BUSINESS LAW 1. (P71 4) It is a wrong committed without any pre-existing relations between the parties. a. Natural Obligation b.

. Quasi-delict c. Quasi-contract d. Crime

2. (P78 36) The money or currency which the debtor may compel the creditor to accept in payment of a debt, whether public or private, is known as: a. Notes payable to order document b. legal tender c. bill of exchange d. mercantile

3. (P78 40) Consignation alone without any tender of payment is sufficient in the following cases, except: a. When the creditor is absent or unknown or does not appear at the place of payment. b. When the creditor presents the title to the obligation for collection. c. When without just cause, the creditor refuses to give a receipt. d. When two or more persons claim the same right to collect. 4. (P86 68) An obligation where various prestations are due but the performance of all of them is required in order to extinguish the obligation is known as: a. Alternative obligation b. facultative obligation d.simple obligation c. conjunctive obligation

5. (P87 72) On June 1, 2010, Demetrio obtained a loan of P100,000.00 from Cornelio. The loan, which is payable on or before June 1, 2011, is secured by a chattel mortgage on Demetrios brand-new Toyota car with plate number XYZ123. On February 1, 2011, while Demetrio was opening the trunk of his car at the parking lot of a grocery store to place the groceries he had just purchased, three unidentified men approached him and took his car at gunpoint. He reported the carnapping to the authorities but his car has not been recovered. a. Cornelio may demand immediate payment of the loan unless Demetrio gives another security therefor. b. Cornelio may demand payment only on June 1, 2004 because Demetrio has the benefit of the period and the loss of the car was due to force majeure. c. Cornelio may no longer demand payment since the loan was extinguished by reason of the loss of the car due to fortuitious event. d. Cornelio may demand immediate payment even if Demetrio offers another security because the car is determinate and could not be replaced. 6. (P94 96) The delivery of mercantile documents such as checks will produce the effect of payment: a. When through the fault of the creditor they have been impaired. b. Upon delivery of the mercantile document. c. When they are certified by the bank. d. When they are presented to the bank for payment.

7. (P95 100) Alternative obligation and facultative obligation are similar in which of the following respects? a. The right of choice may be given either to the debtor or creditor. b. Several prestations are due. c. Only one prestation is due but the debtor may render another in substitution. d. The obligation becomes a simple obligation once the choice of the prestation is made and communicated. 8. (P102 124) A, B and C are liable in solidum to X for P12,000.00. X renounced the share of A who accepted it. Later, B becomes insolvent. a. X can collect from C P8,000.00 b. X can collect from C P4,000.00 c. X can collect from C P12,000.00 d. X can collect nothing from C

9. (P103 128) D has a grains warehouse in Davao, while C has a grains warehouse in Cebu. D borrowed 10 sacks of rice worth P10,000.00 from C for Ds customer in Cebu. Later, C borrowed 10 sacks of rice which was also worth P10,000.00 from D for Cs customer in Davao. Both the obligations are already due. Transport costs to Davao amount to P1,000.00, while those for Cebu amounts to P800.00. a. D and C need not pay each other since their debts compensated each other. b. D and C need not pay each other since their debts compensated each other, except for the delivery charges which C must pay to D in the amount of P200.00 (P1,000.00 less P800.00). c. Compensation cannot take place because the debts are payable at different places. d. D must pay C P10,800.00, while C must pay D P11,000.00. 10.(P110 2) A person criminally liable is also civilly liable. True or False? 11.(P110 6) If the debtor fails to perform an obligation to do, the creditor may compel the debtor to comply with the obligations. True or False? 12.(P111 10) A waiver of an action for future fraud is valid. True or False? 13.(P111 14) An obligation subject to a resolutory condition is demandable at once. True or False? 14.(P111 18) The condition not to do an impossible thing shall be considered as not having been agreed upon in such a case, the obligation is immediately demandable. True or False? 15.(P111 22) A thing, although it still physically exists, may be considered lost if it goes out of commerce. True or False? 16.(P158 3) The elements of a contract without which a contract would not exist are known as: a. Accidental elements elements. b. natural elementsc. special elements d. essential

17.(P159 7) Elements that accompany certain contracts unless set aside or suppressed by the parties are known as: a. Natural elements original elements b. accidental elements c. essential elements d.

