Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION

NORTHERN CPA REVIEW

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4 Floor Pelizloy Centrum, Lower Session Road, Baguio City, Philippines
Mobile Numbers: SMART 09294891758 & GLOBE 09272128204
E-mail: ncpar@yahoo.com
ATTY. ANDRIX DOMINGO, CPA
REX B. BANGGAWAN, CPA, MBA

BUSINESS LAW AND TAXATION

FINAL PRE-BOARD EXAMINATION

1. Corporation governed by special laws aside from the requirements

specified under the corporation laws. In order that their Articles of
Incorporation may be approved or accepted, they must present before the
Securities and Exchange Commission.
a. A favorable recommendation from the Ministry of Finance
b. A copy of previous income tax return and a statement of
assets, liabilities and networth.
c. A favorable recommendation of the appropriate government
agency in the effect that such article or amendment is in accordance
with law.
d. An undertaking to change the name of the corporation if there
is already registered with the SEC a name similar to the name of the
corporation

2. I. If the certification is obtained not by the holder but by

others, the secondary parties are also discharged as when it is obtained
by the drawer even at the request of the payee or even though the drawer
is also the payee.
II. The certification of checks enables a person not well acquainted with
each other to close promptly business transactions since the holder knows
that he can compel the drawee bank to cash it. It thus avoids the delay
and risks of receiving, counting, and passing from hand to hand large
sums of money.
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
c. Both Statements are True
d. Both Statements are False

3. May contribute money, property or industry to a common fund

a. Both general and limited partners
b. Limited partners
c. General partners
d. Capitalist partners

4. Rex, a bright young star with a golden touch and Darryl, a pastor
who lectures with a melodious voice entered into a universal partnership
of all present property. The common property of the partnership shall be:
a. All the properties which belonged to each of the partners at
the time of the constitution of the partnership
b. All the properties which shall belong to each of the partners
after the constitution of the partnership.
c. All the properties which belonged to each of the partners at
the time of the constitution of the partnership as well as properties
which each may acquire thereafter.
d. All the properties which belonged to each of the partners at
the time of the constitution of the partnership as well as the profits
which they may acquire therewith.

5. Three of the following enumerations are not authorized to issue no

par value shares of stock . Which is the exception?
a. Insurance companies
b. Industrial companies
c. Public utilities
d. Trust Companies

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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION

6. Which one of the following is not a requisite prescribed by law in

order that a partnership may be held liable to a third party for the acts
of one of its partners?
a. The contract must be in the partnership name or of its
account.
b. The partner binds the partnership by acquiescence for
obligations he may have contracted in good faith.
c. The partner must act on behalf of the partnership
d. The partner must have the authority to bind the partnership.

7. Any stockholder of a corporation shall have the right to dissent and

demand payment of the fair value of his share/s in three of the following
corporate acts. Which is the exception?
a. In case of any amendment to the Articles of Incorporation
which has the effect of changing or restricting the rights of any
stockholder or class of shares.
b. In case of merger or consolidation.
c. In case of sale, lease, exchange, transfer, mortgage, pledge,
or other disposition of all or substantially all of the corporate
assets and property of the corporation.
d. In case of incurring , creating or increasing bonded
indebtedness.

8. Which of the following is not a requisite to consider a person an

accommodation party?
a. He must not be liable to a holder in due course.
b. He must be a party to the instrument signing as maker, drawer,
acceptor or endorser.
c. He must not receive value therefore.
d. He must sign for the purpose of lending his name or credit.

9. A Capitalist partner is engaged for his own account in an operation

which is of the kind of business in which the partnership is engaged.
Said partner can be:
a. Compelled to sell his interest in the partnership to the
other capitalist partners.
b. Compelled to dissolve or discontinue the operation of his
business.
c. Compelled to bring to the common funds of the partnership any
profits accruing to him from his transactions.
d. Denied his share in the profits of the partnership.

