09/17/11

FINAL PREBOARD EXAMINATION

September 17, 2011

1. Which of the following is not correct?

a. A check must be presented for payment within a reasonable @e aAer its issue or the drawer will be discharged
for liability thereon
b. Where a check is cer@Bed by the bank on which it is drawn, the cer@Bca@on is equivalent to acceptance
c. Where the holder of a check procures it to be cer@Bed or accepted, the drawer and all indorsers are discharged
for liability thereon
d. A check of itself does not operate as an assignment of any of the funds to the credit of the drawer with the bank,
and the bank is not liable to the holder unless and un@l it accepts or cer@Bes the check

2. Where a promissory note is drawn payable to the order of the maker, which of the following statements is not correct?
a. The maker must sign as such maker and must sign it again as indorser to complete the instrument
b. If the note is delivered by the maker to another without indorsement, the transferee cannot recover from the
maker
c. The note is not complete un@l indorsed by the maker
d. If there is no indorsement yet by the maker, the transferee will not be able to nego@ate the note

3. Where a bill payable aAer a sight is accepted for honor, its maturity is calculated from the date of
a. Acceptance for the honor
b. Presentment for acceptance
c. Dishonor by non-acceptance
d. No@ng for non-acceptance

4. A, B, C and D are partners contribu@ng P20,000, P30,000, P50,000 and industry, respec@vely. The partnership failed so
the partners decided to dissolve the partnership. At the sae @e of liquida@on, the unpaid obliga@on amounted to
P100,000 distributed as follows:

To partnership, Y Php 50,000

To partners A 40,000

B 20,000

If the remaining cash amoun@ng to P10,000 was given to Y as par@al payment. Which of the following is correct?

a. Y can collect P10,000 from the separate property of D

b. As an industrial partner, D is not liable to Y
c. A, B and C are liable to Y in propor@on to their capital contribu@on
d. A, B and C are liable to Y at P13,333 each

5. Using the above informa@on. If Y succeeds in collec@ng the deBciency from the partners concerned, which of the
following is not correct?
a. Only C will be liable to the other partners
b. A and B will not make addi@onal contribu@on
c. D is en@tled to get reimbursement from A, B and C
d. C will pay P35,000 to his partners

6. A, B, C and D are partners in Y & Corp, a limited partnership contribu@ng P10,000, P20,000, P30,000 and P40,000,
respec@vely. A, C and D are general partners while B is the limited partner. The partnership failed and the partners
decided to dissolve partnership. At the @me of liquida@on, the unpaid obliga@on amounted to P100,000 distributes as
follows:

To partnership creditor Y P50,000

To partners A 30,000

B 20,000

If there remaining cash amoun@ng to P20,000 was given to Y as par@al payment, which of the following is correct?

a. Y can collect P7,500 each from the separate proper@es of the partners
b. Y can collect P30,000 form A, or C, or D but not from B
c. B is not liable to Y because B is also a creditor of the partnership
d. Y can collect to P10,000 each from A, C and D

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7. Essen@al elements of pledge, EXCEPT

a. Pledgor is the absolute owner of the thing pledged
b. The person cons@tu@ng the pledge has the free disposal of his property or if he is an agent or representa@ve,
that he is legally authorized
c. The thing pledged must be placed in the possession of the creditor or of a 3 rd person by common agreement
d. To bind third person there must be an a[davit of good faith

8. Essen@al elements of cha]el mortgage, EXCEPT

a. The object is a personal or movable property
b. The thing mortgaged is not delivered to the creditor
c. The mortgagor cannot sell without the consent of the mortgagee
d. Descrip@on of the thing mortgaged must appear in a public instrument

9. Essen@al elements of real estate mortgage, EXCEPT

a. In case of foreclosure sale, the mortgagor is en@tled to the excess
b. The mortgagor can sell even without the consent of the mortgagee
c. The thing mortgaged must be delivered to the creditor
d. To bind third persons it must be recorded in the Registry of Property

10. Which of the following statements is not correct?

a. If the thing pledged is returned by the pledgee to the pledger, the obliga@on is ex@nguished
b. In sale public auc@on, the pledger may bid and his bid is valid even if he is the only bidder
c. Any s@pula@on authorizing the pledgee to appreciate the thing pledged is void and without eaect
d. Share of stock can be the object of pledge or mortgage