18.(P166 39) It is present when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants, and ascendants, to give his consent. a. Violence b. physical coercion c. intimidation d. mistake

19.(P167 43) Abulencia, who knew that his ring was embellished with glass, told Banzon that the embellishment was emerald. Banzon, who knew that his watch was gold-plated, told Abulencia that it was made of pure gold. Banzon, believing that Abulencias ring was embellished with emerald, and Abulencia, believing that Banzons watch was made of pure gold, then entered into a contract whereby they exchanged their respective articles. A week later, Banzon discovered that the ring was adorned only with an ordinary glass. a. The contract may be annulled at the instance of Banzon since he discovered the fraud. b. The contract may be annulled at the instance of Abulencia since Banzon also employed fraud. c. The contract is void because of the bad faith of both parties: hence, it shall not produce any effect. d. Neither party may ask for annulment since both are guilty of fraud. The contract, therefore, is valid.

20.(P175 71) The Statute of Frauds applies only to: a. Wholly executed contracts. b. Contracts wholly or partially executed on the part of the debtor. c. Contracts wholly or partially executed on the part of the creditor. d. Wholly executory contracts. 21.(P182 95) W, a woman, agreed to live with H, a man, as the wife of H without the benefit of marriage in exchange for the monthly support of P10,000.00 that H would give to W. Both H and W are single, of legal age, and there is no legal impediment for them to get married. Their parents have no objections to the two getting married. Based on the foregoing information, which of the following statement is true? a. The agreement between H and W is valid because they can legally get married if they want to. b. The agreement between H and W is void for being contrary to morals. c. H may legally demand that W live with him as his wife.

d. W may legally demand that H give her the monthly support of P10,000.00 that he had promised. 22.(P190 123) On January 1, 2010, Berroya bought a parcel of land from Salustiano who was insane. The deed of sale was duly acknowledged before a notary public. Six months after the sale, Berroya realized that he needed a larger area on which to construct a commercial building. At about the same time, Salustiano who had been undergoing psychiatric treatment was declared of sound mind by his neurologist. Should a court action be filed today: a. Berroya may successfully prosecute a court action to annul the contract on the ground of Salustianos insanity. b. Salustiano may successfully prosecute a court action to annul the contract on the ground of his insanity. c. Neither Berroya nor Salustiano may successfully prosecute a court action to annul the contract. d. Berroya may successfully prosecute a court action to annul the contract on the ground of mistake as to the area of the parcel of land. 23.(P199 2) A contract entered into in the name of another without authority is unenforceable against the latter. True or False? 24.(P199 6) An offer made through an agent is accepted from the time acceptance is communicated to the principal by the agent. True or False? 25.(P199 10) A simple mistake in the computation in a contract will render the contract voidable. True or False? 26.(P199 14) Violence or intimidation employed by a third person upon a contracting party does not vitiate consent. True or False? 27.(P286 7) One of the following is not a requisite of the object of a contract of sale. Which is it? a. It must be within the commerce of men. b. It must be licit. c. It must be determinate or determinable. d. Vendor must have the right to transfer the ownership of the thing at the time of sale. 28.(P287 11) San Manuel Corporation, which maintains a professional basketball team, entered into a contract with Armstrong Rubber Company for the latter to provide a pair of rubber shoes to the formers two imported basketball players, Charles Jordan and Michael Barkley. Armstrong Rubber Company was instructed to make a pair for either or both players in case the company did not manufacture shoes of their size. No pair was, however, immediately available for both the players. Charles Jordan, who is 65 tall and wears size 12 rubber shoes, was given a pair the following day from the 300 pairs that Armstrong was in the process of manufacturing for its customers at the time the orders were received. Michael Barkley, who is 7 tall and wears size 18 shoes, was provided three days later, with a pair that was specially made for him since Armstrong does not make shoes of his size. What kind of contracts were entered into for the shoes provided to the two basketball players? a. The contract for the pair of shoes provided to Charles Jordan is a contract for a piece of work, while that for Michael Barkley is a contract of sale.

