04/19/08

FINAL PRE-BOARD EXAMINATION

September2
1. A owes B P10,000 as gambling debt and A issued 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 statements is correct?
a. B can collect from A because the note is negotiable
b. B cannot negotiate the note because the consideration between A and B is
illegal
c. If B negotiates to C, a holder in due course, C can collect from A
d. A is not liable because of illegal consideration
2. A, a minor issued a promissory note to B as follows:
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 negotiable because the maker is a minor
b. B cannot collect from A because A is a minor
c. If B negotiates to C, a holder in due course, C cannot collect from A
d. If B negotiates to C, a holder for value, C cannot collect from A
3. Below are two promissory notes prepared by A:
I.
I promise to pay B or order P100,000 if he will pass the CPA Board
Examination. Sgd. A
II.
I promise to pay C or order P100,000 if he kills Z. Sgd. A
Which of the following statements is correct?
a. Both promissory notes are negotiable
b. Both promissory notes are non-negotiable
c. Only the first promissory note is negotiable
d. Only the second promissory note is negotiable
4. Using the above facts (no. 3), and both conditions are satisfied, which of the
following statements is correct?
a. Both B and C can collect from A
b. Neither B nor C can collect from A
c. Only B can collect from A
d. Only C can collect from A
5. Using the above facts (no.4), and B assigns the note to D, and C assigns the note
to E, which of the following statements is correct?
a. Both D and E can collect from A, if both acted in good faith
b. Neither D nor 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
6. I promise to pay to the order of B P10,000, 30 days after the death of C. Sgd. A,
is an instrument payable
a. Subject to a suspensive condition
b. On demand
c. At a determinable future time
d. On a fixed date but non-negotiable