11. Deliver a nego@able promissory note payable to P or order. Later, P makes a special indorsement to A and A delivers the
note to B. who is the holder?
a. B, because he is in possession of the note
b. A, because he is the indorsee
c. P, because he is the payee
d. No one can be considered as holder

12. A issued a nego@able promissory note to the order of B for P10,000 payable in 30 days aAer date. Later B, endorsed the
note C. then X stole the note from C, forged the signature of C and nego@ated it to D, and D to E, E to F, the holder. On
maturity of the note, which of the following statement is not correct?
a. F can collect from either D or E because their signatures are genuine and the note is opera@ve against them
b. F can collect for A because A cannot put up forgery as his defense as his signature is genuine
c. F cannot collect from C because it was C’s signature which was forged
d. F cannot collect from B because B is a party prior to the forgery

13. M, J and G formed a general partnership with a capital of P100,00 and the partners contribu@ng 50%, 30% and 20%
respec@vely. O has a claim of P160,00 against the partnership. If O Bles a suit to collect her claim, which of the following is
not correct?
a. All the partners are liable to the extent of their separate property
b. All the partners shall be liable pro-rata with all their property only aAer the partnership assets have been
exhausted
c. The personal liability of the partners is merely join and not solidary
d. AAer exhaus@on of the partnership assets, M, J and G shall be liable 50%, 30% and 20% respec@vely of the
unpaid claim

14. A person secondarily liable on the instrument is discharged, EXCEPT

a. By any act which discharged the instrument
b. By the inten@onal cancella@on of his signature by the holder
c. By a valid tender of payment made by a prior party
d. By the discharged of a subsequent party

15. A promissory note reads “I promise to pay to the order of B P1,000 on August 22, 2011. Sgd. A”. Suppose A is only 16 years
old which of the following is correct?
a. If B nego@ates the note to C, C can enforce the note against A if C is a holder in due course
b. If B nego@ates the note to C, C can enforce the note against A even if C is not a holder in due course
c. B cannot nego@ates the note because the maker is a minor who is not liable to any holder of the instrument

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d. If B nego@ates the note to C, C cannot enforce the note against A, regardless of whether or not C, is a holder in
due course

16. A, B and C are partners in a joint venture engaged in real estate and land development. A, without the knowledge of B
and C oaered to sell to D all the remaining unsold lots at a price very much higher than the prevailing market prices. Later,
A bought out B and C from the partnership and thereaAer family sold all the lots at very big proBts.

Statement 1 – When A bought out B and C from the partnership, the partnership was dissolved so B and C have no
more share in the proBts of the sale

Statement 2 –The sale of the lots between A and D is void because it was without the knowledge and constant of B and
C

a. True, true
b. True, false
c. False, true
d. False, false

17. The following are ways of enforcing payment of unpaid subscrip@on. Which is the excep@on?
a. Sale of public auc@on of delinquent dividend
b. Denying delinquent stock cash dividend
c. Filing a court ac@on to recover unpaid subscrip@on
d. Denying delinquent stock the right to vote and be voted upon

18. A owes B P10,000 as gambling debt and A issues a promissory note to B to cover the debt, as follows:

“I promise to pay B or order P10,000. Sgd, A “

Which of the following statement is correct?

a. B can collect from A because the note is nego@able

b. B cannot nego@ate the note because the considera@on between a and B is illegal
c. If B nego@ates to C, a holder in due course, C can collect from A
d. A is not liable because of illegal considera@on

19. A, minor issued a promissory note to B as follow:

“I promise to pay B or order P10,000. Sgd, A”

Which of the following statements is not correct?

a. The promissory note is not nego@able because the maker is a minor

b. B cannot collect from A because A is a minor
c. If B nego@ates to C, a holder in due course, C cannot collect from A
d. If B nego@ates to C, a holder for value, C cannot collect from A

20. Below are two promissory notes prepared by A:

A. “I promise to pay B or order P100,000 if he will pass the CPA board examina@on, Sgd A”
B. “I promise to pay C or order P100,000 if he kills Z. Sgd, A”

Which of the following statement is correct?

a. Both promissory note are nego@able

b. Both promissory note are non-nego@able
c. Only the Brst promissory note is nego@able
d. Only the second promissory note is nego@able

