Gensantos Foundation College, Inc.
Accountancy and Accounting Technology Department
Departmental Examination- 1st Semester SY 2022-2023
Accounting 303
GENERAL INSTRUCTIONS:
Answer what is being asked. Show your solutions in your blue booklet and shade your final answer using
pencil (#1 or #2) on the answer sheet provided. Answers without solution will not be given credit.
Answer sheet without the shade will not be check. Write your complete name, class section, and name
of your instructor on the space provided on your answer sheet/booklet. Only one answer shall be
accepted per item and avoid erasure. Any form of CHEATING is intolerable!!!....GOD BLESS.
1. A reconciliation of the Investment in Branch account in the home office of GFCI Company and the
Home office account on the branch books showed the following discrepancies at December 31, 2020:
a. Collection of branch accounts receivable by the home office, P8,000. The branch was not notified.
b. Shipment in transit to branch on December 31, 2020, P32,000.
c. Acquisition of furniture by the branch, P12,000. The fixed asset accounts is to be maintained on the
home office books. The home office had not been notified of such acquisition.
d. Return of excess merchandise by the branch but not received yet by the home office, P15,000.
e. Cash remittance by the branch on December 31, 2020 was in transit, P5,000.
f. The balance of the home office account in the books of the branch on December 31, 2020 is P440,000.
Compute the unadjusted balance of Investment in Branch Account
a. P496,000 b. P474,000 c. P501,000 d. P472,000 e. none of the choices
2. Laog Company, Inc. has been operating a branch in Cavite for a year. Shipments are billed to the
branch at a cost. the branch carries its own accounts receivable, makes its own collections, and pays its
own expenses. On December 31, 2020, the branch books shows the following balances prior to closing:
Cash P8,500 Shipment from home office P160,000
Home office 35,000 Accounts receivable 25,000
Sales 147,000 Expenses 13,500
Twenty percent of shipment in 2020 was unsold at the end. The shipment of inventory from home office
in prior year is P70,000 of which P10,000 remain unsold at the December 31, 2019. On January 1, 2021,
what is the balance of shipment to branch?
a. P42,000 b. P32,000 c. P22,000 d. P0 e. none of the choices
3. A branch's ending inventory of merchandise shipped by the home office and purchased from outside
vendors amounts to P50,000. The post-closing balance in the unrealized gross profit in branch inventory
account is P6,000 due to the home office practice of shipping merchandise at 20% above cost. The
merchandise purchase from outside vendors contained in the ending inventory of the branch amounts
to
a. P38,000 b. P30,000 c. P18,000 d. P14,000 e. none of the choices
4. During 2020, Jufel Corporation transferred inventory from its home office to its Louie branch at a
billed price of P110,000. The inventory originally cost the company P90,000. The home office reported
sales and cost of goods sold of P1,400,000 and P590,000, respectively. the Louie branch reported sales
and cost of goods sold of P675,000 and P300,000, respectively. all of the inventory had been sold by
year-end. What is the cost goods sold to be reported in the 2020 combined statement of comprehensive
income?
a. P890,000 b. P870,000 c. P800,000 d. P780,000 e. none of the choices
5. The following balances are from the books of Edmar Co. and its James branch as of December 31,
2020:
Debit Credit
Sales P270,000
Shipment from a home office P151,200
Inventory,Jan. 1 28,350
Expenses 90,000
The James branch purchases all of its merchandise from the home office. Its December 31 inventory was
P25,200. The home office bills the branch at 40% above its cost. What is the branch profit as far as the
home office is concern?
a. P28,800 b. P31,950 c. P69,750 d. P76,950 e. none of the choices
6. The Bryan B. Corp. decided to open a branch store in Gensan. Shipments of merchandise to the
branch totaled P108,000 which included a 20% mark-up on cost. All accounting records are to be kept at
the home office.
Sales on account P148,000 Sales on cash basis P44,000
collection of accounts 120,000 Expenses Pid 76,000
Expenses unpai 24,000 Purchase of merchandise for cash 52,000
Inventory on hand,Dec.31(80% 60,000 Remittance to home office 110,000
from home office)
What is the branch comprehensive income under the generally accepted accounting principle?
a. P1,600 b. P8,000 c. P2,000 d. 5,000 e. none of the choices
7. The following are extracted from the books and records of Pinoy Company and its branch. The
balances are at December 31, 2020 the fourth year of the company’s operations.