7. A prepared and signed an incomplete and negotiable promissory note and kept it
inside his drawer. Unknown to A, his janitor, W, took the note, filled the date,
inserted the name of B as payee and the amount of P10,000. Then W forged the
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04/19/08
signature of B and indorsed the note to C, C in turn indorsed it to D, D to E and E
to F, the present holder. F can collect from any of the following, except
a. B
b. C
c. D
d. E
8. I promise to pay B or order P100,000 on demand. Sgd. A. To C This is
a. A promissory note
b. A bill of exchange
c. Either a promissory note or a bill of exchange at the option of A
d. Either a promissory note or a bill of exchange at the option of the holder
9. Statement 1 Where a check is certified by the bank on which it is drawn, the
certification is equivalent to an acceptance
Statement 2 Where the drawer of a check, procures it to be accepted or
certified, the drawer and endorsers are discharged from liability
a. True, true
b. True, false
c. False, true
d. False, false
10.Instances when a drawee bank may refuse to pay checks drawn against, except
a. The check is post dated
b. The drawee bank receives notice of the drawers death
c. The drawer is married to the payee
d. There is insufficiency of funds of the drawer
11.P, a passenger in a bus operated by ABC Trans Co., suffered serious injuries as a
result of an accident. An information was filed against J, the driver of the bus, for
serious physical injuries through reckless imprudence. He was, however acquitted
because according to the judgment of acquittal, J was not negligent. Later, P
instituted an action against ABC to recover damages. Will the action prosper?
Answer 1 Yes, because the action to recover damages as based on culpa
contractual and not on the act or omission complained of as felony.
Answer 2 No, the acquittal of the driver will result to the exoneration of the
operator from civil liability.
a. True, true
b. True, false
c. False, true
d. False, false
12.P borrowed P2,000 from J on January 23, 2008. He executed a promissory note
promising to pay the indebtedness on January 23, 2009. Upon arrival of the
designated date for payment, is demand necessary in order that Paul shall incur
delay?
Answer 1 Yes, because the law or obligation should expressly add that the
obligor shall incur in delay if he fails to fulfil the obligation upon the arrival of the
designated date.
Answer 2 No, there was a stipulation that the indebtedness shall be paid on a
designated date and therefore upon the arrival of such date, demand shall not be
necessary.
a. True, true
b. False, true
c. True, false
d. False, false
13.Dolo causante as distinguished from dolo incidente
a. Gives right to the innocent party to ask for the annulment of the contract
b. Gives right to recover damages
c. Present during the performance of a pre-existing obligation
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04/19/08
d. Results in non-fulfilment or breach of the obligation
14.A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y
and Z. The note is now due and demandable. Which of the following is not
correct?
a. X, Y and Z cannot proceed against A alone for the payment of the entire
obligation
b. X alone cannot proceed against A, B and C for the payment of the entire
obligation
c. Present during the performance of a pre-existing obligation
d. If C is insolvent, his co-debtors shall be held liable for his share is the
obligation which will be divided equally between A and B
15.Which of the following is not correct, with regard to the effect of remission of a
solidary obligation effected by the solidary creditor upon the obligation itself?
a. If the remission covers the entire obligation, the obligation is totally
extinguished and the entire juridical relation among the debtors is
terminated already
b. If the remission is for the benefit of one of the debtors and it covers his
entire share in the obligation, he is completely released from the creditors,
but he is still bound to his co-debtors
c. The solidary creditor responsible for the remission shall be liable to the
other solidary creditors for the share corresponding to them
d. If the whole obligation is condoned through the efforts of a solidary debtor
or for his benefit, he is entitled to reimbursement from his co-debtors
16.Statement 1 If the period for payment of an obligation is shortened, from 4
years to 2 years, is there novation of the obligation?
Statement 2 Suppose that, instead, there is an extension of two years for
payment is there novation of the obligation?
Answer 1 Yes, because there is a clear case of incompatibility between two
obligations and also because there is an essential change or alteration of the
principal condition of the old obligation.
Answer 2 No, there is no incompatibility between the two obligations. They can
stand together, neither is there an essential change in the principal condition.
a. True, true
b. True, false
c. False, true
d. False, false
17.A, is indebted to B in the amount of P50,000, with C as guarantor. On due date, A
tendered payment to B but B refused. Because of Bs refusal A deposited the
amount in court. After the consignation of the amount, A withdraws the money
with the consent of B. In such case,
a. B lost the right to collect as As obligation is extinguished
b. B lost all the preference she might have over the amount deposited but C is
still liable as guarantor
c. B lost the right to collect from A and consequently lost also her right to
collect from C
d. B lost all the preference she might have over the amount deposited and C
as guarantor was likewise released from liability
18.Which of the following statements is true?
a. Insertion of a wrong date will not affect a holder in due course
b. Forgery of the makers signature makes the instrument inoperative
c. If a promissory note is incomplete and undelivered by the maker, the
holder in due course can still recover from the maker
d. A holder in due course does not have the right to recover from the maker if
the maker did not deliver the complete promissory note to the payee
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04/19/08
19.This is not a personal or equitable defense
a. Illegal consideration
b. Want of delivery of an incomplete instrument
c. Duress in the absence of physical pressure
d. Fraud in inducement
20.A holder may treat a bill of exchange as a promissory note, except
a. When the instrument is ambiguous
b. When the drawee is fictitious
c. When the instrument is payable on demand
d. When the drawer and drawee are the same person
21.A person secondarily liable on the instrument is discharged, except by
a. Any act which discharged the instrument
b. Intentional cancellation of his signature by the holder
c. A valid tender of payment made by a prior party
d. The discharge of a subsequent party
22.Rules on construction where the instrument is ambiguous, except
a. If not dated, the date is considered to be the date of the issuance
b. Where the signature is placed and is not clear in what capacity the person
intend to sign, he is deemed an acceptor
c. Between printed and written provision, the written provision prevails
d. Instrument containing the words I promise to pay signed by two or more
persons, such persons are deemed jointly and severally liable
23.Acceptance for honor as distinguished from payment for honor
a. Protested for non payment
b. Bill maybe overdue
c. Payor maybe a party to the bill
d. Consent of holder is required
24.C orders for his workers 1,000 pieces of T-shirt ranging in size from small to large
from L. Garments Manufacturing Inc. The specified sizes although not hen
available, are manufactured by said corporation and consigned to its sales outlets
regularly. The contact entered into by C with L. Garments is a
a. Contract for a piece of work
b. Contract subject to resolutory condition
c. A contract of sale
d. Barter
25.M owes the BIR P100,000 in delinquent taxes and penalties. In order to evade the
payment of the said liability, he executed a deed of sale of his only parcel of land
valued for P200,000 in favour of his brother, P, where P20,000 was stated as the
purchase price but the BIR has evidence that said price had never been paid, the
purpose of the sale being to prevent the BIR to levy upon the land to satisfy the
tax liability of M. In this case,
a. The BIR may not levy upon the land because the sale is valid
b. The BIR without annulling the sale, may levy upon the land of M pursuant
to the provisions of NIRC
c. The BIR should first annul the sale before it may levy upon the land
pursuant to the provisions of NIRC
d. The BIR should ask for the rescission of the contract between M and P