21. Using the above facts, and both condi@on are sa@sBed, which of the following statements is correct?
a. Both B and C can collect from A
b. Neither B or C can collect form A
c. Only B can collect from A
d. Only C can collect from A

22. Using the above facts, and B assigns the note to D, and C assigns the note to E, which of the following statement is
correct?
a. Both D and E can collect from A, if both acted in good faith

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b. Neither D or E can collect from A, even if both acted in good faith

c. Only D can collect from A even if both acted in good faith
d. Only E can collect from A even if both acted in good faith

23. A and B are partners. On June 15, 2011 when the total obliga@on of the partnership totals P80,000, C was admi]ed as a
new partner. At the @me of his admission, the partnership creditors were M for P50,000 and N for P30,000. AAer June 15,
the partnership borrowed from O, P20,000 and P10,000 from P. On December 15, 2011, the partnership became insolvent
leaving an obliga@on of P110,000 and the partnership asset amoun@ng to P30,000. The creditors are going aAer separate
proper@es of the partners to sa@sfy their remaining claims. How are the creditor’s claim sa@sfy?

Answer 1 – M and N can go aAer the separate proper@es of A and B but C’s separate proper@es are not answerable to
their claims.

Answer 2 – O and P can go aAer the separate proper@es proper@es of A, B and C

a. False, false
b. False, true
c. True, false
d. True, true

24. The following statements pertain to a vo@ng trustee, EXCEPT

a. The representa@ve acquired legal @tle to the shares
b. It is good only for the mee@ng for which it was intended
c. It is generally irrevocable and the representa@ve may vote even in the presence of the stockholder
d. The agreement giving the representa@ve the power to vote must be duly notarized and a copy thereof must be
submi]ed to the SEC to be eaec@ve and enforceable

25. The ar@cle of incorpora@on of ABC Corpora@on provides for 7 directors. In the monthly mee@ng of the board of directors
held on April 8, 2011 directors B, C, D and E were present and the following resolu@on were approved:
A. a resolu@on for the purchase of a delivery truck from E trading, a sole proprietorship owned by E
B. a resolu@on appoin@ng T as the new corporate secretary where B, C, D and E voted for the resolu@on

Which is correct?
a. Both resolu@on are valid and do not need stockholders approval
b. Both resolu@on are valid but need stockholders approval
c. Resolu@on A needs stockholders approval, Resolu@on E is valid
d. Resolu@on A is not valid, Resolu@on B needs stockholders approval

26. A sells to B a sony colored TV for P12,000 payable in twelve equal monthly instalment beginning May 5, 2011 and every
5th day of each month thereaAer. The contract provides that upon failure to pay any instalment due, the whole balance
becomes due and demandable. To secure the obliga@on, a cha]el mortgage over the TV set was executed. When B
defaulted on the seventh and eighth instalments, a sued B for the payment of the whole balance of P6,000. The TV set
was levied and subsequently sold at a public sale for P5,000. Can a s@ll recover the deBciency of P1,000 from B?
a. Yes, if there was s@pula@on to that eaect
b. Yes, even though there was no s@pula@on
c. No, any s@pula@on allowing recovery is void
d. No, if there was no s@pula@on to that eaect

27. M execute a promissory note for P10,000,000 payable to the order of P. M and P had a private understanding that M is
liable only for the discounted amount of P9,500,000. P indorsed the note to A, A to B, B to C, C to D and D to H, holder. As
a result
a. M may refuse to pay H if P is a minor
b. If M dishonors the note, A may refuse to pay H on the ground that A is a remote party
c. The indorsement made by P passed @tle to the instrument in favour of A even if P is a minor
d. M is liable to H for P9,500,000 since that was the amount that he agreed with P that he should pay

28. A pledged his ring to B for P20,000 A failed to pay his obliga@on. B sold it at a public auc@on for P18,000. Can B recover
the deBciency?
a. Yes, even without s@pula@on
b. Yes, if there is s@pula@on
c. No, even if there is s@pula@on
d. No, unless there is s@pula@on

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29. Using the above data, if the sale is P22,000. Can A recover the excess?
a. Yes, even without is s@pula@on
b. Yes, if there is s@pula@on
c. No, even if there s@pula@on
d. No, if there s@pula@on