Home office books Branch books
Sales P200,000
Shipment to branch P60,000
Shipment from home office 80,000
Purchases 20,000
Expenses 60,000
Inventory, January 1, 2020 20,000
Allowance for overvaluation of branch inventory is P24,000. There are no shipments in transit between
the home office and the branch. Both shipments accounts are properly recorded. The ending inventory
at billed price includes merchandise acquired from the home office in the amount of P20,000 and P6,000
acquired from the vendors for a total of P26,000. How much of the branch beginning inventory was
acquired from outsiders?
a. P12,000 b. P10,000 c. P8,000 d. P4,000 e. none of the choices
8. The following data were taken from the records of Luzon Corp. of Manila and its Rizal Branch of 2020:
Manila office Rizal branch
Sales P530,000 P157,500
Inventory, January 1 57,500 22,250
Purchases 410,000
Shipments to branch 105,000
Shipment from home office 126,000
Inventory, December 31 71,250 29,250
Expenses 191,000 50,750
In 2020, Manila billed Rizal branch at 120% of cost which was lower by 5¢ than last year’s. What is the
combined comprehensive income?
a. P48,325 b. P48,000 c. 49,650 d. P56,075 e. none of the choices
9. On September 1, 2020, Ligid Inc., a calendar year corporation, purchased car tires from a factory in
Hongkong for 200,000 Hongkong dollars. The amount is payable in 60 days. The exchange rate for
Hongkong dollar has varied as follows:
Sep. 1, 2020 1 hkg$= P5.61 Sep. 30, 2020 1 hkg$= P5.59
Dec. 31, 2020 1 hkg$= P5.62
If Ligid Inc. prepare annual statement of comprehensive income, the forex gain or loss for the year
ended December 31,
10. Lawlaw Corporation, had the following foreign currency transaction during 2020:
•Merchandise was purchased from a foreign supplier on January 1, 2020, for the Philippine peso
equivalent of P600,000. The invoice was paid on April 20, 2020, at the Philippine peso equivalent of
P608,000.
•On September 1, 2020, Lawlaw corporation borrowed the Philippine peso equivalent of P3,000,000
evidence by a note that was payable in the lender’s local currency on the principal amount. On
December 31, 2020, the Philippine peso equivalent of the principal amount and accrued interest were
P3,200,000 and P120,000, respectively. Interest on the note is 10 percent per annum.
In Lawlaw’s 2020 statement of comprehensive income, what amount should be included as a forex
loss?
a. P40,000 b. P200,000 c. P228,000 d. P300,000 e. none of the choices
11. on October 1, 2021, Ben Company acquired goods from USA company in $10,000, payable in US
dollars on April 1, 2022. Spot rate on various dates follows:
Transaction date $0.020=P1 Balance sheet date $0.017=P1
Settlement date $0.018=P1
As a result of this transaction, Ben Company has a forex gain or (loss) in 2022 of
a. P98,235 b. P(98,235) c. P55,555 d. P(55,555) e. none of the choices
12. On June 30, 2020, Aslom Company purchases pandecopeya from a foreign supplier for 50,000
foreign currencies, payable in 60 days. On June 30, the day of settlement, 1 FC is worth P0.6265. The 60
day forward rate by august 30, the day of settlement should record the cost of pandecopeya at
a. P31,685 b. P31,280 c. P32,490 d. P33,060 e. none of the above
Gensantos Foundation College, Inc.
Accountancy and Accounting Technology Department
Departmental Examination- 1st Semester SY 2022-2023
Accounting 301/302 (Auditing & Assurance: Concept & Application 1 & 2)
GENERAL INSTRUCTIONS:
Answer what is being asked. Show your solutions in your blue booklet and shade your final answer using
pencil (#1 or #2) on the answer sheet provided. Answers without solution will not be given credit.
Answer sheet without the shade will not be checked. Write your complete name, class section, and
name of your instructor on the space provided on your answer sheet/booklet. Only one answer shall be
accepted per item and avoid erasure. Any form of CHEATING is intolerable!!!....GOD BLESS.