26.The following persons can be incorporators of a corporation, except

a. A resident alien
b. A married woman without the consent of the husband even if the payment
of her shares comes from her paraphernal property
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04/19/08
c. A subscriber on the shares of the corporation who pays less than 25% of his
subscription
d. A corporation organized under the laws of the Philippines
27.The following are legal effects of merger or consolidation, except
a. The consolidated corporation shall enjoy the same rights, powers,
privileges and immunities and shall be subject to the same duties and
obligations of corporations established under the Corporation Law
b. All actions pending by or against the constituent corporations shall now be
litigated by the consolidated corporation
c. All properties, interest, claims and the like pertaining to the constituent
corporations shall now pertain to the surviving corporation
d. The liabilities and obligations or claims against the constituent corporations
may not be assumed by the consolidated corporations because of the
theory of separate legal entity
28.A and B are partners. On June 15, 2007 when the total obligation of the
partnership totals P80,000, C was admitted as a new partner. At the time of his
admission, the partnership creditors were M for P50,000 and N for P30,000. After
June 15, the partnership borrowed from O, P20,000 and P10,000 from P. On
December 15, 2007, the partnership became insolvent leaving an obligation of
P110,000 and the partnership assets amounting to P30,000. The creditors are
going after the separate properties of the partners to satisfy their remaining
claims. How are the creditors claims satisfied?
Answer 1 M and N can go after the separate properties of A and B but Cs
separate properties are not answerable to their claims
Answer 2 O and P can go after the separate properties of A, B and C
a. False, false
b. False, true
c. True, false
d. True, true
29.The following are corporate acts in which a stockholder of a corporation shall
have the right to dissent and demand payment of the fair value of his shares of
stock, except one
a. In case an amendment to the Articles of Incorporation which has the effect
of changing or restricting the rights of any stockholder
b. In case of merger or consolidation
c. In case of sale, lease, mortgage or other disposal of all or substantially all
of the corporate asset
d. In case of incurring, creating or increasing bonded debts
30.The following, except one are the requisites of acceptance for honor of a bill
a. The bill must be previously protested for dishonour by non-acceptance or
protested for better security
b. The bill is overdue
c. The holder must give his consent
d. The acceptor for honor must be a stranger to the bill
31.Which of the following statements regarding the contract of pledge is not correct?
a. A pledge cannot be constituted unless the thing pledged be placed in the
possession of the creditor
b. Pledge is a real contract because it is perfected by delivery of the thing
pledged
c. Pledge is an accessory contract because it needs a principal obligation to
exist
d. A pledge cannot be constituted to secure the performance of a voidable or
unenforceable or even a natural obligation