10. Which of the following instruments is not negotiable for the reason
that the instrument is not payable at a determinable future time?
a. “On the death of X, I promise to pay to the order of B P1,000.
(Sgd.) A”
b. “ On or before October 30, 2010, I promise to pay B or his
order P 1,000.
(Sgd.) A”
c. “Sixty days after sight, I promise to pay to the order of B P
1,000.
(Sgd.) A”
d. “Ten days before the death of X, I promise to pay B or his
order.
(Sgd.) A”

11. A, B and C secured a loan from X. The promissory note which

evidences the obligation states: “ I promise to pay” and signed by A, B
and C. The obligation is:
a. Joint
b. Solidary
c. Divisible
d. Indivisible

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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
12. The following except one are the rights of a holder in due course. Which
is the exception?
a. He may enforce payment of the instrument for the full amount
thereof against all parties liable thereon.
b. He may receive payment and if payment is in due course, the
instrument is discharged.
c. He holds the instrument subject to the same defense as if it
were non-negotiable.
d. He may sue on the instrument on his own name.

13. A limited partnership named YESTOWKEE Co. Ltd. was formed on October 25,
2010 by YES as general partner and TOW and KEE as limited partners. In
2011, YES and TOW got married, did the marriage dissolve or put an end to
the partnership?
a. Yes, the partnership is dissolved by marriage because there is
a change in equity among the partners.
b. No, because spouses can enter into a universal partnership.
c. Yes, because spouses can enter into a particular partnership
on be thereof.
d. No, the marriage did not dissolve the partnership.

14. X, Y and Z were partners. X is an industrial partner. During the first

year of operation, the firm received a profit of P 60, 000. During the
second year, the firm sustained a loss of P 30, 000. In the Articles of
Partnership, it was agreed that the industrial partner would get 1/3 of
the profit. But would not share in the losses. How much will X, the
industrial partner get?
a. X will get only P 20, 000 which is 1/3 of the profit of the 1 st
year of operation.
b. X will get only P 20, 000 in the first year and none in the
second year.
c. X will get only P 10, 000 which is 1’3 of the net profit
d. X will share in the loss in the second year.

15. A, B, and C, capitalist partners each contributed P 30, 000, P 20, 000
and P 10, 000, respectively and D, the industrialist partner, contributed
his services. Suppose X, a customer, is the creditor of the firm to the
amount of P 180, 000. Can he recover the P180,000?
a. X must sue the firm and get P 60, 000 from all the partners
including D, the industrial partner. X. can still recover the balance
of P120, 000 from the four partners jointly.
b. X can recover from the firm P 60, 000. X can still recover the
balance of P 120, 000 from the capitalist partners only.
c. X can recover from the firm P 60, 000. X can recover the
balance of P 120, 000 from any of their partners solidarily.
d. X can recover from the firm P 60, 000 and consider the balance
of P 120, 000 as loss.

16. The authorized capital stock of a corporation is P 500, 000 divided into
1, 000 shares with a par value of P 100 each. At least P 25, 000 or 250
shares of the authorized capital stock must be subscribed. The 250 shares
were subscribed by 25 subscribers. To meet the minimum amount of
subscription that must be paid:
a. It is enough that 25% of the total subscription is paid,
regardless of the amount paid by each individual.
b. Each and every subscriber must always pay P250 which is 25% of
their individual subscription.
c. Seven of the subscribers paid P 6, 250 and the rest of the
subscribers did not make any payment.
d. None of these.

17. Which of the following is not a requisite for the existence of a de facto
corporation?
a. The existence of a valid statute under which a corporation
with some of the purposes in question can be formed.

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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
b. An attempt in good faith to form a corporation according to
the requirements of law.
c. The organization is not registered with Securities and
Exchange Commission.
d. As user of corporate powers, there must be a transaction of
business in some ways as if it were a corporation.

