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CPA Review Sch,c** <lf tlte Phrlippines

Business Law and Taxation

Saturdag September 14,2013

10:30AM to 12:30Noon

rrffincdons,Choose the BEST answer fur each of the ferliowing items. Mark only one answer for each item on the Speciat
Ansv*er $hed pnovided. Strictly rssasure dlowd.


Which one ofthe fotlowing is nnt a. requtsite to rnake an initnment

a. If addressed to a drawee, he rnust tre named or otherwise inclicated therein with reasonable
b., JI grgst sO$-af*a*pnEqudt-tjpgf,I SES!LI$g o'r qr.dgf rfi Sr.{r}..A S!-jI} s.6rf +}t! tp.E,.gf-Ky
c. Where the instrument is payable i;o tx*rcr, the payoe rrrr,ir. !r ,iemed or otherwise indicated
tirerein vrrrth reasonable certainty
d. Where the instrument is parvable to order, the palee must be nam.eC or otherwise indicated
therein with reasonable certainty


M, makes

to the orCer ot'i'. P made a special indorsement to A. A

made a qualified indorsement to B, a minor. Subsequent in<.iryrsrments are ftom B to C, C to D and D to
E,. all by speoial indorsement, then E made a qualified indorsennent to F. Which of the following
a negotiable promissory note payable

staternents is correct?

The inriorsement made by B transfers titls to C, herce i3 is llabls as an indorser Transfer title but
NOT liable.
F can hoid E liable ifM dishonors the urstnrrnrrr: E violates warranty
In case M dishonors the instrument, F can hold alt itdroi'sers liabie except B & Q
d. The qualified indorsers A ancl E and miuor B are not liable to F E is liable


His warranty extends in favor only of the irrme 1i;fs transferee and to no other holder
a. Qualified
r,. Fe'r'son negoriating b-'r delivery
b. General
nt. Person uegotiating by biank indorsement


which of the fc,llov,ing sta.tenents r:e'.r"t'lidrg tr freffir.rri, ohares il corect?

a. Treaslly shares are not part of r:su ,d ca.p,ital s:tcc"l:
b. Treasury shares may not be d.sposed of at a price lowor thur thv par or jssued price even if it is



reasonabtre and approved by the toarcl of<hrectors

Treasury shares are entitled to vote

,J. Treasury


shares, onco disposer! cf, entitle the purchaser or transfore,e he right to dividends

5. Which of the frillowing is not a negotrabie instrurnent?

a. '?ay to B or order P1,000 in 4 equal monthly installinellts."


Kailangan nakaspecify din kung

Sgd. A
kailan mo siya sisimulang
'?ay fti B or order Pl,000 and debit rny a*eo,xrt thercafter"
To: X
Sge{. ,1"
'?ay to the older of B within 6 mon'ths from dete tire sum,rf P1,000 at 12% per annum"

To: X


"Fay to B or 1iearerP1,000 ons ye,ar afie r .{ate. df rtt paiC v,rhe*. due, I agree to pay collection and
attorney's fees"

To: X




Holder H altered the amount of a n*gotiat leinote froru Fld),,{i00 to P1 1C,000 then negotiated the note to
P. As a result,
a. If P is a holder in due course. tie can 1eq,rdr,, fl.:"r ntl,,&.er;c,Ila) PJ l,J JOa
b. If P is not a holder in ciue sourse, he qaR *"e,{uir*g tlr.* maker io pa}'only the original sgm of
o. P cannot require the maker to pa1. trc,oaui,e *t siferalrrrt ,vhetlrer or not he is a holder in due


l-f.P is a Lotrder for value, he can cir'[Iqm F I tii"ul)e

ficm ]i.

i 7. M issued to p, accommodatd party, a nego{iabrle pr:omissory note for P10,000. P endorsed it to A' A to
Accommodated Party - sya yung nakisuyo. On the eyes of
B and B to C. Which one of the fotlowing is incorrecti
the partues. Subsequent to accommodation,
a. M can collect from P, if M will Pay C
syang alam sa accommodation na naganap.
b. P maydirectlypay C
c. Between M and P, M is not liabte ufuilr P is principally liable
d. P can collect from lvI, if P \^rill pay C

pwedeng wala

{. A is maker and H is payee of a negotiabl* promissory note payable to order. There is no valuable

consideration for the note-. B delivers the ins*:rment to C, without indorsement, under circumstances that
otherwise would have made C a holder in due course such es, that C did uot know of the absence of
consideration. May C recover from A?
a. Yes, because A's personal defense oalnot be used agai.nst C
b. Yes, bos.atis the promissory rme is rlsgotiable
c- No, because A hai a real deferse iryhich can be used even against a holder in due course
d. No, because C acquires only B's nghts and A can set up agarnst B the defense of absence of