b. The contract for the pair of shoes provided to Charles Jordan is a contract of sale, while that for Michael Barkley is a contract for a piece of work. c. Both contracts are contract of sale. d. Both contracts are contract for a piece of work. 29.(P294 35) Sison sold a registered piece of land to Bautista on May 1, 2010 in a public instrument. On May 3, 2010, Sison sold in a private instrument the same piece of land to Cruz, who took physical possession of the land. Neither buyers was aware of the sale made to the other. Assume that on May 5, 2010, Sison sold the land in a public instrument to Domingo who was not aware of the two previous sales. Domingo then registered the sale with the Register of Deeds. a. The land belongs to Bautista. b. The land belongs to Cruz. c. The land belongs to Domingo. d. The land will be equally divided among the three buyers. 30.(P295 39) This refers to an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner. a. Easement or servitude b. Real estate mortgage mortgage. c. Pledge d. Chattel

31.(P302 67) One of the distinctions between option money and earnest money is that earnest money is : a. The consideration paid for the purpose of holding one to his promise to buy or sell a determinate thing for a certain period of time. b. Not part of the purchase price c. Proof of the perfection of the contract of sale d. Paid before the perfection of the contract of sale 32.(P303 71) A and B are co-owners of a rural lot not exceeding 1 hectare. The lot is surrounded on its four sides as follows: on the North, by the road; on the East, by the lot of X consisting of 2 hectares; on the South, by the lot of Y consisting of 2 hectares; and on the West, be Zs lot consisting 2 hectares. A sells his undivided interest in the agricultural lot to T, who owns several hectares of rural land in the area. Who has the right of legal redemption over the undivided interest in the lot sold by A to T? a. B b. X c. Y d. Z

33.(P310 95) The unpaid seller, in addition to his right to retain the goods while he is in possession of them, has the following rights, except: a. The right of stoppage in transit. b. The right to resell the good. c. The right to rescind the sale d. The right to bid when the goods are resold. 34.(P358 21) D borrowed P50,000.00 from C. The obligation bears interest of 10% per annum. To secure the debt, D agreed with C that the fruits from the agricultural lot of

D shall answer for the interest and the principal obligation. Assuming the form required by law was complied with, the contract entered into between D and C for the application of the fruits of the lot to the interest and principal obligation is known as: a. Antichresis b. pledge c. real estate mortgage d. chattel mortgage

35.(P359 25) D pledged his computer to secure a loan which he obtained from C. The debt which amounts to P10,000.00 is due after 60 days. Before the due date, C executed an instrument abandoning the pledge. I. II. III. IV. Ds debt of P10,000.00 is extinguished. The pledge of the computer is extinguished even if D has not yet accepted the renunciation of the pledge. The pledge is not extinguished until C returns the ring to D. The pledge is extinguished even if C has not returned the ring to C.

Based on the foregoing, which is false among the four statements? a. I and III Items 36 - 40 Chattel mortgage Mortgator Conventional Pledge Pledgee Indivisibility Pledge b. II and IV c. I and II d. II and III