18. Stock corporations are prohibited from retaining surplus profits in

excess of 100% of their paid capital stock. Three of the following
enumerations are exceptions. Which does not belong to the exception?
a. Where there is pension plan as agreed in Collective Bargaining
Agreement.
b. When justified by definite corporate expansion projects or
programs approved by the board of directors.
c. When the corporation is prohibited under any loan agreement
with any financial institution or creditor whether local or foreign
from declaring dividends without its consent.
d. When it can be clearly shown that such retention is necessary
under the special circumstances obtaining in the corporation, such as
providing for probable contingencies.

19. Which of the following instrument is negotiable?

a. “Pay to B or order, P 1,000 and reimburse yourself out of my
money in your hands.”
(Sgd )A (to C)
b. “ I hereby authorize you to pay P1,000 on our account to the
order of X.”
(Sgd.) A
c. “ I promise to pay X or order P 1,000 on or before October
25.”
(Sgd.) A
d. “Please let the bearer have P1, 000 and place to my account
and you will oblige.”
(Sgd.) A

20. Every person negotiating an instrument by delivery or by a qualified

endorsement warrants the following. Which does not belong to the
warranties?
a. That the instrument is genuine in all respects what it
purports to be.
b. That he has good title to it and that all prior parties has
capacity to contract.
c. That the person negotiating has no liability to a third person
d. That he has no knowledge of any fact which would impair the
validity of the instrument or render it valueless.

21. Mr. Bang-ga owes Mr. Eskal P150, 000 due on August 31, 2011. Mr. Bang-ga
executed a mortgage in favor of Mr. Eskal on Mr. Bang-ga’s old yellow
building which is tilting on a ravine of no return to guaranty the
obligation. On August 10, 2011, the mortgaged building was totally lost
due to a strong typhoon name “bagyong SuuS”. On August 12, 2011, Mr.
Eskal demanded payment from Mr. Bang-ga. Is Mr. Eskal’s demand valid?
a. No, the obligation is with a definite period, thus the
creditor cannot demand fulfillment of the obligation as such would be
prejudicial to the rights of the debtor.
b. No, the obligation is extinguished because the obligation is
lost due to a fortuitous event.
c. Yes, the debt becomes due at once because the guaranty was
lost even though a fortuitous event unless the debtor can mortgage
another property that is equally satisfactory.
d. Yes, the debt becomes due at once because the tenor benefit is
given solely to the creditor thereby giving the creditor the right to
demand performance even before the due date.

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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
22. If a partner in a partnership is insolvent, the first order of preference
in the distribution of his assets are:
a. Partnership creditors
b. Partners contribution to the partnership
c. Separate creditors or the debtors
d. Pro rate between the separate creditors of the debtor and the
partnership creditors.

23. X. Y and Z are equal partner to ZXY Partnership. A owes the XYZ
Partnership for P 9, 000. Z, a partner collected from A P 3, 000 before X
and Y received anything. Z issued a receipt on the P 3, 000, as his share
of what A owes. When X and Y collected from A, A was insolvent.
a. Partner Z shall share partners X and Y with the P 3, 000.
b. Z cannot be required to share X and Y with the P 3, 000.
c. X and Y should first exhaust all remedies to collect from A.
d. X and Y can automatically deduct from the capital contribution
of Z in the partnership their respective share in the P 3, 000.

24. Estong who has long half-gray hair falls in shaggy layers to his
shoulders and Que who has a thing and long goatee which is completely
gray, are partners in a real estate (ESTONGQUE) partnership. The
partnership owns a piece of land which Bal desired to buy. Bal contacted
Estong and informed him of his desire to buy the land and Estong did not
inform Que about it. Estong bought Que out of the partnership and
afterwards sold the land to Bal with a big profit.
a. The partnership is dissolved when Estong became the sole
owner.
b. The sale of the land to Bal is void because it was without the
knowledge of Que
c. Estong is not liable to Que for the latter’s share in the
profits.
d. Estong is liable to Que for the latter’s share in the profits.