a shak B is tk snd X is tlrri drauv-e bank. Y fraudulently gets hold of the
check and forges the signature of the pay*e, ts" Y theo deposits it io C bank. C bank indorses the check
to X, drawee bank and collects from-said X dra.wee hank through the clearing house. then Y, forger
withdraws from C bank the proceeds of tlre clree'.k and disappears. Vrhich of the following is not correct?
L. The drawer A has the right to reool-er'from calleoCing bank C
b. The drawer's acoouot cannot be chargsd try the drarvee bank
c. The payee, B can recover &om drawer A
d. The drawee bank can recover from fhe cnliecting'bank

A is the drarvsr


10. The following statements pertain to a voting tn$tee' except



The representative acquires legal title to the shares

It is good only for the meeting for which it was intended
;.: *rufly irr.rocable *O tU* representative may vote even in the presence of the
The agreement giving the reprresentativq thlpower to vote must be duly notarized and a copy
ther.eoimust be iubmiued to the SEC to be effective and enforceable

;. ii


l. This vacancy in the board of directors

still constitute

may be finled by the board of directors


the remaining directors

a quonrm

Removal of a director
Death of a director
Iacrecse in thenturbersf dirustffis
d. Expiration of the term of a director



M issues a promissory note payable to P or bearer. B"hjclr of the fotlowing is not correct?
a. If indorsedUy f to A nirO A also indorses it to B, B rnay negotiate the note to C by delivery
b. If indorscd by P to A and A also indors^es ii tri B, P is liable to A altd B
c. If indorsed Uy e to ^A, and A also inelorx*s it to B, and B negotiates the note to C by delivery- A is
liahle to B and C
d. If p negotiates the note to A by deliverv and. A indorses it to B, B may negotiate tho note to C by

ofthe following is,not correct?

Where the instrument is negotiated ba,c,l( to a prior party, all intervening indorsements are not
nccessary to the h.older's tifle
b. lVlrere the instrument is originally payahle to order, the holder maY not strike out the PaYee's

13. Which



The indorser whose indorsement i: struck out and atrl the indorsers are thereby relieved from
liability on the instrument
The holdermay at anytime strike out an i*dorsernent which is not necessary to his title



The subscriber of shares even if not fully prraid but rvho is not delinquent is entitled to the folfowing
rights, except
Stock certificate is issued only to
a. Rights to receive dividends
fully paid shares.
b. R.ight to vote in stockholders meetings
c. Right to demand his stock certificate
d. Rights to inspect corporate books and records.

B - {5' Slaiemenll - A majority of the number of directors or trustees as fixed in the artioles of incorporation
shall constitute a quonrm for the transaction of corporate business, anel every decision of at least a
majority of,the directors or trustees present at a meeling at which threre is a quorum shall be valid as a
corporate act, except for the election of the offrcers rnhich shall requir"e the vote of a mejority of all the
mernbers of the board

Stsfqffiqt U

No pe,rsou
fu a
six esfivftted of fiml jgdgruent of an rltfemse pnrnisimble by irrprisorrrmt
period exceeding XXX
five years or a violation of the corpormion oode committed withinsix
XX lears
prior to the
date of his electioo or appoinunen! shall quaiiff as a director, fustee or officer of any corporation.
a. True, true
b. True, faJse
c. False. fnre
-1. False" t'alse

D 16' M rnakes and

ctrelisers a prornissory note

payatle to the order of P. P indorses the note to A. Later,

steals the nste and negotiates the same to t{ by f'orging A's signature. Thereafter, B negotiates the note
to C, C to D and D to E, a holder in due osurse^ lttricle of the tbllo*ing statements is correct?
&. E can hold M and P liable because their signat"r* are genuine



E cannot hold B, C and D linble beca'*se they have iro pa.rticipatr.on in the commission of the

E can enforce the instrurnent nnly ag*inst S, the fc,rger
E can enfilrce the instrument against S, B" C and D but nc,t agaiast ld, P and

B 17.P, O and A are partners in an impoit and exp:rt irusiness. Customers desiring to place an order for
imported artictres are always required to rnake a d,cp':sit of l5_9ro of the tota! cost .rf the order. B, a regular
customer, deposited P5,000 to P for his ord*r, P, instead of tumin;* over the said amount to the
partnership, misappropriated it. As a result, (rrio lti irot cofiect
a fI may institute a ciaim aga.inst the parfnerstiip and a{{ th* partners
b. 'Ihe personal liability of the pafiner,:s is jr:rint
c. The partnership is bound to make gorx! the loss wherre one parhler acting rvithi* the scope of his
apparent authority receives nlonev or proiierg cf a thrd psrson anct misapplies it
d. Ail the parhrers are lrable sc,lirftrlil;r r,,ltl thc pxtlr,rsliip for:"er;thin_ chargeable to the
pafine$irili Damages 'to kaya solidary.