Problem 1
The following information was obtained from the statement of financial position of Sinigang Company:
December 31, 2012 December 31, 2011
Accounts receivable P100,000 P60,000
Allowance for doubtful account 15,000 19,000
Inventory ? 75,576
Bad debts 2,000
Sales discount 2,000
Accounts Payable 185,468 110,000
It was estimated that P2,000 of accounts receivable is doubtful. Customer’s account of P4,000 previously
written-off were recovered during the year. The total cash collection made from the customers
excluding account written off amounted to P1,563,000. All sales are on account. Sinigang sells only one
product. All purchases of inventory are made on account. Sinigang sells only one product and all sales
are on account which are made on account. Sinigang sells only one product. All purchases of inventory
are made on account. Sinigang sells only one product. All sales are on account which are 25th day for
P90 per unit. Sinigang purchases 500 units of inventory every 5th and 15th day of the month. The unit
cost upon (first purchase) during January 5 was P60.50 and increase by P0.25 per month during the year.
The units unsold at the end of 2012 is 940. Sinigang used the FIFO method.
1. Compute the amount paid to supplier
a. P935,282 b. P982,262 c. P928,282 d. P953,282 e. none of the above
2. How much is the cost of goods sold during 2012?
a. P1,291,871 b. P1,129,871 c. P1,192,871 d. 1,291,781 e. none of the above
3. How much is the Unit cost of beginning inventory?
a. P84.0817 b. P87.0315 d. P87.9424 d. P85.45025 e. none of the above
4. Compute the cost of purchase on 2012.
a. P1,113,750 b. P1,131,750 c. P1,145,750 d. P1,154,750 e. none of the above
5. Assuming, the inventory end of 2010 is overstated by P5,000, how much is the net effect of such error
to Retained earnings as of December 31, 2012?
a. If discover in 2012, over by P5,000 but if not under by 5,000
b. P5,000 under c. P0 d. P5,000 over e. none of the above
Problem 2
On January 1, 2013, Virtue acquired a factory equipment at cost of P15,000,000. The equipment is being
depreciated using the 150% declining balance method with estimated life of 20 years. The estimated
residual value of the equipment is P500,000. As of December 31, 2014 the original life of factory
equipment was change to 12 year and also the residual value is increase to P834,375 and will be
depreciated using the straight-line method starting January 1, 2015.
On December 31, 2016, a determination was made that the factory equipment’s suffered from
impairment loss. The recognition of impairment was warranted. The estimated fair value net in disposal
during that date is P8,480,000. It was also ascertain that the value in use of such equipment is
P6,514,375. During that date no changes in the amount has been identified. The depreciation method.
By January 1, 2018, an indication of impairment recovery exist. The newly recoverable amount has been
identified. The projected net cash flows annually is even throughout the remaining life of the
equipment. The present value such net cash inflow is P9,500,000. The establish fair value is P9,600,000
and the estimated cost of disposal is P200,000.
Requirement:
6. Compute the carrying amount of equipment as of December 31, 2014
a. P12,406,563 c. P12,834,375 e. none of the above
b. P12,906,563 d. P12,334,375
7. Compute the depreciation on 2014
a. P1,005,938 c. P968,438 e. none of the above
b. P1,087,500 d. P1,040,625
8. Compute the carrying amount of the equipment as of December 31, 2015.
a. P11,634,375 c. P11,453,675 e. none of the above
b. P11,543,675 d. P11,275,774
9. Compute the impairment loss on December 31, 2016.
a. P1,920,000 c. P2,005,000 e. none of the above
b. P1,620,325 d. P1,789,635
10. Compute the carrying amount of equipment as of December 31, 2017.
a. P7,554,375 b. P7,338,375 c. P8,090,625 d. P7,880,625 e. none of the above
11. Compute the impairment recovery as of January 1, 2018.
a. P1,560,000 b. P1,680,000 c. P1,750,000 d. 1,570,000 e. none of the above
12. Compute the carrying amount of equipment as of December 31, 2019
a. P7,500,375 b. P7,780,000 c. P7,934,375 d. P7,640,000 e. none of the above
Problem 3
On January 7, 2011, you were hired to perform an independent audit to attest the assertion of
Ultrafartfusion Corporation. The Corporation was authorized at the beginning of 2008 with 540,000,
P100 par value, ordinary shares. At December 31, 2009, the equity section of Ultrafartfusion was as
follows:
Ordinary Share capital, par value P100 per share; P5,400,000
authorized 540,000 shares; issued 54,000 shares
Share premium – ordinary shares 540,000
Retained earnings 5,810,000
12% preference share capital, P30 par, 135,000 shares 1,080,000
issued and outstanding
On May 10, 2009, Ultrafartfusion issued 90,000 ordinary shares for P10,800,000. A 20% ordinary share
dividend was declared on September 30, 2009 and issued on November 10, 2009 to shareholder of
record on October 31, 2009. Market value of ordinary shares was P 110 per share declaration date. The
profit of Ultrafartfusion for the year ended December 31, 2009 was P1,855,000.