36.(P366 3) A mortgage constituted upon a movable property to secure an obligation. 37.(P366 7) A pledge created by the agreement of the parties. 38.(P366 11) The character of pledge or mortgage whereby a lien is created on the property pledged or mortgaged, which lien continues until the obligation it secures has been fully paid. 39.(P366 15) The party who constitutes a security upon a movable or immovable property but without delivering the property. 40.(P366 19) The party who receives a movable property from another to secure the latters debt or that of another. 41.(P398 9) P; the owner of a certain car, wanted to sell the car. A learned that P was selling the car. Without the authority of P, A sold the car in his (As) name to B. What is the status of the sale of the car? a. Valid between A and B but A must be able to transfer the ownership of the car to B at the time of delivery. b. Unenforceable against P because he did not authorize A to sell the car. c. Void because A was not the owner of the car at the time of sale. d. Voidable because the sale was without the consent of P. 42.(P407 33) A, a duly authorized agent of P, wrote a letter to X on March 1, 2010 offering to sell Ps only Mercedes Benz car for P200,000.00 cash. On March 3, 2010, X wrote a letter to A stating that he accepted all the terms of the offer, which letter was received by A on March 5, 2010. Before A could relay such acceptance to P, P died in a vehicular accident on March 6, 2010.

a. The contract was not perfected because P, the real party to the sale, died before the acceptance came to his knowledge. b. The contract was perfected on March 1, 2010. c. The contract was perfected on March 3, 2010. d. The contract was perfected on March 5, 2010. 43.(P414-3) The right to vote during elections for a public office may be delegated by a person to his agent since it is a right that the principal may lawfully do. True of False? 44.(P415 7) Payments made by the agent, whether or not they are considered as acts of administration, require only a general power of attorney from the principal. True or False? 45.(P415 11) If an agent acts with the authority of the principal but in his (agents) own name, the third person with whom the agent had contracted shall have no right of action against the principal unless the contract involves things belonging to the principal. True or False? 46.(P415 15) A stipulation between the agent and the principal that the agent need not render an accounting of his transaction is valid. True or False? 47.(P479 1) A contract where two or more persons bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves. a. Voluntary association b. corporation proprietorship c. partnership d. sole

48.(P486 25) Assuming that no fraud is committed by or consented to by the partner concerned, which of the following statements is false? a. Notice to any partner relating to partnership affairs while already a partner is notice to the partnership. b. Knowledge of a partner acting on the particular matter acquired by him while already a partner is knowledge of the partnership. c. Knowledge of a partner acting on the particular matter obtained by him before he became a partner is knowledge of the partnership provided he still remembers the same. d. Knowledge of partner not acting on the particular matter obtained by him before he became a partner is knowledge of the partnership. 49.(P487- 29) Three of the following will cause the automatic dissolution of a general partnership. Which one will not? a. When any event makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership. b. Expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the parties. c. A partner becomes in any way incapable of performing his part of the partnership contract. d. The insolvency of a partner or of the partnership.

50.(P497 53) Great Company, a partnership engaged in the distribution of generators, is composed of George, Roland, Edmond, Albert and Troy. George is the managing partner. During the month of April, the following transactions were entered into by the following partners in behalf of the partnership without any authority: I. The sale of a generator by Roland to Juan Torres who was not aware that Roland had no authority. Juan Torres has paid for the generator which is due for delivery. The purchase of a car by Edmond from Lexus Motors whose owner was not aware of Edmonds lack of authority. The car and the price are due for delivery and payment, respectively.

II.

Based on the foregoing, the partnership is bound by: a. Transaction I only b. Transaction II only c. Both transactions I and II d. Neither of transaction I nor II 51.(P502 25) A general partnership is automatically dissolved by reason of the insanity of a partner. True or False? 52.(P502 29) As a rule, a limited partner shall be liable as a general partner if he allows the use of his surname to be included in the partnership name. True or False? 53.(P598 27) Which of the following statements pertaining to non-stock corporations is incorrect? a. Members may vote by mail b. The number of trustees may be more than 15 c. Any incidental income that it may earn may be distributed as dividends to its members. d. The meetings of members may be held outside the city or municipality where the principal office of the corporation is located. 54.(P606 51) How many shares are needed to elect 3 directors and assure each of them a seat in the board of directors assuming that the articles of incorporation provide 11 directors and the corporation has 5,000 shares outstanding and entitled to vote? a. 1,251 shares b. 5,000 shares c. 1,667 shares d. 1,364 shares

55.(P607 55)The articles of incorporation of Power Corporation provide for 15 directors. For the year 2010, only 5 meetings of the board of directors were convened because of the difficulty in mustering a quorum. In view thereof, some transactions of the corporation which required board approval did not materialize resulting in lost profits. In preparation for the annual meeting of stockholders, the following were considered by the board of directors as possible solutions for approval of the stockholders: I. Amending the by-laws reducing the quorum to 6 directors.