30. C mortgaged his car to B for P200,000. C failed to pay his obliga@on. B sold it at a public auc@on for P180,000. Can B
recover the deBciency?
a. Yes, even without is s@pula@on
b. Yes, only if there is s@pula@on
c. No, even if there s@pula@on
d. No, if there s@pula@on

31. Using the above data, if the sale is for P220,000, can C recover the excess?
a. Yes, even without s@pula@on
b. Yes, only if there is s@pula@on
c. No, even if there is s@pula@on
d. No, unless there is s@pula@on

32. Any director of a corpora@on may be removed from o[ce by a vote of

a. Majority of the members of the board
b. Majority of the outstanding capital stock en@tled to vote
c. 2/3 of the stockholders of vo@ng and non-vo@ng shares
d. 2/3 of the outstanding capital stock en@tled to vote

33. When by-laws are adopted and Bled prior to incorpora@on, which of the following is correct?
a. Approved and signed by all the incorporators
b. Approved by the stockholders represen@ng at least 2/3 of the outstanding capital stock
c. Approved by the stockholders represen@ng at least a majority of the outstanding capital stock
d. Approved and signed by at least 2/3 of the incorpora@on

34. When by law are adopted and Bled aAer the incorpora@on, which of the following is correct?
a. Submi]ed within one month aAer the Blling of the ar@cles of incorpora@on with SEC
b. Approved and signed by at least a majority of the incorporators
c. Approved by the stockholders represen@ng at least 2/3 of the outstanding capital stock
d. Approved by the stockholders represen@ng at least a majority of the outstanding capital stock

35. I. A corpora@on commences to have a juridical personality upon the execu@on of the Ar@cles of Incorpora@on unless a
diaerent date is set by the incorporators.

II. A partnership begins from the moment of the execu@on of the partnership contract unless a diaerent date is set by
the partners.

a. True, true
b. True, false
c. False, true
d. False, false

36. If par value shares are now treasury shares, the following rules are applicable, except one. The excep@on is
a. They shall have no vo@ng rights as long as they remain in the treasury
b. They are not en@tled to dividends
c. They may again be disposed of for a reasonable price even below par
d. They are not part of subscribed stock and not considered as outstanding shares

37. The members of the board of directors may be given compensa@on by any of the following acts, except
a. If approved by the vote of the stockholders represen@ng majority of the outstanding capital stock
b. If provided in the by-laws
c. If approved by the board of directors if the salary given is not more than ten percent (10%) of the not income
before income tax during the preceding year
d. If approved by the board of directors giving them a reasonable per diem

38. The ra@Bca@on of director’s or trustee’s contract with the corpora@on requires the vote of

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a. Majority of outstanding capital stock of vo@ng shares or majority of the members en@tled to vote
b. 2/3 of outstanding capital stock of vo@ng shares or 2/3 of the members en@tled to vote
c. Majority of outstanding capital stock of vo@ng and non-vo@ng shares or majority of all the members
d. 2/3 of outstanding capital stock of vo@ng and non-vo@ng shares or 2/3 of all the members

39. Subscrip@on as dis@nguished from purchase of stock

a. Maybe made before or aAer the incorpora@on
b. Governed by the Statute of Frauds if the price is at least P500,00
c. Can vote only on the shares he has paid
d. Does not become a shareholder un@l he has paid the purchase price

40. The by-laws as dis@nguished from the ar@cles of incorpora@on

a. Submi]ed to the SEC before the issuance of cer@Bcate of incorpora@on
b. A condi@on precedent in the acquisi@on by a corpora@on of a juridical personality
c. The amendment may no longer require ra@Bca@on if delegated by the stockholders to the board of directors
d. Majority of the outstanding capital stock of vo@ng shares is required for its ra@Bca@on

41. Which of the following is subject to VAT?

a. Sale of residen@al lot valued at P2,000,000
b. Sale of residen@al house and lot valued at P2,500,000
c. Lease of residen@al units with a monthly rental per unit of P10,000 where the aggregate rentals received during
the year was P2,500,000
d. Lease of residen@al units with a monthly rental per unit of P12,000 where the aggregate rentals received during
the year was P1,500,000

42. The gross receipt of A, a lessor, from his residen@al units for the year, show:
Monthly Rent/Unit No. of Units Total
Php 9,000 5 Php 540,000
Php 10,000 5 600,000
Php 11,000 5 660,000
Php 12,000 5 720,000
The output vat is
a. P165,600
b. P302,400
c. P237,600
d. P0