25. In the matter of management of the business affairs of the corporation,

this is supreme.
a. majority of the stockholders
b. 2/3 of the stockholders
c. Board of Directors
d. President of the corporation

26. In payment for honor, the holder can refuse the payment.
II. In acceptance for honor, the holder’s consent is necessary.
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
c. Both Statements are True
d. Both Statements are False

27. I. A check must be presented for payment within a reasonable time

after its negotiation
II. An ordinary bill must be presented for payment within a reasonable
time after its issue
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
c. Both Statements are True
d. Both Statements are False

28. I. The holder of a bill drawn in a set is liable to each person to

whom he has indorsed a part of the bill; and should the indorsees, in
turn, indorse their respective parts of the bill, each would be liable on
the part he has himself indorsed, such part being considered a separate
bill by itself.
II. Each part of a bill in set may be negotiated. But the payee is not
supposed to negotiate all the parts since the only reason for drawing the
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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
bill in parts is to obtain greater assurance that at least one part will
reach the payee or its destination safely. However, should the payee
negotiate the different parts to different persons, then he is liable on
each part.
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
c. Both Statements are True
d. Both Statements are False

29. Choose the minimum requirement of the Corporation law to corporate

formation
Authorized capital Subscribed Paid In Capital
a. P 50, 000 P 20, 000 P 5, 000
b. P 50, 000 P 20, 000 P 4, 000
c. P 50, 000 P 25, 000 P 5, 000
d. P 50, 000 P 25, 000 P 6, 250

30. I. When a check is accepted or certified, the drawer and indorsers

are discharged from liability thereon
II. In an ordinary bill, the drawer and indorsers remain liable in spite
of the acceptance.
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
c. Both Statements are True
d. Both Statements are False

31. These are the effects of certification of checks, except

a. It is equivalent to acceptance
b. The drawer may still issue a stop payment order on the certified
check.
c. The payee or holder, for all intents and purposes, becomes the
depositor of the drawee bank, with rights and duties of one in such a
situation
d. It operates as an assignment of the funds of the drawer in the hands
of the drawee bank

32. A person primarily liable even though he adds the word “surety” to
his signature or the fact that he signed for accommodation is known to
the holder.
a. Accomodation guarantor
b. Accomodation drawer
c. Accomodation drawee
d. Accomodation maker

33. An instrument is considered payable on demand

a. When no time of payment is expressed.
b. When payable to order
c. When the last endorsement is in blank
d. When the last endorsement is restricted

34. A presented a bill to B, the drawee. B destroyed the bill. What can A do?
a. A may sue B for the destruction of his property.
b. A may go after the drawee for the bill
c. A may no longer collect since the bill was destroyed
d. A may consider the bill as impliedly accepted by B.

35. I. Where a check is certified by the bank on which it is drawn, the

certification is equivalent to an acceptance.
II. Where the holder of a check procures it to be accepted or certified,
only the drawer is discharged from liability thereon.
a. Only the 1st Statement is True
b. Only the 2nd Statement is True
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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
c. Both Statements are True
d. Both Statements are False

36. Which statement is true?

a. Taxation power is formidable and even superior to the Constitution.
b. The objects of taxation are persons, properties an excise.
c. Fiscal adequacy is an inherent limitation to the exercise of taxation.
d. Double taxation is illegal.

37. Which is true?

a. The CIR is empowered to terminate the taxable period whenever he deems
it necessary to enforce the collection of tax.
b. Tax avoidance is illegal.
c. Taxes can be subject to compensation or set-off.
d. Claim for exemption shall be interpreted against the taxpayer.

38. All of these are incorrect statement, except?

a. Tax condonation operates retrospectively.
b. Tax amnesty is a general pardon involving total and unconditional
relinquishment of government right to enforce tax collection.
c. Tax as to incidence can be specific or ad valorem.
d. Professional tax is a local tax.

39. Which of the following depicts the correct final tax?

a. P200,000 deposits from foreign banks, P40,000.
b. P100,000 prize for winning Miss World, P20,000.
c. P80,000 royalties from books, P8,000.
d. P50,000 inter-corporate dividends, P10,000.