04/19/08
32.Which of the following statements is not correct?
a. A stockholder is entitled to cast such number of votes as the number of
shares outstanding entitled to vote in his name times the total number of
directors to be elected
b. Outstanding shares although with voting rights but have not been fully paid
cannot be voted
c. A stockholder may cumulate his vote for one candidate or may distribute
them among as many candidates but he cannot cast more than the shares
outstanding in his name times the number of directors to be elected
d. Members of the board of directors are voted by stockholders by means of
cumulative voting
33.One of the following is a ground for the suspension or revocation of the Certificate
of Incorporation by the SEC
a. If the corporation has commenced its business transactions and afterwards
ceased operations continuously for a period of at least 5 years
b. If the corporation fails to commence and start to operate and the failure is
due to causes beyond its control
c. If the corporation does not formally commence its business transactions
within 2 years from the date of Incorporation
d. If the corporation has commenced its operations and subsequently become
continuously inoperative for 2 years
34. I promise to pay to the order of B P10,000 30 days after date. Sgd. A. Which of
the following indorsements of the above promissory note is not valid?
a. Pay to C or D. Sgd. B
b. Pay to C P5,000, balance of his note. Sgd. B if P5,000 has been paid by A
c. Pay to C P5,000 and to D P5,000 Sgd. B
d. Pay to C and D, partners. Sgd. B
35.In the contract of agency, which of the following is not true?
a. A, the agent of P is expressly prohibited from appointing a substitute. A
violates this prohibition appointing C in his stead. P can refuse to recognize
the acts of C but A is not liable for damages to P
b. A and P appoint C as their agent for a common transaction. A can revoke
the agency even without the consent of P
c. P sells his dry goods to Q provided P shall be made the manager thereof. Q
cannot revoke the agency of P at will
d. If A, an agent with the power to appoint a substitute who is not named,
appoints P who is a well-known estafador in the community, then A must
answer for the acts of P
36.Chattel mortgage as distinguished from pledge
a. The delivery of the personal property is necessary
b. The registration of the property in the Registry of Property is not necessary
c. The excess over the amount due after foreclosure goes to the debtor
d. The sale in auction of the object extinguishes the obligation
37.Which of the following statements is true?
a. Unless otherwise agreed upon by the parties, the sale of the mortgaged
property extinguishes in full the obligation of the mortgagor to the
mortgagee
b. Pledge and mortgage are considered principal contracts
c. When the obligation is secured by a pledge or mortgage and it is not paid
when due, the pledgee or mortgagee may dispose the collateral even if
there is no agreement to that effect between the parties
d. In both pledge and mortgage the creditor is entitled to deficiency judgment

04/19/08
38.Statement 1 A director is removed from office by a vote of the stockholders
holding at least 2/3 of the outstanding capital stock. The vacancy occasioned by
such removal can be filled by the vote of the majority of the remaining directors if
still constituting a quorum.
Statement 2 It is illegal to issue watered stocks. However, stocks issued
without any consideration at all is justified if such issues are bonus shares.
a. True, true
b. False, false
c. True, false
d. False, true
39.Which of the following statements is correct?
a. To sell, lease or mortgage or otherwise dispose of all or some of the
corporate assets, majority vote of directors or trustees and majority of the
outstanding capital stock or of the member is needed
b. To issue stock dividends, majority vote of the quorum of the Board of
Directors and majority of the outstanding capital stock
c. To invest corporate funds in another corporation or business, majority vote
of directors or trustees and majority of the outstanding capital stock or of
the members is needed
d. To enter into management contract, majority vote of the Board of Directors
and majority of the outstanding capital stock or of the members
40.One known to be acting for and in behalf of the principal either because the latter
presented him to be his agent or the people believe him to be acting on behalf of
the principal is
a. Ostensible agent
b. Implied agent
c. Special agent
d. Universal agent
41.Which of the following is a negotiable bill of exchange
a. Pay to the order of Y the sum of P30,000. Sgd. X
b. Pay to the order the sum of P20,000. Sgd. A. To A and B
c. Pay to the order of X and Y the sum of P40,000. Sgd. C. To A or B
d. Pay to the order of X or Y the sum of P50,000. Sgd. X. To A and B
42.The following are exempt from VAT, except
a. Sale of agricultural and marine food products in their original state
b. Sales of non-agricultural, non-electric and non-credit cooperatives under
certain conditions
c. Sale of professional instruments and implements wearing apparel,
domestic animals and personal household effects under certain conditions
d. Sale of passenger or cargo vessels and aircraft for domestic or international
transport operations
43.What would be the allowable deduction for P10,000 contribution made by a
resident citizen to a religious organization from his P80,000 net income after
contribution?
a. P10,000
b. P9,000
c. P8,000
d. P5,000