A contract lvlrere the creditor acqui:r;s tfte right rrt re*eire the firdts of rn rrninovalrle of his debtor, with
the obligntion to apply them to the payment iif irrt;rest it ow.,ng" arrC tlroreafler to the principal of his
credit is

a. Anfichrssis





R.adestrte;.norfgr4e d


A ptedged his nng to B for P20,000. A faiie,J 1,r pay his obiigaE,lrr. i"i lohl rt at a public auction for
Pl8,000. Can B recover the deficiency?
a" Yes, even without stipulation r. li'o, even ifthere is stip,;Lr*i,tn
b. Yes, if there is stipulation
d i{o,liyllesl there is stjpr.llafion

A 20. C mortgaged his car to B for

P?CI0,000. C failed.

P180,000. Can B recover the deflciency"l

a. Yes, even without
b. Yes, onlv if there is





o, No, ev*ia

hil ctili,6ation. B sold

if there is stipri;gl6,n

tL N$, u:rless ther.e is stipulati,;n

D 21. Any director of a col'poration maybe removedrf'rr:nn oftjse

a. Majority of the mernbers of the board
b- Majority af the stockholders Fr.esent
o. 2/3 ofthE stockholders present
- d.
213 of trcourstanding capiml sfock

b.v a



rt at a public auction for

22.PLand P2 are co-owners ofa piece of lend an*i ttie-v iuulr,::d ,rnd arrthorised A to sell their land. tUho will be
liable to A fortlre payment ofhis commission?



Both Pl and P2 jointly

Both P1 and P2 solidarily only if stiplated
BothPl andP2 solidarily even withorrt stipulation
50% fromP1 and S0YofromP2

23. F appoints A1 ar:d A2 as his agents. A{ anrl A3 agreed to be bormd solidarily. Suppose A1 performed the
agency negligently which caused damaged to F, **n P hold A2 liable for damages?
Slalennen!-l- Yes, if A1 acted withitr the sirrpe of his authority
Steteseul2 - No, if Al acted beyond. the s,;ope *f h"is authority
a. Both statements are true
b. Bo{ft st*$exrreuts afe false
c. Only Statement 1 is true
d. Only Statement 2 is true


A sold his piano to B for Php200,000 payable ilr inste^tlmrent. A chattel

mortgage was constituted on the

pianci. il defaulted in two installment payments. A clef,rranded payment of the unpaid obligation amounting
to Php 120,000 and a writ of attachment was issued and the piano was sold for Php 100,000. Can A still
recover the deficieney?
Statement I - No, the foreoloswe ofthe piamo extinprrishes B's obligation
S{atgent 3 - Yes, if stipulated that in casc of foreclosure the buyer will pay any deficiency
Both statements are true
SALE by installment => RECTO law.
b. Eodr statements are false LOAN with installment => Chattel
c. Only Statement I is true
d. Only Statement 2 is tnre


25. Which of tlie follorr*,ng instrufirents:s negotiahle?

a. '?ay to the order of A or B the s,rrm rif,P1*0,000." Sgd. C and D
b. "I promise to pay to the order oI A cr B ths surn of P100,000". Sgd. C and D
'?ay to B or order the sum of Plii0,Ctt0 30 days after sight". Sgd. A
d. "We promise to pay A and B the suni cf'P100,000". Sgd. C and D


26. Deleof,rs personap is an element of a prfirership wh,ic.h. me&ns

a. Right to choose his partners
b. Con{idence and trust in his partners
c" Obligation to remain loyal to his partrers
d. ilistribution of profits among the partrrers

27. When real property is contributed to the partrlersh,p

a. A real oon.tract is perfected
b. A written in*strument is required
c. A public instrument complete with inventory is required
d. A partner can make important alteration if beriefir:ial to tlre partnership

28. In a parlnership, the liability of the partners shall be joirirt and solidary
L Oblig,atiors in favor of partnership suppliers by virtue of sales contract
U. Ohligatioras in fb'vor of a partnership client for retum of deposits misappropriated by one of the
partners damages
m. Obligations in favor of a pedesfiian hit by tho rl*hveiy van driven by one of the porhrers in the course
of partnership business damages

c. I arul II


b. I{ and
d. I,




29. Acorporatiotr is cirtferent ilicrn a pm.rtnership in -that ttre fonner is

a. An artificial berng
Partnership is created by agreement/
b. Created by operation of law
consensual NOT by operation of law.
c. A business organization
d. Organized for profit