40. Jane sold his shares in BB Company, a closely held corporation, directly
to a buyer. The shares have book value of P300,000 but were sold for
P250,000. Jane cost these shares P100,000. The capital gains tax on the
sale is
a. P 0 c. P10,000
b. P 5,000 d. P15,000

41. Raymond sold his old residence on fear of a ghost that looks like him.
The selling price was P2,000,000. He immediately acquired a new residence
utilizing the whole proceeds of his old residence which were exempt from
capital gains tax. While dressing for a date one day, he saw the same
ghost on the mirror. This prompt him to sell his new residence at a
P600,000 discount from its P2,400,000 fair value. Raymond immediately
reacquired another residence for P2,000,000 beside the residence of his
boy friend at Tomay, La Trinidad Benguet.

Compute the capital gains tax on the sale of the second residence.
a. P 0 c. P120,000
b. P108,000 d. P144,000

42. Kelly, realty dealer, sold the following properties during 2010:

Properties sold Holding period Gain/(Loss)

Principal residence Long-term P 800,000
Stocks sold directly to buyer Short-term 200,000
Personal car Long-term ( 40,000)
Office equipments Long-term 50,000
Bonds, held as investment Short-term 80,000

Compute the net capital gains subject to regular tax.

a. P 0 c. P90,000
b. P85,000 d. P110,000

43. Ron, who died during the year, has the following income in 2010:

Proceeds of life insurance P1,000,000

Death benefits received from SSS 200,000
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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
Separation benefit from employer 800,000
Salary accruing before death 50,000

Compute the total exclusion from gross income.

a. P1,000,000 c. P2,000,000
b. P1,200,000 d. P2,050,000

44. The books of the taxpayer shows the following for 2011:

Interest expense P200,000

Interest income, net of final tax 80,000

The deductible interest expense is

a. P200,000 c. P167,000
b. P173,600 d. P120,000

45. Horacio, Inc. provided the following benefits to its employees for the
calendar quarter ending March 31, 2011:
 Granted the use of a residential unit with fair market value of
P10,000,000 Horacio for the use of its president. The unit has rental
value of P34,000 per month.
 Purchased a P680,000 car and transferred title to its VP for finance.
 De minimis benefits granted to all employees, P400,000.
 Benefits given to rank and file employees, P800,000.

Compute the fringe benefit tax expense for the quarter.

a. P354,000 c. P320,000
b. P344,000 d. P 0

46. Anjo,a sole proprietor, made the following contributions during 2010:

Contributions to priority activities P100,000

Contributions to accredited non-profit
charitable institution 120,000
Contributions to the government for public use 100,000

Anjo reported P500,000 net income after the above contributions. Compute
the deductible contribution expense.
a. P320,000 c. P261,000
b. P302,000 d. P220,000

47. Mr. and Mrs. Cuaresma have the following children:

 Orio, the family’s cook, 23 years old deaf-mute
 Jane, 21 years old and working as part time office assistant
 Babe, 16 years old young artist of ABS-CBN
 Verna, 14 year old BS. Biology student at Harvard
 Bernard, 12 year old Math genius studying at the University of Kalinga

Mr. and Mrs. Cuaresma has salaries from employment of P150,000 and
P100,000, respectively. Mrs. Cuaresma paid P3,000 health insurance for
the family.

Compute the taxable income of Mr. and Mrs. Cuaresma, respectively.

a. P75,000; P50,000 c. P50,000; P47,600
b. P50,000; P47,600 d. P25,000; P50,000

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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
48. Intrepid, Inc. showed the following computation of its taxable income in
2010.

Gross income P4,000,000

Less: Other deductions from gross income 2,000,000
Net operating loss carry over 1,000,000
Taxable income P1,000,000

This was the first time Intrepid, Inc. reports taxable income since its
inception in 2004. Intrepid, Inc. paid P200,000 MCIT in prior years.
During the current year, P25,000 was withheld by clients from Intrepid’s
gross income.

