability – 3,000,000
SHE – 2,000,000

How much is the income tax due under CREATE Law if the taxpayer is an ordinary partnership and opted for
OSD?

a. Php 720,000
b. 120,000
c. 480,000
d. 600,000
31. A taxpayer made available the following financial information:

Gross receipts – Php 10,000,000

Cost of Service – Php 6,000,000

Expenses:

Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000

Rental – Php 240,000

Representation expense – Php 200,000

Depreciation expense – Php 200,000

Office Supplies – Php 20,000

Miscellaneous expenses – Php 10,000

How much is the taxable income if the taxpayer is a domestic corporation and opted for OSD?

a. Php 4,000,000
b. 0
c. 2,400,000
d. 6,000,000
e. A taxpayer made available the following financial information:

Gross receipts – Php 10,000,000

Green = Di sure

Cost of Service – Php 6,000,000

Expenses:

Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000

Rental – Php 240,000

Representation expense – Php 100,000

Depreciation expense – Php 200,000

Office Supplies – Php 20,000

Miscellaneous expenses – Php 10,000

How much is the income tax due if the taxpayer is an individual resident citizen?

a. 2,278,000
b. 361,000
c. 621,200
d. *missing*
32. A taxpayer earned the following incomes (gross amounts) in 2020: (Assume source is Phils unless stated)

Dividends from ABC Corp. a domestic corp – Php 1,000,000

Dividends from XYZ Corp. a foreign corp* (dominant income is abroad) – Php 1,000,000

Interest Income from long-term investments (6th year) – Php 1,000,000

Interest Income from short-term deposits – Php 1,000,000

Raffle Prize (car) – Php 1,000,000

Royalty – Php 1,000,000

*Assuming tax treaty rate is 10%

Compute the ordinary/active income if taxpayer is a resident citizen:

a. 3,000,000
b. 2,000,000
c. 6,000,000
d. 1,000,000
33. A taxpayer made available the following financial information:

Gross receipts – Php 10,000,000

Cost of Service – Php 6,000,000

Expenses:

Depreciation expense – Php 200,000

Miscellaneous expenses – Php 10,000

Green = Di sure

Office Supplies – Php 20,000

Rental – Php 240,000

Representation expense – Php 100,000

Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000

How much is the total allowable deduction if the taxpayer is a domestic corporation?

a. 7,590,000
b. 1,590,000
c. 1.570,000
d. missing
34. Nicanor was employed by ABC Corp. from April 1,2020. He receives basic pay of php 20,000 per month as
compensation. During annualization of compensation in November, it was determined that he will also receive
the following:
● Additional compensation allowance – php 5,000
● Cash gift – 5,000
● Christmas bonus – 5,000
● Loyalty award – 5,000
● Performance bonus/productivity incentive – 10,000
How much is the 13th month pay?
a. Php 15,000
b. 0
c. 45,000
d. 20,000
35. *missing info*
Shares of stocks not listed in stock exchange:
Audited Financial Statements of the company disclosed the following:
Balance Sheet: Asset – Php 5 million
Liability – 3 million
SHE – 2 million
Income Statement: Revenue – 2 million
Cost and Expense – 1 million
Net Income – 1 million
Additional information: Outstanding shares of stocks is 10,000

Compute the total final tax withheld on Nicanor’s passive income.

a. Php 40,000
b. 60,000
c. 50,000
d. 30,000
36. The following information appeared in the 2020 BIR Form 2316 (Certificate of Compensation Payment/Tax
Withheld) of Nicanor, a purely compensation income earner:

Gross compensation income php 400,000.00

13th month pay and other benefits 40,000.00

Green = Di sure

Amount of taxes withheld (by the employer) 30,000.00

Commission 50,000.00

Pagibig contributions 10,000.00

Philhealth contribution 10,000.00

SSS 10,000.00

Union dues 10,000.00

Question: The total non-taxable portion to be deducted from gross compensation income of Nicanor is:

a. Php 110,000
b. 80,000
c. 60,000
d. 70,000

37. The Commissioner can force a taxpayer to produce its accounting records if the taxpayer refuses to provide the same
during audit.

a. True
b. False

38.