30. A bought from B a car at a price of P2M, FOB factory. A paid PIM as down payment and the balance
within one month from delivery. The car was picked up by A upon payment of the down payment on April
24,201Q. On May 10, 2010, B ieamed of A's insolvency. In this case, B shall be entitled to
a. Remedy of possessory lien
Possesory lien - right to retain possession of
b. Remedy *f resale
goods until FULL payment.
c. Remedy of stoppage intransit
Insolvent na nga sya. Hindi na yun mababayaran ng
d. Remedy of rescission


31. The principle of "caveat emptor" or let the buyer beware will not apply in
a- Sheriffs sale
b. Sales of animals in pairs
c. Auction sales
d. Sales of livestock as condemned


A, B and C are partners" A died togsther with other Fssengers of Flight 123 of Air Port. In spite of A's
a matter not
deatlU which is kno*.n to B, B still transacted business with the firm's previous creditor, Y, on

related to winding up. y thought all the time that the f,rm had not yet been dissolved because he did not
the notice of dissolution publiihed in the newspapers. In this case, the
a. No longer liable toy since the transactionitrr dissolution is not oonnected with winding-up
b. Still liable to Y since he is a previous creditor
c. Still liable to Y since the transaction is within the 3-year liquidation period
d. No longer liable to Y since B can no longer bind the firm due to the death of A

- 33. A and B entered into a contact

of partnership for the purpose of operating a car repair shop. A promtryd !o

contribute P500,000 on April 2q,ZOW. B as industrial partner, wilfmanage the business. On April 24,2A14,
A did not effect confiibution. Thus
a. A is in delay ifB makes a demand
b. A is a debtor in default
c. B shali be entitledto damages
d. The partrership is dissolved due to lack of crbject

34. Ais the listed owner of 10,000 with par value of Pl00/share common shares in ABC Corporation AB9
sued A for the pavment of A's indebtedness of FlM. A contends that such debt must be compensated by his
shares of stocks with the plaintiff corporation. The contention of A is
a. Valid due to legal compensation
b. Valid by virtue ofjudiciatr compensation
c. Unte,lrable since he is not a creditor of the corporation
d. Automatically exinguished if the fair market value of the shares is


35. A gave B p50,0C0 for the purchase of a TV set in behalf of the former, with the obligation of returning the
amognt if the TV set was not bouglit u'ithin a week. A did not buy the item but did not return the amount'
An estafa case was filed by A against B. B pleaded A to drop the case. In returr! B issued a promissory note
in favor of A for the amount involved. Is the promissory note valid?
a No, the consideration of the note is the stiffling of the crime of estafa
b. No, the consideration of the nofe is unlawful
c. Yes, if the note is negotiable because ofmutual consent
d. Yes, the note is in considerition of a pre-existing debt


A and B efl,tsred into a universal prrtnership of ali present property. No stipulation lYas rnade regarding
futue properl.y After the perftction of the contract, A inherited a parcel of land and B acquired a car as
r"1n*.rutloo io.



services rindered. The properties aoquired after the perfection of the confact belong to





37. Which of the following statements is thlse?



Treasury strarei revert to the unissued shares of the corporation and being in the treasury they don't
have the status of outstanding shares
of such
Shares issued without p* uui-u" shall be deemed futly paid and non assessable and the holder
shares shall not be liable to the corporation or its creditors in respect thereto
Redeemable shares may be redeemed regardless of the existence of unrestrioted retained earnings
provided such redempion would not cause insolvency or inability of the corporation to meet its
debts as they mature
part of
When pa, oal.r. shares are issued above par, the premium or excess is notto be considered as
the legal capital

3g. In case the members of the board of directors of a corporation still constitute a quorum, and there are
vacancies, who will fill up such vacancies?
Removal Besisnation Exniration of term Incrpase in the number otDirectors
Stostlmlders Board
Stockholders Stockholders Board

partner, and C as an industriat partner, contributing'P200,000, P200,000 and industry respectively. Th"rrtip failed and after dispoiing all ix assets to puy partnership debts, there still remains a note payable
in the sum ofP30,000. Against whom canthe creditor demand payment?
Nakalagay yung name nung limited partner









sa company name e. So sa mata ng 3rd

P10,000 party, general partner sya unless may

kapangalan syang general partner.