II.

Providing a by-law for the creation of an executive committee consisting of 5 members of the board of directors to act on matters that may be delegated to it by the board. Providing a by-law allowing directors to send representatives during the board meeting provided that the representative is given a special power of attorney Amending the articles of incorporation reducing the number of directors from 15 to 7 effective the expiration of the term of the incumbent directors.

III.

IV.

Which of the above proposed solutions may you validly recommend for submission to the stockholders? a. I or III b. II or IV c. I or IV d. II or III

56.(P726 13) One of the following can set up the defense of forgery in an instrument payable to order. Who is it? a. An indorser, if the makers signature is forged. b. The acceptor, if the drawers signature is forged. c. A person negotiating by mere delivery if a prior parys signature is forged. d. The maker, if an indorsers signature is forged. 57.(P727 17) In order that a person may be held liable as an accommodation party, the following requisites must concur, except: a. He has signed the instrument as maker, drawer, acceptor or indorser. b. He has not received any value for such making, drawing, accepting or indorsing the instrument. c. His purpose of signing the instrument is to lend his name or credit to some other person. d. The holder must have no knowledge that such person signed the instrument as an accommodation party. 58.(P735 41) The following instrument were presented to you for evaluation: I. Pay to the order of Pablo Patricio P20,000.00 in goods which are displayed at your store. Pay to the order of Pablo Patricio P20,000.00 or deliver to him a computer of the same value at his option,

II.

Assuming all the other requisites of negotiability are present: a. Both instruments are negotiable b. Both instruments are not negotiable c. Instrument I is negotiable; instrument II is not negotiable d. Instrument I is not negotiable; instrument II is negotiable 59.(P743 65) On August 1, 2003, M executed a promissory note for P50,000.00 payable to the order of P which is payable 30 days after date. Thereafter, P

indorsed the note to A, A to B, B to C, C to D and D to M. The indorsement by D to M was made on August 29.2003. a. The obligation on the note was extinguished by merger or confusion on August 29,2003 b. M may reissue/renegotiate the promissory note after it was indorsed to him. c. M can go after P, A, B, C and D to collect d. M may strike out the indorsement to him by D. 60.(P750 34) If an instrument stamped with the words no sufficient funds is negotiated, the holder will no longer be considered a holder in due course. True or False? 61.(P750 38) If a holder has received notice of any defect or infirmity of the instrument before he has paid the full amount agreed to be paid therefor, he well be deemed a holder in due course only to the extent of the amount paid by him. True or False? 62.(P750 42) Joint payees or joint indorsees are deemed to indorse jointly and severally. True or False? 63.(P750 46) An absolute and unconditional renunciation made by the holder before, at or after maturity in favor of the principal debtor discharges the instrument. True or False? 64.(P751 50) The drawer of a bill of exchange need not have funds with the drawee except in the case of a check. True or False? TAXATION 1. (P1-4 , 12)Which of the following is not a scheme of shifting the incidence of taxation? a. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the goods sold b. The purchaser asks for a discount or refuse to buy at regular prices unless it is reduced by the amount equal to the tax he will pay c. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that the title passes abroad instead of the Philippines d. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer and finally to the consumer. 2. (P1-5, 16) Which of the following statements is not correct? a. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation. b. The property of an educational institution operated by a religious order is exempt from property tax, but its income is subject to income tax c. The prohibition of delegation by the state of the power of taxation will still allow the Bureau of Internal Revenue to modify the rules on time for filing of returns and payment of taxes.