43. This miller is subject to VAT on sale of services if he is engaged in milling for others
a. Palay into rice
b. Wheat into rour
c. Corn into grits
d. Sugar cane into raw sugar

44. For VAT purposes, the following transac@ons shall be “deemed sale”, except
a. Transfer, use or consump@on in the course of business of goods or proper@es originally intended for sale or for
use in the course of business
b. Property dividends which cons@tute stock in trade or proper@es primarily held for sale or lease declared out of
retained earnings
c. Distribu@on or transfer of goods to creditors in payment of debt or obliga@on
d. Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned

45. Which of the following is not a power vested in the Bureau of Internal Revenue?
a. The assessment and collec@on of all na@onal internal revenue taxes, fees and charges
b. The enforcement of all forfeitures, penal@es and Bnes
c. The gran@ng of tax exemp@on and other tax incen@ves to taxpayer
d. The execu@on of judgement in all cases decided in its favor by the Court of Tax Appeal and the ordinary courts

46. The seizure by the government of real property to enforce the payment of taxes to be followed by its public sale if the
taxes are not voluntarily paid
a. Delinquency
b. DeBciency
c. Levy

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d. Distraint

47. On April 15, 2010, A Bled his income tax return for his 2009 income and paid the tax due thereon. In 2011, A discovered
that he made an overpayment in his income tax return. He Bled a wri]en claim for refund of tax erroneously with the CIR
on October 1, 2011. On April 14, 2012, without receiving a decision on his claim for refund, A Bled in the CTA a pe@@on for
review on his claim for refund of tax erroneously collected. Which of the following is correct?
a. The CTA did not acquire jurisdic@on over the pe@@on for review because the appeal is premature, there being no
decision yet on said claim for refund
b. The CTA’s jurisdic@on is to review by appeal decisions of the BIR Commissioner so if there is no decision, there is
nothing to review
c. The CTA acquired jurisdic@on over the pe@@on since it is the right of a taxpayer to go to the CTA with or without
decision rendered by the BIR Commissioner
d. The CTA acquired jurisdic@on over the pe@@on as the peremptory period of 2 years within which a claim for
refund is about to expire and the failure of the CIR to act on the claim is tantamount to denial of the claim

48. Which one of the following is not allowed with presump@ve input tax
a. Those engaged in the manufacturing of reBned sugar
b. Those engaged in manufacturing packed noodle based instant meals
c. Those engaged in the processing of canned products
d. Those engaged in pasteurizing milk

49. DEF Corpora@on, due to Bnancial incapacity requested that it be allowed to pay its income tax liability per return for
calendar year 2010, amoun@ng to P1 million in four(4) equal monthly instalments star@ng April 15, 2011. Its request has
been duly approved. The tax due for the second instalment on May 15, 2011 is
a. P250,000
b. P254,167
c. P262,500
d. P300,000

50. A Bled his income tax return for calendar year 2010 on March 20, 2011. When is the last day for the BIR to collect,
assuming A did not pay the tax due upon Bling?
a. March 20, 2014
b. April 15, 2014
c. April 15, 2016
d. March 20, 2015

51. A insured his life for P10M. in case A dies, the proceeds of the life insurance shall be:
a. Excluded from gross estate if the beneBciary is the estate, executor or administrator whether revocable or
irrevocable
b. Part of gross income if the beneBciary is a third person and the designa@on is revocable
c. Part of the gross estate if the beneBciary is a third person and the designa@on is irrevocable
d. Excluded from gross income whether beneBciary is revocable or irrevocable

52. ABC Corpora@on has the following sales during the month:
a. Sale to private en@@es subject to 12% vat Php 1,000,000
b. Sale to private en@@es subject to 0% vat 1,000,000
c. Sale to the government subjected to 5% Bnal withholding vat 1,000,000
d. Sale of goods exempt from vat 1,000,000
The following input taxes were passed on by its vat suppliers:
i. On taxable goods (12%) Php 50,000
ii. On zero rated sales 30,000
iii. On sale to the government 40,000
iv. On depreciable capital goods not a]ributable
to any speciBc ac@vity (monthly amor@za@on) 20,000
The unrecoverable input vat which maybe recognized as cost or expense
a. P70,000
b. P160,000
c. P20,000
d. P90,000
53. Using the above data, the input vat which maybe refunded
a. P30,000
b. P50,000