04/19/08
44.Mr. A files his ITR for 2007 on April 1, 2008 and paid the tax due thereon of
P100,000. The BIR made an assessment on April 15, 2011 which shows that the
correct income tax due should have been P150,000 requiring payment on or
before July 15, 2011. The assessment was received by Mr. A on June 1, 2011. Mr. A
can
a. Ignore the assessment because June 1, 2011 is beyond 3 years from April
1, 2008
b. Ignore the assessment because June 1, 2011 is beyond 3 years from April
15, 2011
c. Appeal to the CTA within 30 days from June 1, 2011
d. Dispute the assessment with the CIR within 30 days from June 1, 2011
45.A did not file his income tax return for the calendar year 2005 which was due for
filing on April 15, 2006. He was notified by the BIR of his failure to file the tax
return, for which reason, he filed his tax return and paid the tax, only after the
said notice on June 15, 2007. The tax due per return is P100,000. Ignoring
compromise penalty, the tax due on June 15, 2007 is:
a. P100,000
b. P123,333
c. P148,333
d. P173,333
46.ABC Corp. filed its income tax return for calendar year 2005 and paid its income
tax due of P175,000. However upon investigation, it was disclosed that its income
tax return was fraudulent because it did not report a taxable income where the
correct tax due for the taxable year should have been P350,000. It was duly
informed of this finding through a preliminary assessment notice (PAN). Failing to
protest on time against the PAN, a formal letter of demand and assessment notice
was issued on May 15, 2007 calling for payment of the deficiency income tax on
or before June 15, 2007. The total tax due on June 15, 2007 is
a. P259,583
b. P215,833
c. P303,333
d. P338,333
47.Using the preceding number, assuming the corporation fails to pay the tax due on
June 15, 2007, and assume further, that the corporation pays its tax assessment
only on July 15, 2007. Ignoring compromise penalty, the tax due on July 15, 2007
is
a. P329,805.13
b. P273,388.45
c. P384,22.80
d. P428,555.13
48.DEF Corporation, due to financial incapacity requested that it be allowed to pay
its income tax liability per return for calendar year 2005, amounting to P1 million
in four(4) equal monthly installments starting April 15, 2006. Its request has been
duly approved. The tax due for the first installment on April 15, 2006 is
a. P250,000
b. P254,167
c. P262,500
d. P300,000
49.Using
a.
b.
c.
d.

the above data, the tax due for the second installment on May 15, 2006 is
P250,000
P254,167
P262,500
P300,000

04/19/08

50.A filed his income tax return for the calendar year 2005 on April 15, 2005. The tax
due per return is P100,000 with a creditable withholding tax of P40,000. A will pay
his income tax liability in instalment. The tax due for the first installment on April
15, 2006 is
a. P50,000
b. P30,000
c. P10,000
d. P60,000
51.Using
a.
b.
c.
d.

the above data, the tax due for the second installment on April 15, 2006 is
P50,000
P30,000
P10,000
P60,000

52.A filed his income tax return for calendar year 2007 on March 20, 2008. When is
the last day for the BIR to collect, assuming A did not pay the tax due upon filing?
a. March 20, 2011
b. April 15, 2011
c. April 15, 2013
d. March 20, 2013
53.Using the above data, assuming A filed his income tax return on April 20, 2008
and the return is not fraudulent, when is the last day for the BIR to make an
assessment?
a. April 20, 2011
b. April 15, 2011
c. April 20, 2013
d. April 15, 2013
54.Using
2010,
a.
b.
c.
d.

the data above, if the BIR issued a deficiency income tax on March 10,
when is the last day for the BIR to collect?
March 10, 2013
April 15, 2013
March 10, 2015
April 15, 2015

55.The failure of the taxpayer to pay the tax due on the date fixed by law or
indicated in the assessment notice or letter of demand
a. Assessment
b. Delinquency
c. Deficiency
d. Levy
56.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 beneficiary is the estate, executor or
administrator whether revocable or irrevocable
b. Part of gross income if the beneficiary is a third person and the designation
is revocable
c. Part of the gross estate if the beneficiary is a third person and the
designation is irrevocable
d. Excluded from gross income whether beneficiary is revocable or irrevocable