d. The power of taxation is shared by the legislative and executive departments of government. 3. (P1-12, 36) Which statement is wrong? The tax should be based on the tax-payers ability to pay. a. As a basic principle of taxation, this is called theoretical justice. b. As a theory of taxation, this is called ability-to-pay-theory c. No person shall be imprisoned for non-payment of a tax d. A graduated tax table is in consonance with this rule. 4. (P1-13, 40) Under the basic principle of a sound tax system, the Government should not incure a deficit: a. Theoretical justice b. Administrative feasibility c. Fiscal Adequacy d. None

5. (P2-7, 15) Which of the following taxpayers whose personal exemption is subject to the law on reciprocity under the Tax Code? a. Non-resident citizen with respect to his income derived outside the Philippines b. Non-resident alien who shall come to the Philippines and stay therein for an aggregate period of more than 180 days c. Resident alien deriving income from a foreign country d. Non-resident alien not engaged in trade or business in the Philippines whose country allows personal exemption to Filipinos who are not residing but are deriving income from said country. 6. (P2-14, 27) All the following statements, except one, are correct. Which is wrong? a. April 15, August 15, November 15 of the current year, and April 15 of the succeeding year, are dates (last day) for filing the quarterly income tax returns of the individual who is self-employed b. April 15 is the last day for filing the annual income tax return of an individual who is self-employed c. April 15 is the last day for filing of the income tax return for individuals who have gross compensation income only, but whose income tax returns show income tax due or refundable d. The dates will be other than the dates mentioned in (a) to (c) if the individual has a fiscal year accounting period. 7. (P2-23, 43) Corporations exempt from income tax are enumerated under Section 30 of the National Internal Revenue Code. Statement I. They are not subject to income tax on income received which are incidental to or necessarily connected with the purpose for which they were organized and are operating. Statement II. They are subject to income tax on income of whatever kind and character from any of their properties, real or personal, or from any activity conducted for profit, regardless of the disposition of such income.

a. Both statement are true b. Both statement are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statement is true 8. (P3-2, 4) Thirteenth month pay Christmas bonus Productivity incentives pay 5,000 8,000 P25,000

The taxable compensation income from the benefits is: a. 38,000 b. 13,000 c. 8,000 d. 1,000

9. (P3-9, 20) Leasehold improvements had a cost of P4,000,000 to the lessee, with a useful life of forty years and remaining term of the lease of twenty-five years. At the beginning of the twenty-first year of the improvements, when the fair market value thereof was P2,500,000, the lessor took possession of the improvements. If annual method of reporting income was adopted for the leasehold improvements, his income in year 21 is: A. 2,500,000 b. 500,000 c. 1,200,000 d. 1,300,000

10.(P3-16, 32) Statement I. Fringe benefit given to rank-and-file employee, which was not subjected to the fringe benefit tax, is gross income to the employee receiving it. Statement 2. Fringe benefit given to managerial or supervisory employee, which was subjected to the fringe benefit tax, is not gross income to the employee receiving it. a. Both statements are true b. Both statements are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statement is true

11.(P3-17, 36) Which of the following statements is correct? A prize or award is not taxable: a. When it is the result of a difficult contest b. When the prize is for an outstanding achievement c. When the prize is not in money d. When the prize exceeds 10,000 12.(P3-24, 52) Which statement is wrong? The optional Standard Deduction is allowed a. To a resident citizen b. To a non-resident citizen

c. To a domestic corporation d. To a non-resident corporations 13.(P3-32, 68) Which of the following fringe benefits is not subject to the fringe benefits tax? a. Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans b. Housing c. Expense Account d. Vehicle of any kind 14.(P3-40, 84) Statement 1. Bad debts is an expense in the books of accounts when a provision is made for it. Statement 2. Bad debts is a deduction from the gross income when the account is written off. a. Both statement are true b. Both statements are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statement is true 15.(P3-41, 88) Cost of leasehold improvements to the lessee Estimated life of improvements Remaining term of the lease Annual deduction for the lessee? a. 20,000 b. 16,666.67 c. 16,000 d. 18,000 1,000,000 60 years 50 years