During the year 2010, Ultrafartfusion had the following transaction;
Jan 1 Land A cost P1,500,000 was revalued with replacement cost of P2,400,000.
The following are the revaluation of PPE:
Land B cost P3,000,000 had a sound value of P3,200,000.
Building cost P9,000,000 had an accumulated depreciation of P2,700,000 and residual value of P900,000
was being revalued. The replacement cost is P10,800,000 with no changes in original life and estimated
residual value.
Jan 5 It was ascertained that the beginning inventory of P10,000 is overstated and adjusting entry was
appropriately made.
Feb 9 Ultrafartfusion reacquired 5,400 ordinary shares for P95 per share held as treasury shares.
Mar 1 A 10% ordinary share dividend was declared and issued on June 18, 2010 to shareholder of
record on April 16, 2010. The fair value of the share is P115 per share.
May 23 Ultrafartfusion sold 2,700 treasury shares for P120 per share.
Jun 1 Split-up ordinary shares two for one.
Jun 6 Retired 5,400 preference shares at P45 per share. Also, 9,000 ordinary shares were donated to
company by shareholder when the shares had market price of P54.
Jun 30 Issued to ordinary shareholder one right for each share held to purchase two additional
ordinary shares for P125 per share. The rights expire two years from the date of issuance.
Jul 12 Land A was sold for P2,500,000 and gain of P1,000,000 was recorded.
Aug 17 From the ordinary shareholder one right for each share held to purchase two ordinary shares
were exercised when the market value of ordinary share was P130 per share.
Sep 11 Sold the 5,000 donated shares for P15,000.
Oct 26 Building with fair market value of P1,530,000. The building was originally issued 4,200
(preference share, and 2,100 ordinary shares in exchange for a P660,000. In addition, 18,000 preference
shares were sold for P720,000 cash. Retired the 200 treasury shares.
Oct 30 Declared a cash dividend of P2 per share of ordinary shares and on preference share at the
preference rate payable on January 5, 2011 to shareholder of record on December 31, 2010.
Dec 1 500 ordinary shares were subscribed at par and 200 preferred shares are subscribe for P200 per
share.
Dec 31 Profit for 2010 was P2,900,000.
Due to negligence in conducting physical count, P10,000 inventory purchase in transit FOB shipping
point and P7,000 inventory purchase in transit FOB destination was not included in inventory end.
Base on the result of your audit, compute the adjusted stockholder’s equity as of December 31, 2010.
13. Compute the total stockholder’s equity as of December 31, 2010.
a. P45,495,850 d. P45,582,530 e. none of the above
b. P46,663,440 c. P45,461,960
14. Compute the balance of the retained earnings as of December 31, 2010.
a. P4,864,150 b. P4,576,020 c. P4,724,190 d. P4,172,060 e. none of the above
15. Compute the total Share premium as of December 31, 2010.
a. P11,856,900 c. P11,635,900 e. none of the above
b. P12,453,900 d. P11,973,900
16. Compute the total number ordinary shares issued as December 31, 2010.
a. 460,980 b. 475,980 c. 470,980 d. 478,980 e. none of the above
17. Compute the adjusted net income of 2010.
a. P2,010,000 b. P2,020,000 c. P2,050,000 d. 2,030,000 e. none of the above
Problem 4
In order to finance Pitopiktok Company’s planned expansion, a 10% P5,000,000 face value bonds were
issued for P5,300,000, plus accrued interest on December 1, 2013. Interest is payable November 1 and
May 1. On August 31, 2014, P2,500,000 face value of bonds was retired at 103% plus accrued interest.
By the end of year 2015, the book value of the bonds was reported at P2,575,000. The straight-line
amortization method is used. On September 1, 2016, Pitopiktok decided to reacquire the remaining
bonds at 1% lower than original issue price plus accrued interest.