57.A, a citizen of the Phils and a resident of Bacolod City, died testate on April 19,
2008. Among his gross estate are properties purchased from his father who died
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on April 14, 2005. What percentage of deduction will be used in computing the
amount of vanishing deduction?
a. 20%
b. 40%
c. 60%
d. 0%
58.One of the following is not effect of failure to affix documentary stamps; the
documents, instruments or paper
a. Shall not be recorded in the proper registry
b. Shall not be valid
c. Shall not be admitted or used in evidence in court
d. Shall not be acknowledged by a notary public or other officer authorized to
administer oaths
59.The donor and donee are strangers to each other
a. Gift to the brother of donors grandfather
b. Gift to the daughter of the granddaughter of the daughter of the donors
granddaughter
c. Gift to the grandson of the daughters sister
d. Gift to the granddaughter of the sister of the donors mother
60.What would be the amount to be included in the gross estate of a decedent
whose collectible sum from a debtor is P100,000 and the same debtor was
subsequently declared by court as insolvent for having a total liabilities of
P400,000 and total properties of P80,000?
a. P100,000
b. P64,000
c. P60,000
d. P20,000
61.One of the following is not exempt from Value Added tax
a. Lease of residential unit with a monthly rental not exceeding P10,000
b. Services subject to percentage tax
c. Service rendered by individuals pursuant to an employer-employee
relationship
d. Export sales by persons who are VAT registered
62.When
a.
b.
c.
d.

is hereditary property deemed transferred to heirs?

At the date of writing the will
At the moment of the death of the decedent
After the decedents heirs are finally determined
After the estate tax is paid

63.Maybe claimed as deduction from the gross estate of a non-resident alien

decedent
a. Vanishing deduction
b. Standard Deduction
c. Family home
d. Medical expenses
64.Which of the following statements is true?
a. The sharing of an heir in intestate succession does not satisfy the rule on
legitime
b. The sharing of the heirs in testamentary succession must satisfy the rules
on legitime
c. A compulsory heir cannot receive more than his legitime
d. There can be no disinheritance of a compulsory heir

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65.Which statement is correct?
a. The share of an heir is subject to an inheritance tax;
b. Net distributable estate, after estate tax, is what is participated in by the
heirs;
c. The net taxable estate and net distributable estate cannot be coincide at
the same amount;
d. The estate tax is a charge on the heir, if the estate is not enough.
66.Which statement is correct?
a. A person has unlimited right to make donations;
b. A compulsory heir can question a donation and ask for its reduction if it
impairs his legitime;
c. Husband and wife cannot give donations to each other;
d. An artificial person(corporation) cannot give a donation
67.Which of the following properties of A who died April 19, 2008 is subject to
Vanishing Deduction?
Property 1 Car purchased 3 years ago from his father
Property 2 Land inherited from his mother in 2005 the estate tax
thereon is not yet paid
Property 3 Donation from his best friend in 2004
Property 4 Community property inherited before marriage from his
grandfather who
died April 18 2002
Property 1 Property 2 Property 3 Property 4
a.
No
Yes
Yes
No
b.
No
No
Yes
No
c.
Yes
No
No
Yes
d.
Yes
Yes
No
No
68.A died on April 19, 2008. Some of the properties he left are the following:
Assets
A
Land
Car

Mode of
Date of
Market Value
Acquisition Acquisition Date Acquired
Donation
Purchase

7-3-03
10-2-07

Death of

P 500,000 P 350,000
800,000
980,000

Other information:
The gross estate of the decedent amounts to P3,000,000.
The land was mortgaged for P50,000, which was deducted in prior estate
and A paid the same before he died.
The allowable deductions total P125,000, which includes medical expenses
of P30,000. It excludes bequest to a charitable institution in the amount of
P50,000.
The vanishing deduction is ---a. P58,100
b. P57,500
c. P67,783
d. P67,083