16.(P4-2, 6) If the capital asset is not subject to capital gain tax, who of the following cannot report income on the installment method? A. Dealer of personal property regularly selling on installments B. Casual seller of personal property other than inventory, if the selling price does not exceed one thousand pesos (P1,000) and the initial payments do not exceed twenty-five percent (25%) of the selling price. C. Seller of real property if the initial payments do not exceed twenty-five percent (25%) of the selling price. D. Seller of real property even if the initial payments exceed twenty-five percent (25%) of the seller price, as long as installment sales are made regularly. 17.(P4-11, 26) On the same date , an individual sold two parcels of land in the Philippines. Parcel 1 was sold thru a real estate broker at a selling of 2,000,000 (when the fair market value was 2,200,000) and commission paid to the broker of 60,000. The cost to the seller was 1,000,000, not including a commission to a real

estate broker of 30,000. Parcel 2 was a direct sale to a buyer at its fair market value of 3,000,000, even as it had a fair market value when inherited of 3,100,000. The capital gain taxes on that date is: a. 128,400 b. 120,000 c. 38,400 d. 308,400

18.(P4-19, 42) Mr. A, a resident citizen of the Philippines, had the following data for 2009 and 2010: 2009: Gross Income from business Business Expenses 600,000 350,000 40,000

Gain on sale of capital asset held for six years

Loss on sale of capital asset held for three months 25,000 2010: Gross income from business Business expenses 400,000 460,000 120,000

Gain on sale of capital asset held for ten months The taxable income for 2010 is? a. 5,000 b. 55,000 c. 95,000 d. 40,000

19.(P5-21, 22) Which statement is wrong? When a taxpayer controls a manufacturing corporation and a marketing corporation, sales made by the manufacturing corporation to the marketing corporation, as recorded in the books of accounts, may be considered by the Bureau of Internal Revenue as not reflective of correct selling price. a. Under the rule of piercing the veil of corporate fiction b. Under the provision of the National Internal Revenue Code which authorizes the Commissioner of Internal Revenue to allocate revenues and expenses of corporations controlled by the same interests, so as to clearly reflect the income of the taxpayers c. Under the provision of the National Internal Revenue Code which authorizes the Commissioner of Internal Revenue to determine the correct taxable income from the best evidence obtainable. d. Cannot be done by the Bureau of Internal Revenue. 20.(P5-29, 38) Tax credit for foreign income tax paid or incurred is allowed to a citizen of the Philippines or a domestic corporation. Statement 1: When a taxpayer is qualified to take a tax credit for a foreign income tax paid, he may take a deduction instead for such tax Statement 2: When there are several foreign countries to which income taxes were paid, a taxpayer qualified, and who opts to take tax credit, must take all the income taxes paid to foreign countries as tax credit.

a. Both statements are true b. Both statements are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statements is true 21.(P5-37, 54) Which is not a creditable withholding income tax? a. Expanded withholding income tax b. Withholding income tax on passive income c. Withholding income tax at source d. Withholding income tax on compensation income 22.(P6-4, 9) Proceeds of life insurance includible in the taxable gross estate. a. Insurance proceeds from SSS or GSIS b. Amount receivable by any beneficiary irrevocable, designated in the policy by the insured c. Amount receivable by any beneficiary designated in the insurance policy d. Proceeds of group insurance taken out by a company for employees. 23.(P6-12, 25) Y, a Filipino resident, died on November 5, 1992 and his estate incurred losses due to: 1st loss: From fire on February 2, 1992 of improvement on his property not compensated by insurance. 2nd loss: From flood on February 25, 1993 of household furniture also not compensated by insurance. a. 1st loss is not deductible and 2nd loss is deductible b. Both losses are not deductible c. Both losses are deductible from gross estate d. 1st loss is deductible and 2nd loss is not 24.(P6-20, 41) Which of the following is deductible from the gross estate? a. Income tax paid on income received after death b. Property taxes not accrued prior to death c. Estate tax paid to a foreign country d. Donors tax accrued prior to death 25.(P6-36, 65) Which statement is wrong? An estate tax return is required to be filed: a. When the estate is subject to estate tax b. When the estate is not subject to estate tax but the gross estate exceeds 200,000