Compute the 2010 income tax payable of Intrepid, Inc.

a. P300,000 c. P100,000
b. P275,000 d. P75,000

49. Atlas, Inc. reports the following income in 2010:

Taxable income P400,000

NOLCO claimed 600,000
Estimated 2010 income tax paid 100,000
Capital gains, net of tax 50,000
Passive income, net of tax 180,000
Exclusions from gross income 120,000
Exempt income 200,000
Dividends declared 400,000
Reasonable appropriation 300,000

If Atlas, Inc. was assessed for improperly accumulating profit in 2010,

how much is the improperly accumulated earnings tax?
a. P105,000 c. P 75,000
b. P103,000 d. P 73,000

50. All of these are exempt from transfer tax, except?

a. Transfer of the usufruct in the owner of the naked title
b. Proceeds of group insurance received by heirs of the decedent
c. General renunciation of share in the conjugal property by the
surviving spouse
d. Transfer under special power of appointment

51. Non-resident decedent can claim deduction for

a. Transfer for public purpose
b. Medical expenses
c. Family home
d. Standard deduction

52. On November 1, 2010, Gwen died leaving the following properties:

Agricultural land, inherited February 2, 2008 P1,200,000

House and lot 2,000,000
Cash 2,800,000
Car 500,000
Other personal properties 1,000,000
Total properties P7,500,000

Mortgage on the agricultural land P 500,000

Other indebtedness 1,200,000
Deductible expenses and losses 400,000
Total ordinary deductions P2,100,000

Gwen paid P300,000 in mortgage before his death. The prior estate paid
the estate tax on the agricultural which was then valued at P1,000,000.
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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION

Compute the vanishing deduction.

a. P403,200 c. P330,400
b. P388,800 d. P302,400

53. Mr. and Mrs. Boromeo got married on February 14, 2001. The spouses
stipulated the conjugal partnership of gains for their property relation.

Mr. Boromeo died leaving the following properties:

 P800,000 cash inclusive of Mr. Boromeo’s P200,000 SSS benefits
 P200,000 claim from insolvent persons, from the salary of Mr. Boromeo
accruing after marriage
 P400,000 second hand car, inherited by Mrs. Boromeo in 2000
 P2,000,000 house and lot, purchased out of Mr. Boromeo’s salary
savings
 P300,000 pieces of jewelry, inherited by Mr. Boromeo from his father
 P500,000 agricultural land purchased by Mrs. Boromeo out of her PCSO
winnings during the marriage

Compute Mr. Boromeo’s gross estate.

a. P4,200,000 c. P3,800,000
b. P4,000,000 d. P3,600,000

54. Which of the following donation is exempt?

a. Donation to the government for public purpose
b. Donation to accredited non-profit institutions
c. Donation to the Philippine Inventor’s Commission
d. Donation to the Board of Accountancy

55. The following are deductible by a non-resident alien donor, except

a. Dowry exemption
b. Donation to the government for public purpose
c. Indebtedness assumed by donee
d. Donation to accredited non-profit institutions

56. Which of the following is subject to value added tax?

a. Importation of grapes and apples
b. Sale of husked rice, corn grits and molasses
c. Sale of fire wood and charcoal
d. Sale of seaweeds

57. All of the following entities are VAT-exempt, except?

a. Tagbilaran University, a proprietary educational institution
b. Notre Dame, a proprietary hospital
c. Bank of the Philippine Islands, a commercial bank
d. Philippine Airlines, a domestic air carrier

58. Which is subject to VAT?

a. Life insurance companies
b. International air or sea carrier
c. Agricultural, credit or multi-purpose cooperative
d. Operators of hotels, motels and inns

59. Which is not subject to output VAT?

a. Direct export sales of goods
b. Cessation of status as VAT taxpayer with respect to all goods or
properties on hand
c. Sale of residential dwelling for P2,800,000
d. Sale of residential lot for P1,500,000

60. Which is not a transaction deemed sales?

a. Withdrawal of goods by the proprietor for personal use
b. Retirement from or cessation of business
c. Declaring business properties as property dividends
d. Corporate merger or consolidation
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 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION