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69.A, newly VAT registered taxpayer is a lessor of several apartment units. During
the month of January 2008, A had the following receipts from customers (VAT
inclusive):
Security deposit from Lessee B
P 112,000
Rent income for January from various lessees
89,600
Prepaid rentals received from Lessee C (February to June)
134,400
Loan to A from Customer D
84,000
During the month, a portion of the security deposit for the faithful compliance by
the Customer B of its obligations to the lessor was applied to rental for January in
the amount of P11,200. At the beginning of the year, A had P52,000 worth of
inventory of supplies and materials for use in the business. VAT paid on the
beginning inventory is P3,500. The output tax of A in January is ---a. P45,000
b. P33,500
c. P25,200
d. P46,200
70.A VAT taxpayer has the following data for a particular quarter during the current
year:
Sale of shares of stock held as inventory
P
1,000,000
Sale of shares of stock held as investment
500,000
Cost of shares sold (shares held as inventory)
300,000
Cost of shares sold through local stock exchange (shares held as
investment) 600,000
How much is stock transaction tax?
a. P7,500
c. P1,500
b. P2,500
d. P0
71.Recovery of bad debt written off by a taxpayer:
No.1: P20,000 from accounts written off in a year which had a net income
of P200,000 before write off.
(write-off of the year was P20,000)
No.2: P5,000 from accounts written off in a year which had a net loss
before write-off of P36,000.
(write-off for the year was P5,000)
No.3: P10,000 from accounts written off in a year which had a net income
of P8,000 before write-off.
(write-off for the year was P12,000)
The income from bad debt recovery is:
a. P35,000
b. P20,000
c. P26,000
d. P30,000
72.Which of the following unpaid taxes is not deductible from the gross estate?
a. Property taxes accrued prior to decedents date.
b. Income taxes on income earned and received after decedents death.
c. Gift taxes on life time gifts which remain unpaid at the date of death.
d. Capital gains tax on transfers before death and paid after date of death.
73.Which is deductible from gross estate of resident decedent?
a. Loss of portion of the estate incurred during settlement, arising from theft.
b. Loss of portion of the estate incurred 200 days before the date of the death
of the decedent.
c. Loss of portion of the estate incurred a month before the date of the death
of the decedent.
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d. Loss on the portion of the exclusive capital of surviving spouse incurred
during the settlement of the estate.

74.Which of the following statements is not correct?

a. Gambling winnings during the marriage constitute community property
b. Support of an illegitimate child is against exclusive property
c. Expenses of successful litigation between spouses are against community
property
d. Gambling losses during the marriage are against community property
75.As regards use of VAT invoice or receipt:
First Statement A person may have two lines of businesses, one subject to
VAT, and the other is exempt from VAT.
Second Statement
As a consequence of above statement, he must have
two separate sets of invoices and receipts.
a. True, true
b. False, false
c. True, false
d. False, true
76.First Statement
Philippines of a

The gross estate includes properties located outside the

resident alien.
Second Statement
The gross income includes income earned outside the
Philippines of a resident alien.
a. True, false
b. True, true
c. False, true
d. False, false
77.The property of a foreign state may not be taxed by another because of sovereign
equality among states. This is
a. International comity
b. Territorial jurisdiction
c. Constitutional limitation
d. Non-delegability of the power to tax
78.What are the effects if the real property levied is forfeited in favor of the
government if there are no bidders
1st answer The forfeiture operates as a total discharge of the claim
2nd answer If the fair market value of the property forfeited is more than
the amount of the claim, the taxpayer is entitled to the excess
a.
b.
c.
d.

True, true
False, false
True, false
False, true

79.A local business firm paid P200,000 salaries, net of P5,000 withholding tax,
P40,000 13th month pay and Christmas bonus and P20,000 premium contributions
withheld for SSS, Philhealth and Pagibig contributions of its employees. How much
would be its allowable business expenses deductible from its related business
income?
a. P265,000
b. P215,000
c. P205,000
d. P245,000
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80.A, had the following transactions in capital assets:

January 2, 2008- Bought 100 common of B Corp. at P30 per share
March 02, 2008- Received 20% stock dividend of common share
April 05, 2008 - Sold the stock dividend at P28 per share
As a result, A will report
a. Capital gain of P3 per share
b. Capital loss of P2 per share
c. Capital gain of P560,000
d. No gain because stock dividend is not taxable

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ANSWERS: (APRIL 19, 2008)
1. C
21.D
2. A
22.B
3. B
23.D
4. C
24.C
5. C
25.B
6. C
26.D
7. A
27.D
8. D
28.D
9. B
29.D
10.C
30.B
11.B
31.D
12.C
32.B
13.A
33.A
14.D
34.C
15.D
35.A
16.A
36.C
17.D
37.C
18.A
38.B
19.B
39.D
20.C
40.A
81.

41.D
42.C
43.B
44.D
45.D
46.C
47.C
48.A
49.C
50.C
51.A
52.A
53.B
54.C
55.B
56.D
57.D
58.B
59.D
60.A

15

61.D
62.D
63.A
64.B
65.B
66.B
67.B
68.A
69.C
70.B
71.C
72.B
73.A
74.D
75.A
76.A
77.A
78.B
79.A
80.A