c. Where the gross estate includes registered real property d. In all cases where there is a gross estate 26.(P7-5, 11) All the following statements are correct, except one. If the donor is a nonresident, not citizen of the Philippines: a. Property situated abroad, but donated to a citizen of the Philippines will not pay the donors tax. b. Property situated in the Philippines but donated to a done abroad will pay the donors tax c. Property outside the Philippine donated on account of marriage to a resident of the Philippines has a deduction of 10,000 d. Property in the Philippines with a value of 150,000, donated to a citizen of the Philippines, will pay a donors tax. 27.One of the following statements is correct. The donors tax return: a. Must be filed within thirty days after the end of the calendar year. b. Must be filed within thirty days from the date of donation c. Must be accomplished by a certificated of an independent Certified Public Accountant if the gross gift is 50,000 or more d. In the case of husband and wife making donations, one donors tax return shall be filed signed by either the husband or the wife. 28.(P8-1, 2) The account title to best reflect the value-added tax on a purchase: a. Sales tax payable b. value-added tax payable c. input tax d. output tax

29.(P8-8, 22) Statement 1: the output value added tax is computed by multiplying the gross selling price by 12%; or multiplying the total amount indicated in the invoice by 12/112. Statement 2: the output value-added tax is computed by multiplying the total amount indicated in the invoice by 12%. a. Both statements are correct b. Both statements are false c. The first statement is correct but the second statement is wrong d. The first statement is wrong but the second statement is correct 30.(P8-9, 26) Which is correct? The inventory balance in the financial statements at any given date of a VAT-registered person is: a. Balance, net of input taxes b. Balance, inclusive of input taxes c. Balance on which the transitional input tax is computed annually d. Balance where the value-added tax thereon may be calculated by multiplying it by 12%.

31.(P8-25, 50) Mr. Abner Aquino, a VAT taxpayer, on August 1, 2009, made the following purchases from VAT sellers, for use in his business. The amount stated not including value-added taxes: Machine 1, with a useful life of 19 years Machine 2, with a useful life of 3 years Patent, with useful of 11 months 3,000,000 1,800,000 600,000

The input taxes from the purchases, available to Mr. Abner Aquino, for the month of August, 2009: a. 84,000 b. 70,000 c. 51,000 d. 62,000

32.(P8-32, 66) Statement 1: Withholding value-added tax is required at five percent (5%) of the gross payment for the purchase of goods by the Government or any of its political subdivision, or by a government-owned or controlled corporation Statement 2: Withholding value-added tax is required at five percent (5%) on every release or installment payment on purchase of services by the Government or any of its political subdivision, or by a government-owned or controlled corporation a. Both statements are correct b. Both statements are wrong c. First statements is correct but second statements is wrong d. First statements is wrong but second statement is correct. 33.(P8-41, 82) D Co. is a common carrier with passenger buses and cargo trucks. For the month of June 2009, it had the data on revenues and receipts, taxes not included: For transporting passengers, gross revenues and receipts of 330,000. For transporting cargoes, gross revenues of 220,000, of which, 200,000 was received. For renting out to the MMDA its towing trucks, gross receipts of 50,000, representing 10,000 from gross revenues of the quarter ending March 31 and 40,000 for the month of June. Percentage tax: a. 17,400 b. 9,900 c. 16,500 d. 15,900

34.(P9-1, 3) Which of the following is not a basic principle of local taxation? Statement 1. Taxation shall be uniform in each local government unit. Statement 2. The collection of local taxes and other impositions cannot be let to any person a. Both statements are true b. Both statements are false c. First statement is true while second statement us false d. First statement is false while second statement is true