Requirements:
18. Carrying amount of bonds payable as of December 31, 2013
a. P5,225,000 b. P5,296,000 b. P5,365,000 c. P5,254,000 e. none of the above
19. Interest expense for 2014
a. P342,667 b. P356,667 c. P348,667 d. P327,667 e. none of the choices
20. Total cash paid for interest on 2014
a. P466,333 b. P442,333 c. P458,333 d. P436,333 e. none of the choices
21. Gain or (loss) on retirement of bonds on September 1, 2016
a. P(56,000) b. P(49,000) c. P(74,000) d. P15,000 e. none of the above
22. The interest expense for 2016
a. P152,667 b. P162,667 c. P172,667 d. P142,667 e. none of the above
Problem 5
AUDIT OF FINANCIAL STATEMENTS
The adjusted account balances of UTV Corp. for the year ended December 31, 2015 are as follows:
Cash and cash equivalents P400,000
Bank Overdraft 100,000
Accounts receivable 900,000
Allowance for doubtful accounts 40,000
Raw materials 560,000
Goods in process 600,000
Finished goods 1,400,000
Financial assets at Fair value through OCI 2,500,000
Land 1,000,000
Building 6,000,000
Accumulated Depreciation-building 1,600,000
Plant and Equipment 2,400,000
Accumulated Depreciation- plant and Equipment 400,000
Patent 800,000
Goodwill 1,400,000
Note payable,bank - due June 30, 2016 1,300,000
Note payable,bank - due June 30, 2017 2,100,000
Accounts payable 1,000,000
Employee benefit provisions 180,000
Warranty liabilities 80,000
Income tax payable 120,000
Deferred tax liability 280,000
Retained earnings, January 1 ,2015 3,600,000
Revaluation surplus, January 1,2015 360,000
Unrealized gain on financial assets, January 1, 2015 280,000
Share capital 6,000,000
Sales 10,000,000
Unrealized gain on financial assets during the year 100,000
Revaluation surplus on land during the year 140,000
Cost of sales 6,000,000
Selling expense 1,960,000
Administrative expenses 500,000
Finance cost 100,000
Income tax expense 160,000
The company declared and paid cash dividends totaling P1,000,000 during the year.
Requirements:
23. What are the total current assets to be reported in the 2015 statement of financial position?
a. P3,820,000 b. P3,650,000 c. P3,280,000 d. P3,560,000 e. none of the above
24. What is the total non-current assets to be reported in the 2015 statement of financial position?
a. P12.4 M b. P14.2 M c. P12.1 M d. P11.2 M e. none of the above
25. What are the total current liabilities to be reported in the 2015 statement of financial position?
a. P2,870,000 b. P2,570,000 c. P2,750,000 d. P2,780,000 e. none of the above
26. What are the total noncurrent liabilities to be reported in the 2015 statement of financial position?
a. P2,430,000 b. P2,390,000 c. P2,350,000 d. P2,530,000 e. none of the above
27. What is the stockholder’s equity to be reported in the 2015 statement of comprehensive income?
a. P10.760 M b. P10,640 M c. P9,830 M d. P9,640 M e. none of the above
28. William became the new auditor of Rotting Corporation, succeeding Anna, who audited the financial
statements last year. William needs to report on Rotting’s comparative financial statement and should
write in his report an explanation about another auditor having audited the prior year.
a. Only if Anna’s opinion last year was qualified.
b. Describing the prior year audit and the opinion but not naming Anna as predecessor auditor.
c. Describing the prior year audit and the opinion and naming Anna as predecessor auditor.
d. Describing the audit but not revealing the type of opinion Anna give
e. None of the choices
29. In which of the following situation would public accounting firm have violated the code of ethics in
determining its fees?
a. A fee is based on whether or not the public accounting firm’s audit report leads to the approval of the
client application for bankruptcy financing.
b. A fee is to be established at a later date by the bankruptcy court.
c. A fee is based upon the nature of engagement rather than upon the actual time spent on the
engagement.
d. A fee is based on the fee charged by the client’s former auditors.
e. None of the choices
30. One of the general principles of an audit is compliance with Philippine Standards on Auditing (PSAs).
As a consequence of his failure to adhere to PSAs in the course of his examination of the Mariz
Combined Machinery, Inc., Eric, CPA, did not detect the embezzlement of a material amount of funds by
Ubebbe Gandarita, the company’s controller. As a matter of common law, to what extent would Eric be
liable to Mariz Combined Machinery, Inc., for losses attributable to the theft?
a. Eric would be liable for losses attributable to his negligence.
b. Eric would be liable only if it could be proven that he committed gross negligence.
c. Eric would have no liability because privity of contract is lacking
d. Eric would have no liability, since the ordinary examination cannot be relied upon to detect
embezzlement.
