12 Which of the following statements is incorrect?

“Joint Stock Companies" are constituted

when a group of individuals, acting jointly, establish and operate business enterprise
a. Under an artificial name.
b. With an invested capital divided into transferable shares.
c. An elected board of directors, and other corporate characteristics..
d. Operating with formal government authority.

❖ Answer: D

13. A “Joint Account” is constituted when one interests himself in the business of another by/and
I. Contributing capital thereto.
II. Sharing in the profits or losses in the proportion agreed upon.
III. They are not subject to any formality.
IV. It may be privately contracted orally or in writing.
a. I and II only c. I, II, III and IV
b. I, II and III only d. None of the above

❖ Answer: C

14. Statement 1: Joint ventures, regardless of the purpose by they were created, are generally exempt
from corporate income tax.
Statement 2: The share of a co-venturer corporation in the net income of tax exempt joint venture or
consortium is subject to corporate income tax.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

❖ Answer: B

DC, RFC and NRFC

15. Which of the following statements is correct?

I. The term “domestic", when applied to a corporation, means created or organized in the Philippines or
under the laws of a foreign country as long as it maintains a Philippine branch.
A corporation which is not domestic may be a resident (engaged in business in the
R 1 °r nonresident corporation (not engaged in business in the Philippines). en corporations are subject
to income tax based on net income from sources within the Philippines.

II
.
 a. I only c.
b. II only c. II and II only
d. I, II and III

Answer: C
LJ A DC is a corporation organized under Philippine laws.

16. Statement 1: Non-resident foreign corporation applies to a foreign corporation engaged in trade
or business within the Philippines.
Statement 2: Resident foreign corporation applies to a foreign corporation not engaged in trade
or business in the Philippines.
a. Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

❖ Answer: A

• 17. Which of the following is taxable based on income from all sources, within and without?
a. Domestic Corporations
b. Resident Foreign Corporations
c. Non-resident Foreign Corporations
d. All of the choices

❖ Answer: A

18. The term applies to a foreign corporation engaged in trade or business in the Philippines.
a. Resident foreign corporation
b. Nonresident foreign corporation
c. Multinational corporation
d. Petroleum contractor

❖ Answer: A

19. Which of the following does not have the benefit of claiming deductions in computing income tax?
a. Domestic Corporations
b. Resident Foreign Corporations
c. Non-resident Foreign Corporations
d. All of the choices
❖ Answer: C