61. Which is not a zero-rated sale of goods or service?

a. Transmission of messages message originating from the Philippines to
abroad other than news services, embassies and diplomatic calls.
b. Sale of gold to the Bangko Sentral ng Pilipinas
c. Sale of electricity from hydropower and solar power plants
d. Transport of passengers by air or sea from Philippines to abroad

62. Which is correct statement?

a. If the monthly aggregate acquisition cost of capital goods exceeds
P1,000,000, the input VAT shall be allocated over a period of 60
months starting from the month of purchase.
b. The export sales of non-VAT taxpayers are exempt from VAT.
c. The excess of input VAT over standard input VAT on government sales is
a taxable gain subject to income tax.
d. Monthly VAT is due 25 days from the end of each month with the
quarterly VAT payable 20 days from the end of each quarter.
63. Wendy shows the following input VAT during a quarter:

Deferred input VAT P150,000

Allocation of current input VAT:
- Regular sales P200,000
- Zero-rated sales 300,000
- Sales to the government 100,000
- Exempt sales 50,000

Compute the creditable input VAT.

a. P800,000 c. P650,000
b. P700,000 d. P350,000

64. Traders of which of the following is allowed presumptive input VAT?

A. Milk C. Mackerel
B. Packed noodles D. Raw sugar

a. All, except D c. All of these

b. All, except B d. None of these

65. Rural Bank of Gumaca, Inc. (RBG) shows the following receipts during a
quarter:

Interest income from more than 5 year loans P1,000,000

Interest income from less than 5 year loans 6,000,000
Gain on sale of ROPA 400,000
Rental income from ROPA 200,000
Service fees 800,000
Dividend income 100,000

Assuming RBG is not a cooperative bank, compute the gross receipt tax.
a. P415,000 c. P385,000
b. P408,000 d. P208,000

66. Phil Co. raised its total outstanding shares by 40% to 70,000,000. This
was made by conducting an initial public offering through the Philippine
Stock Exchange. The IPO shares were offered and sold for P20 per share.
The stock transaction tax is
a. P16,000,000 c. P7,000,000
b. P8,000,000 d. P4,000,000

67. Which is a correct statement?

a. Distraint and levy should not be implemented simultaneously so as not
to violate the proprietary interest of the taxpayer.
b. Assessment must be made by the BIR within 5 years from the date the
return is filed. Collection shall be enforced within 3 years from the
date of such assessment.
c. VAT taxpayers shall issue receipts regardless of the amount of the
sale.
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NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch –
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PB03
 Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATION
d. Distrait and levy can be effected even in the absence of a prior
assessment.

68. Remy was unjustly assessed by the BIR. The following relates to Remy’s
protest:

Date of receipt of final assessment November12,2009

Date protest was filed to the BIR December 8,2009
Date supporting documents were submitted January 26,2010
Date of denial was received June 5, 2010

Which of the following statement regarding deadlines is false?

a. The last day to file protest is December 12, 2009.
b. The last day to submit supporting documents is February 6, 2010.
c. The last day to appeal to the CTA is on July 22, 2010.
d. If the BIR should not act on the protest until the lapse of 180 days
from the submission of the supporting documents, the taxpayer should
appeal to the CTA within 30 days from the lapse of the 180 day period.
69. The following relates to a taxpayer’s claim for refund:

Date of erroneous payment of tax April 15, 2009

Date of claim for refund was filed with the BIR December16,2010
Date of receipt of BIR denial April 9, 2011
The last day to appeal to the Court of Tax Appeals is
a. January 16, 2011 c. April 15, 2011
b. April 9, 2011 d. May 9, 2011

70. Mr. Marcos is a resident of Magsaysay, Baguio City. He disclosed the

following properties and income during 2010:

House and lot P3,000,000

Salary 400,000
Professional fees 800,000

How much shall Mr. Marcos pay in community tax for 2011?
a. P5,005 c. P1,685
b. P4,205 d. P 0

----- End of Examination -----

12
NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch –
th

PB03