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c. P80,000
d. P60,000
54. The total creditable input vat
a. P100,000
b. P180,000
c. P250,000
d. P170,000

55. A acquired his residen@al land in 2000 at a cost of P1,000,000. He sold the property on January 1, 2011 with a fair market
value of P5,000,000 for a considera@on of P4,000,000. Within 18 months, he purchased his new principal residence at a
cost of P7,000,000. How much is the capital gain tax?
a. P300,000
b. P240,000
c. P75,000
d. P0

56. Using the same data, except that A acquired his new principal residence at a cost of P3,000,000. How much is the capital
gain tax?
a. P300,000
b. P240,000
c. P75,000
d. P0

57. A Bled his ITR for 2010 on April 15, 2011 and will pay his tax liability in instalment. The return shows an income tax due of
P100,000 and income tax withheld of P60,000. If A pays the 2 nd instalment only on October 15,2011, the amount to be
paid (excluding compromise penalty) is
a. P26,000
b. P35,000
c. P55,000
d. P37,500

58. A sold his piano, a capital asset which he purchased in 1997 at a cost of P50,000. The term of sale show:
Downpayment - January 15, 2010 ---------- P20,000
Installment payment - February 15, 2010 ---------- 20,000
- February 15, 2011 ---------- 40,000
- February 15, 2012 ---------- 40,000
A will report a taxable gain on above sales in 2010 of
a. P11,667
b. P23,333
c. P35,000
d. P70,000
59. ABC Corpora@on engage in freight and trucking business received the following in 2010
Share in net income of the joint venture with XYZ Corp. P900,000
Dividend received from KLM Corp., a domes@c Corp. 18,000
Dividend received from NOP Corp., a Non-resident foreign Corp. 10,000
Own net income 1,200,000
The net taxable income of ABC Corp. is
a. P1,210,000
b. P2,110,000
c. P2,210,000
d. P1,200,000
60. The total amount of income of ABC Corpora@on subject to Bnal tax is
a. P1,020,000
b. P1,000,000
c. P1,018,000
d. P0
61. Which of the following is taxable on income from within and without the Philippines?
a. Jus@n Bigger, a Canadian ci@zen, who stayed in the Philippines for 181 days
b. Taylor Sweep, an American ci@zen, married to Dan Lloyd Cruz, a resident ci@zen. She had been living in manila
since 1999
c. Dan Delacruz, a na@ve of Milan, Italy, now a naturalized Filipino ci@zen and living in Quezon City since 2000

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d. Dingdan Dantes, a Filipino ci@zen born in Sampaloc Manila but working as overseas contract worker in Malaga,
Spain
62. Which of the following is taxable only on estate from within the Philippines?
a. Manny Pasyal, a Filipino overseas contract worker residing in Saudi Arabia
b. Antonio Barreta, a Mexican, married to a Filipina and living in Puerto Rico since 2005
c. Yao Ming Soo, a Taiwanese, now a naturalized Filipino ci@zen and living in Japan since 2002
d. Oscar dela Hoy, an Italian professional boxer residing in the Philippines

63. The export sales amoun@ng to Php 2,000,000 of a non-vat enterprise is

a. Exempt from vat
b. Subject to 0% vat
c. Subject to 12% vat
d. Subject to percentage tax

64. The gross estate of A includes P80,000 receivable which is duly notarized from debtor B whose records shows:
a. Assets P100,000
b. Indebtedness to:
i. Government by way of taxes 40,000
ii. A 80,000

iii. Other creditors 20,000

The deduc@ble claims against insolvent person is
a. P80,000
b. P29,285
c. P48,000
d. P32,000
65. Which of the following is subject to vat?
a. Sale of passenger or cargo vessels and aircraA for domes@c or interna@onal transport opera@ons
b. Sale of agricultural and marine food products in their original state
c. Sales by agricultural coopera@ves duly registered with the Coopera@ve Development Authority
d. Sale of fuel, goods and supplies by person engaged in interna@onal shipping or air transport opera@ons