40. Which of the following is not correct?

a. A partnership begins from the moment of the execution of the articles of partnership, unlEss it is
otherwise stipulated
b. Persons who are prohibited from gving each other any donation or advantage cannot enter into
universal partnership
c. A particular partneiship has for its object detemrinate &ings, their use or fruits, or a specific
undertaking or the exercise of,a profession or vocation
d. Articles of-universal partn"r*ttip entered into without specifications of its nature, only constitutes a
universal partnership of profits

41. A insured his life for PIOM. In case A dies, the proceeds of the life insurance shall be:
&. Excluded frona gross,estate if the beneficiary is the estate, executor or administrator whether
revocable or irre.vocable
b. Part of gross income if the beneficiary is a third person and the designation is revocable
c. part of ihe gross estate if the beneficiary is a third person and the designatio:r is irrevooable
d. Excluded fro* grosr income whether Lreneficiary is revocable or irrevocable



domestic corporation was determined to be improperly accumulating rts earnings for tho taxable
year 2009 based on its records as follows:
P 1,000,000 +
a. Net income from business before tax
i 50.000 b. Dividends actually or constructively paid
:70,CI00 c. Income tax paid for the year
gi;,gli0 + (net of FT na 'to)
d. Income subjoced to 209'i, final +a:l
5U,000 +
e. Income exempt from tax
10,000 + = 700 x 10% = 70
f. Income excluded from gross incorne
g. Net operating loss (2008)
The ta:r on improperly accumulated earnings is
a. P81,500
b. P71,500
c. P80,000
d. P70,000

but subject
{3. Real property with a cost of p300,000 and a fhir market value atlhetime of death of P1,000,000,
to a mortgage of P200,000
a. Shall be in the taxable net estate at F800,000
b. shall be in the gross estate *ttfoe decedent equity of F800,000
c. Shall be in the gro$s estate at P300,000
d. shall be in the gross estate at the owner's equitv of PI0c,000

A acquired his residential land iri 2000 at a cost of P1,000,00s. He sold the properry on January 1, 2009 with
he purchased his
a fair market value of pS,000,000 for a consideration of P4.000,000. Within 18 mon'ths'
new principal residene* at a. c*g"t cf P7,000,000. How unti..":t i:: the' ca.;'itri
a. P300,000 yung resident land sold is NOT his principal residence..
b. P240,000
5M x 6% =300
c. P75,000
d. P0

muoh is
45. Using the same data, exoept that A acquired his new principal residence at a cost of P3,00,000, how
the capital gains tax?
a. P300,000
b. P240,000
c. P75,000
d. P0

46. One of the following is not correct

a. The estate must be valued at the time of ctreatti of the decedent
b. Real estate situated in foreign countries will be included in the gross estate of a resident alien
deeedent pero may tax credit sya..
c. The Commissioner shall have the authority to grant, in meritorious cases, a reasonable oxtension
not exceeding 6 mnnths ior filing the estate tax reiurn 1 month lang extension ng FILING!
d. Vanishing deduction is subject to limitatiori

47. Mabuhay Corporation organized in 2002 has the follov*ing data:

Cost of
The income tax payable in 2008 is
a. P13,000
b. P5,250
c. P10,500




48. Using the above data, the income ta"x payable by Mabuhav Corp<nation in 2009 is


b. Pl10,750

d. P108,000

49. A filed his income tax retum for the calendar year 2007 on }v{arch 20,20A:8. When is the last day for the
BIR to collect assuming A did not pay the tax dur" ugrn frling?
a. March 20,2011


b. April 15,20ll
c. April 15,2013
d. March 20,2013

50. Using the above data, assuming A frled his inconne tax return on April 20, 2008 and the retum is not
fraudulent, when is the last day for the BIR to rnake an assessment?


b. April l5,20ll
c. April20,2Al3
d. April 15,2Al3

51. Using the above data, if the BIR issued a deficieircy income tax assessment on March 10, 2010, when is the
last day for the BIR to collect?

a March 10,2013
b. Apil 15,2A13
c. tvfarch 10,2015
d. April 15,2015

52. One of the following is not within the powers of the Cc,nrnissioner of hrternal Revenue
a. Compromise the payment of intcrnal revenue ta:r on the ground of taxpayer's financial
b. Compromise the pa3ment of intr":rnatr revefiue tax on the ground that there is reasonable doubt
as to the validity of the assessnnent
c. Compromise criminal violation if already filsd in oourt and those involving fraud
d. Abate or cancel a tax liability on *he ground that the cost of collection is greater than that of
the tur to be collected