End
“When cheat begin, honesty end. When honesty end, suspicion appear. When suspicion appear, trust
fade. When trust fade, doubt emerge. When doubt emerge, certainly FAITH will be kaput in the air...”
Gensantos Foundation College, Inc.
Accountancy and Accounting Technology Department
Departmental Examination- 1st Semester SY 2022-2023
Tax 101 (Income Taxation)
GENERAL INSTRUCTIONS:
Answer what is being asked. Show your solutions in your blue booklet and shade your final answer using
pencil (#1 or #2) on the answer sheet provided. Answers without solution will not be given credit.
Answer sheet without the shade will not be checked. Write your complete name, class section, and
name of your instructor on the space provided on your answer sheet/booklet. Only one answer shall be
accepted per item and avoid erasure. Any form of CHEATING is intolerable!!!....GOD BLESS.
1. Schedule system of income taxation
a. All types of income are added together to arrive at gross income
b. Separate graduated rates are imposed on different types of income
c. Capital gains income and business/professional income are added together in determining gross
income
d. Compensation are excluded in determining gross income
2. Statement 1: The power of taxation is inherent in sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the Constitution, the state can still exercise the power.
Statement 2: It is essentially a legislative function. Even in the absence of any constitutional provisions,
taxation power falls to Congress as part of the general power of lawmaking
a. False, true
b. False, false
c. True, true
d. True, false
3. The Luzon School of Business and Arts, a proprietary educational institution is offering primary,
secondary and tertiary education, is with and accredited by the Department of Education and the
Commission on Higher Education. Which of the following is exempt from tax? What kind of tax?
a. The importation of laboratory equipment - from custom duties
b. A portion of the school building rented by the school to a fast-food chain-real property tax
c. The school building being rented being leased from real property tax-from real property tax
4. CPA Corporation manufactures glass panels and is almost at the point of insolvency. It has no more
cash and all it has are unsold panels. It received an assessment from the BIR for deficiency income tax. It
wants to pay but due to lack of cash, it seeks permission to pay in kind with glass panels. Should the BIR
grant the permission?
a. It should grant the permission to make payment convenient to taxpayers
b. It should not grant permission because a tax is generally a pecuniary burden
c. It should grant permission, otherwise, CPA Corporation would not be able to pay
d. It should not grant permission because the government does not have the storage facilities for glass
panels
5. Which of the following is (not) an example of excise tax?
a. Transfer tax
b. Sales tax
c. Real property tax
d. Income tax
6. Statement 1: The Congress can enact tax laws even in the absence of a constitutional provision
granting said body the power of tax.
Statement 2: A tax may be validly imposed in the exercise of police power and not the power of tax.
a. False, true
b. False, false
c. True, true
d. True, false
7. Which of the following statements constitute tax avoidance?
a. Deliberate failure of a taxpayer to pay the taxes due to government
b. Connotes fraud through the use of pretences and forbidden devices to lessen or defeat taxes
c. Punishable by law
d. Naybe contrary to the intent of the legislature but nevertheless do not violate the law
8. Which of the following is (not) correct with respect to a taxpayer’s suit?
a. It must pertain to illegal disbursement of public funds
b. The funds sought to be disbursed must have been raised through taxation
c. It pertains to the passage of a seemingly unconstitutional measure
d. It must not refer to an enactment of a tax law
9. Which of the is (not) a remedy against indirect double taxation
a. Tax sparing
b. Reciprocity provisions
c. Tax exemptions
d. Vanishing deduction
10. Grace, nonresident citizen arrived in the Philippines on July 1, 2019 to reside here permanently after
working as a nurse in the United States for many years. Which of the following statements is correct
with respect to his classification for income tax purposes?
a. He shall be classified as nonresident citizen for the year 2019 to his income derived from Philippines
sources abroad from January 2, 2019 until the date of his arrival in the Philippines
b. He shall be classified as nonresident citizen for the whole year 2019
c. He shall be classified as resident citizen for the whole year 2019
d. He shall be classified neither resident nor nonresident citizen for the year 2019
11. ABC Corporation took two key men insurance on the life of its President, Mr. X. In one policy, the
beneficiary is the corporation to compensate it for its expected loss in case of death of its president. The
other policy designates Mr. X’s wife as its irrevocable beneficiary.