66. Statement 1 – Born of a poor family in 1963, A worked his way through college. AAer working for 20 years, A decided to
re@re in 2011 and avail of the beneBts under a very reasonable re@rement plan maintained by his employers for those
who have rendered con@nuous service for at least 20 years. A received P1M as re@rement beneBts.
Statement 2 – Mrs. B, wife of a deceased employee received Bnancial beneBts voluntarily voted upon by the Board of
Directors of the employer company in recogni@on of her husband’s long,loyal and dedicated service and primarily to help
her meet Bnancial needs.
a. Both statement are subject to income tax
b. Both statement are exempt from income tax
c. Only statement 1 is a taxable income
d. Only statement 2 is a taxable income

67. XYZ corpora@on Bled its income tax return and paid the tax due for calendar year 2008 showing a tax liability of P175,000.
However, upon audit, it was discovered that its income tax return was false or fraudulent because it did not report other
taxable income. Per inves@ga@on the correct income tax due is P350,000. The corpora@on was duly informed of this
Bnding through preliminary assessment no@ce. Failing to protest on @me against the preliminary assessment no@ce, a
formal le]er of demand and assessment no@ce was issued on May 31, 2010 calling for payment of the deBciency income
tax on or before July 15, 2010. The amount due on July 15, 2010 is
a. P306,250 b. P437,500 c. P240,625 d. P612,500

68. ABC Corp. concluded its eight year of opera@on. Its Bscal year ended June 30, 2009. The net income from July 1, 2008 to
June 30, 2009 amounted P1M. The gross income for the same period is P20M. The income tax due for the taxable period
is
a. P350,000 b.P300,000 c. P325,000 d. P400,000

69. Using the above data, but the ninth year of opera@on from July 1, 2009 to June 30, 2010 shows a new income of P1.2M
and gross income of P15M. The tax due for the period is
a. P360,000 b. P310,000 c. P260,000 d. P285,000

70. This is not a purpose of taxa@on

a. To expropriate property for the promo@on of the general welfare

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b. To reduce inequali@es of wealth

c. As protec@ve taria in imported goods to protect local producers against foreign compe@@on
d. To encourage the growth of home industries through the proper use of tax incen@ves
71. During 2010, the total net amount paid for the salaries and wages amounted to P9,000,000 aAer eaec@ng the following
deduc@ons for emplyees:
SSS premiums contribu@ons P420,000
Philhealth premiums contribu@ons 100,000
PAG-IBIG premiums contribu@ons 180,000
Creditable withholding tax 300,000
In addi@on, the corpora@on provides its vice-president for opear@ons P340,000 cash as fringe beneBt. The allowable
deduc@on for salaries and beneBts is
a. P9,340,000
b. P10,500,000
c. P10,340,000
d. P10,000,000

72. ABC, a domes@c corpora@on had a net income from business opera@ons of P200,000 before considering capital gain of
P1,000,000 on a sale of land to the Na@onal Government of the Philippines (selling price P6M, FMV is P7M and cost of
P5M). Using the best alterna@ve available to minimize taxes, how much the total tax liability for the year 2010?
a. P420,000
b. P360,000
c. P480,000
d. P120,000

73. Which of the following statement is not correct?

a. When a compulsory heir is given by will less than his legi@me, the provision of the will should modiBed in such a
way that he will receive his legi@me
b. The CIR may examine the bank deposit of a decedent for the purpose of determining his gross estate even if the
estate did not request for a compromise on the ground of Bnancial incapacity
c. The P500,000 standard deduc@on for medical expenses for estate tax purposes is a legal mechanism further
exempt the less privileged estate and heirs from tax burden
d. The sharing of heirs in testamentary succession must sa@sfy the rules on legi@me

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ANSWERS: (September 17, 2011)

1. A 20. B 39. A 58. C

2. B 21. C 40. C 59. A
3. D 22. C 41. A 60. D
4. A 23. D 42. D 61. C
5. C 24. B 43. B 62. D
6. D 25. C 44. A 63. A
7. D 26. B 45. C 64. D
8. D 27. C 46. C 65. D
9. C 28. C 47. D 66. C
10. A 29. B 48. C 67. A
11. D 30. A 49. C 68. D
12. B 31. A 50. B 69. D
13. D 32. D 51. D 70. A
14. D 33. A 52. D 71. B
15. D 34. D 53. C 72. B
16. D 35. C 54. B 73. C
17. B 36. D 55. A
18. C 37. C 56. A
19. A 38. B 57. C

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