53. The export sale of a vat registered enterprise is

a. Exempt from the vat
b. Subject to the 0o/o vat
c. Subject to the l2a/o vat
d. Subject to percentage tax

54. A filed his ITR for 2012 ot April 15, 2013 and wiltr pay his tax liability in installment. The return shows an
income tax clue of P100,000 and income tax $rithh;ld of P60,000. If A pays the 2"d installment only on
October 75,2013,the amountto be paid (exciudirry compromise penalty) is
a. P26,000
b. P35,000
d. P37,500

= -10 => 0

55. Using the above data, the amount due on

a P20,000
b. P40,000
c. P0
d. Refund of P10,000


=40 + 40x25% + 50x20% x 6/12 = 55

15. 2013 is

56. Which of the following statements is not correct?


When a compulsory heir is given by will iess than his legitime, the provisions of the witl should be
modified in such a way that he will receive his legitime
The CIR may examine the bank deposit of a decedent for the purpose of tletermining his gross estatc
even if the estate did not request f,or a compromise on the ground of financial io*prcity
The P500,000 standard deduction for medical extrrnses for estate tax purposes is a legal mechanism
to further exempt the less privileged estate and heirs from tax burden
The sharing of heirs in testamentary succession must satisff the rules on legitime



stookbroker remified P11,250 to the tsIR representing collecdon of tax withhetd from clients. The peso
volume of his stock transactions from which the tax was withheld is
b, P112,500
d. P2250,000


A vat taxpayer


has the following data for a partioular quar&er cluring the current year:
Sale of shares of stock:
Held as inventory
P 1,000,000

Held as investment
Cost of the shares sold:
Held as inventory
Held as investrnent (thru local stock exchange)
The stock transaction tax is
a. P0
b. P1,500
c. P2,500
d. P7,500


59. A race track bettor won on the fotlowing bets:

On double, a bet of P200 and dividend of p200 per p20 ricket
On winner take all, a bet of P500 and a dividen'J of Ftr 000 per P50 ticket
On forecast, abet ofP1,000 and dividend of pl00 perF20 ticket
The total percentage tax due from the winnings is

b. Pl,Ig2
c. P1,280
d. Pl,530

60. In a hansfer in conternplation of death revocable trensfer ancl. transfer under a general power of
appointment, there are rules to observe to detenaine rvhat amourit to inch,rcie in lIrc grois estate, which is not
a rule to observe?
a. If the transfer was in the nature of a bora firie saie for an adequate and full consideration in
money or money's worth, no value shall bo rncluded in the gro,ss estate
b. If there was no consideration received on fhe f;ansfe,r as ln rlonatic,n inter-vivos, the value to
include in the gross estate shall be the tair markel value of the properfy at the time of transfer
Ifthe consideration received on the transfer vras less than adequa-re and full, tbe value to include
in the gross estate shall be the excess of tiie fair rcarlce;t v,alue of the property at the time of
decedent's death over the consideration re,;eive(I
d. If there was no consideration received or the lransrbr ns iu clonatiori rnortis causa, the value to
include in the gross estate shall be the thir market ralue of,the prr,rperty at the time ofthe



61. For proceeds of life insuranoe not to constitute part nf tii* gross esiat;:
a. Must have been taken out by the Cee*dent upcr: his li{e
b. Must have designated the estate of the rl*cecisnt as irrevocabl,* beneficiary
c. Must have designated a third persoil as. the decedent's elie()utcr cr administrator as the
irrevocable benefioiary
d. Must have designated a thinl persorl other tlun the e;tato, the des:dent's executor or
administrator as irrevocable treuefrci ar17

62. Which of the following statements is false?

a. Donations can be made to conceiveci and unborn children

b. The first Pl00,000 donation is exempted &om donor,s tax

c. Juridical persons can also make donations

Husband and wife can make moderate donations to each other on account of family celebration

63. Which of the following is subject to VAT?

a, knportatio-n of personal or household effects belonging to the residents of the philippines
returning from abroad and non-resident citizen coning to resettle in the philippines where such
goods were subjected to customs duties
b. Importationof passenger or cargo vess*l and aircrafts, including engine, equipment and spare
parts thereof for domestic or international transport operation
c. Importation of fuel, goods and supplies by persons engaged in international shipping or air
transport operations
d. Sale of leal property not primarily held for sale to customers or held for lease in the ordinary
course ofbusiness

64. Which of the following is exempt fiom VAT?

a. Sa.le of passenger or cargo vessels and aircraft, including engine, equipment and spare parts
thereof for domestic or intemationa.l transport operations
b. Sale of professional instruments and impleurenti wearing apparel, domestic animals and personal
household effect
c. Sale of fuel, goods and supplies by perscns engaged in international shipping or air transport
d. Importation by persons who are not rrat registered

65' C, vat-registered person, imported machines to be usecl in the Phflippines as follows:

personal use



Business use
For sale
The importations-were subjected to 5Q% excise tax hased on purchase price. Machine
P1,000,000 (net of vat). How much is the vat paid on impcrtation?