Question 1: Are the insurance premium paid by X corporation in both policies deductible?
Question 2: Will the insurance proceeds is treated as income subject to tax by the corporation and by
the wife?
a. Yes to both questions
b. Yes to 1st and No to 2nd questions
c. Yes to both questions
d. No to 1st question and Yes to 2nd question.
12. Rewards given to the persons instrumental in the discovery of violations of the National Internal
Revenue Code are subject to:
a. Final tax of 10% on amount collected
b. Final tax of 10% on P1,000,000
c. Final tax of 10% of amount collected or P1,000,000, whichever is higher
d. Final tax of 10% on amount collected or P1,000,000, whichever is lower
13. Which is not subject to a 10% final tax?
a. Royalties from literary works
b. Dividends from a domestic corporation
c. dividends from a literary works
d. share in the income of a business partnership
e. All of the above
14. If the proceeds are from the disposition of principal residence and fully utilized in acquiring or
constructing a new principal residence, the capital gain is not subject to tax if the
a. Acquisition or construction of the new principal residence is within 18 calendar months from the date
of disposition.
b. The historical cost adjusted basis of the real property sold or disposed shall be carried over to the new
principal residence built or acquired
c. The Commissions shall have been duly notified by the taxpayer within 30 days from the date of sale or
disposition through a prescribed return of his intention to avail of the tax exemption.
d. All of the above
Use the following information for items 15 through 17:
Ms. Faith signified her intention to be taxed at 8% income tax rate on gross sales in her first quarter
return in 2023. He has no other source of income. His total sales and cost of sales are as follows:
1st quarter 2nd quarter 3rd quarter 4th quarter
Sales P500,000 P500,000 2,000,000 P3,500,000
Cost of sales 300,000 300,000 1,200,000 1,200,000
Operating expense 100,000 120,000 480,000 720,000
15. How much is income tax payable for the first quarter?
a. P20,000
b. P40,000
c. P16,000
d. None of the choices
16. How much is income tax payable for the third quarter?
a. P64,000
b. P140,000
c. P160,000
d. None of the choices
17. How much is income tax due for the year?
a. P289,200
b. P290,200
c. P290,500
d. P300,200
Use the following information for items 18 through 21:
Kidapawan Corporation, a MSME, reported the following gross income and expenses:
Philippines Abroad Total
Gross income P500,000 P350,000 P850,000
Deductions 250,000 200,000 450,000
Taxable income 250,000 150,000 400,000
18. Compute the income tax due if the corporation is a/an
Domestic corporation
a. P170,000
b. P100,000
c. P80,000
d. P50,000
19. Resident Foreign Corporation
a. P62,500
b. P80,000
c. P100,000
d. P125,000
20. Non-resident Foreign Corporation
a. P100,000
b. P125,000
c. P62,500
d. P50,000
21. Private proprietary educational or non-profit hospital, majority of its income from is from related
activities
a. P80,000
b. P80,000
c. P40,000
d. P2,500
22. Gino had the following income and expenses in 2023:
Salary (October to December), net of CWT of P5,000 P160,000
13th month pay 12,900
Gross income, net of withholding tax of CWI of P1,800 86,200
Rent receipts from profession, net 57,000
Gross receipts from business 125,000
Professional and business expenses 56,500
The income tax payable if he availed of the optional standard deduction is:
a. P0
b. P2,200
c. None of the choices
d. P6,200
Use the following information for items 23 through 24:
STUV, Company, a domestic corporation had the following record of income and expenses in 2023:
Gross income from operations P1,540,000; Expenses P654,000; Dividend from a resident foreign
corporation doing 60% business in the Philippines not reinvested in the following year P95,000;
Royalties, Philippines P230,000; Royalties, U.S P175,000; Interest on peso deposit with Metrobank
P8,000; Interest on peso deposit with BPI ($1 = P50) P200.
23. Compute the income subject to normal tax.
a. P886,000
b. P1,061,000
c. P1,156,000
d. P1,331,000
24. The final withholding tax is
a. P48,100
b. P45,350
c. P51,100
d. P103,120
25. A resident international carrier had the following data for 2023: Gross income P700,000 and
expenses P200,000 from the Philippines; Gross income P500,000 and expenses P100,000 from
Hongkong. How much is the tax payable?
a. P17,500
b. P30,500
c. P160,000
d. P288,000