3 was sold for


b. P90,000
c. P54,000
d. P36,000

56. Using the above data, the vat payable is

a. P12,000

b. P30,000
c. Pl06,000
d. P94,000
ltems 67 to 78

],Nagpala a good looking Filipino 19 years old, single, high school graduate from a remote province,
brought his
i0 year old mother went to lv{anila in 2Al2 to try tt *ir iuck here.- He applied, and was 'hirud,
as a janr:tor in
vlapagpala Corporation. As soou as he was hird he eilrolled in the Collegi
of Accountancy. Foi the year zol1,
rc earned and incurredthe following:
Salaries, net of SSS, phitHealth contributions, and
Union dues of p8,000, and withhotding



13e month pay and Christmas bonus

Tuition fee, board and lodging, and othe.r living expenses 60,000
Money sent to his grandparents in the prov"ince

67 . P.

Nagpala's inoome tax payable (refundable) firr the caxirble year 20 I 2 is:
a. P4,900
b. P6,900
c. P10,500
d. P8,900

In 2013, p. Nagpala's good looks and his being anrbitious and hardworking caught the attention of ldakiri, the
company president's daughter. On February tr4 of that year, lv{akiri treated P. Nagpala to snacks. She put a
tablet inhis drinks whichlnade P. Nagpala very rnuch attracted to her. They went out often since then, and on
March 31, they got married because Makiri was already one m.onth pregnant.
For their wedding, Makiri's father gave them the following:
a. Cash of P500,000 and $100,000, whichthey im'ested as foilows:
They deposited P300,000 in a long-term trust .fund.
They deposited P200,000 in a ctrrrent account'
They deposited the $100,000 in a hank zuthorized by the BSP to operate as an FCDU.
b. P. Nagpala's prornotion - P. Nagpala was promoted, &om janitor to accounting department staff'.
c. Mapagpala Corporation shares of stock worth PeM'



In December, P. Nagpala and tv{akiri counted the trXe."lsings tJrey received during the year:
a. The first baby, born on November 30,2{}13: A h;bv boy!
b. Their reoeipts/expenses:
,E*II_@a Makid
Compensation income, net of
SSS/PhilHealth, Pag-Ibig contributions
of P10,000 and withholding tax


t,xtr month pay and midyear


Medical benefit forP.


Uniformlclothing allowance
Laundry allowance



Rental value ofthe house and lot v,ittur, the

company compound used by thtl couple
as residence. They are required to
reside therein so that P. Nagpaiii rvould he
available to the company anltime
Yield from the long-term trust fund, net
Interest, current account, net
Interest, dollar account net
Dividend income, net
Income from practice of profession, net
Expenses, practice of profession

P 180,000


68. On ac.count of donation by reason of marriage, the fath:r of ldakiri

a. Canclairn a derluction of Php 10,000 from the gifts rnade to P.Nagpala and Makiri
b. Can clnirn a deduction of Fhp 20,000 flom the gifts made to P.ltlagpala and Makiri
c. Shall fite the donor's tax return within 30 <lays after the gift is made and the tax due thereon shall be
paid atthe tirne of filing
d. Is not subject to donor's tax on the first Php 10t0,000 of his gross gifts to Makiri

69. Final taxes remitted by the couple's payors for their h*ome totaled:
a. ?44,562
Dividend income: 225/90% x 10% = 25
b. P19.562
Interest: 6.4/80% x 20% = 1.6
c. P35,000
FCDU: 103.6/92.5% x 7.5% = 8.4
d. P31,550


70.Income tal( still due from

a. P29,450
b. P9,950
c. P9,650
d. P23,540

tle couple for the taxable

year 3013:

lrr-2017, P. Nagpala passed the CPA Licensure Examination. E{e was promoted as the Accounting Manager in
the company's Accounting Department. lvlakiri stopped rvorking to have more time for her husband and three
(3) children (three more wpre born from 2014 to 2017, butthe youngest died at the age of 3 months in 2017
wtrile the eldest lives with Makiri's parents)
The year was a lucky year (financially) for the couple. They were able to buy a 2-storey commercial building.
A book about'Makiriis Code" written by Makiri was pubtrished and becarne a bestseller. They were able to sell
one-half of their interest in the corporation to a friend at a gain of P300,000 (SP is Php l'3M)' At year-end,
they computed their financial blessings:
P 684,000
a. R"ental income -net of withholding tax
(Expenses - building rental husiness F200,000)
450,000 I
b. Royalty income from the book, nei
c. A brand new car, purchased by the fiompany for P. Nagpala
(the car was registered in the name of
P. Nagpala) - purchase cost...
d. Otherbenefits glven by the company to P. Nagpala:
Groceries for the family
Salary inerease, P20,000 per month
Tuition fee, shouldered by the ccmpanv when F. Nagpala
attended a computer crash course to learn about
the software being used in the company's
For the taxable year 2A17,


71.P.Napala may claim personal exempticns (basric and additional) of:

a. P150,000
yung eldest child, not living with




Makiri's taxable income is:

b. P192,000
c. P310,000
d. P460,000

73. The final tanes on the couple's passive


P 75,000

b. P 50,000

P 56.500
P 62,500

income and capital gain for 2017 totaled'.

100 x 5%
+ 200 x 10%
+ 450 / 90% x 10%

74.The fringe benefit tax withheld by the compar.y pertaining to the benefits given to P. Naglala dwing the year
a. P531,200
b. P545,317
c. P289,317
d. Y215,204

ln November 2018, while the couple were talking about haviug another child, P. Nagpala suffered a cardiac
arrest and died 3 days after, withoot uoy last will and testanlent. By year-end, the estate tax was paid and the
-estate was distributed to his legal heiri. Makiri rvent braok tro the practice of her profession and continued
operating the commercial building

75.If anincome tax return is to be flled

fcrr the 2018 inconoe of P. Nagpala, how nnuch personal and additional

exempions maybe claimed?

Php 20,OOO
b. Php 125,000
c. Php 75,000
d. Php 100,000

not living with yung eldest child

Later in Novemb er Z}l9,Makiri married P. Nansalo. the best frie,nit of F. Nagpala. Unfortunately, the marriage
did not last long when Makiri died in January 2,202!, one riay after giving birth to their fust child. Makiri left
the following:



Property owned before marriage

Income of property in (a.)
c. Property acquired during marriage:
1. By gratuitnus title
2. By onerous title
d. Income of properg'in:





Php 2,01t0,000

Fhp 3,000,000



life insurance where the

beneficiary is:
1. Her mother - revocable
2. Her son - irrevocable
Receip of proeeeds of insuranc on
property owned before the marriage
which were destroyed by fire on
March 31,,2021
FMV:March 31,2021
Insuance recovery
The property acquired during
marriage - by gratrritous title were
acquired thru inheritance:
FMV (time of inheritance),4 Y,

2,200,000 .

Proceeds of





years ago

FMV (time of inheritance), I




Deductions clairned by the estate:



Funeral exprlses $A% was cov?red by a m*raorid plarr)

Unpaid mortgage on preperty acquired duinig n:ar"riage h], rrnernus fitle:
By lvlakiri (used as famiiy hona,l)
2. By P.Nansalo (used as rest hou"se)
Claims against the estate


Php 250,000

100,000 GE din


76. The exclusive property of Makiri is

a. Php 4,700,000
b. Php 2,200,000
c. Php 1,900,000
d. Php 3,400,000

77.Tlnle gross estate

ofMakiri is

a. Php 16,650,000

b. Php 16,750,000
c. Php 15,850,000
d. Php 15,950,000

78. The vanishing deduction is

a. Php 321,313
b. Php 317,015
c. Php 318,089
d. Php 331,891

79.T\e net ta:rable

estate is

a. Php 7,407,985

b. Php 7,403,687
c. Php 7,393,109
d.Php 7,4A6,911

'80. Sales during the year:

Subject to:

Php 900,000


Php 6,0fi),fi)0



Who iVare srrbject to VAT?

a. A, B, C andD
b. B andC
c. Only D

Php 950,000
Php 5,0fi),0fi)

Php 1,000,000
Php 4,0fi),0fi1

Php 1,000,000

Php 3,0fi),0fi)

Wag mong isama yung VAT-exempt sa pagcompute nung 1919500





Not over 10,000

ae exces::er

Over PI0,000 but not over P30,000

P 5 oo

Over P30,000 but not over P70,000



Over P70,000 but not over P140,000


iiilffit ""

Over P140,000 but not over P250,000


Over P250,000 but not over P500,000


Over P500,000


; ioor;;r


*" .*"*.

**:' "'"
"*"' """





excess over

The End!