ACC 178: Updates in Tax and Business Regulations

Module #24 Student Activity Sheet

Lesson title: Comprehensive Quiz in Taxation Materials:

1.
References:

1. Excise tax on certain articles is an example of:

a. an indirect tax. c. a local tax.
b. a direct tax. d. a transfer tax.

2. Which one of the following is not a characteristic of the State’s power to tax?

a. It is inherent in sovereignty.
b. It is legislative in character.
c. It based on the ability to pay.
d. It is subject to constitutional and inherent limitations.

3. (Adapted) First statement: Symbiotic relation is the reason why the government could impose taxes on the
income of the resident citizens derived from sources outside the Philippines.

Second statement: Jurisdiction is the reason why citizens must provide support to the State so the
latter could continue to give protection.

a. Both statements are correct

b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

4. An annual tax of P1,000 was imposed upon all residents of the Philippines, who are above 21 years of age,
with a gross income of P250,000, whether or not they send their children to public schools, for the purpose
of raising funds in order to improve public school buildings. The tax is:
a.violative of the equal protection clause of the Constitution.
b.confiscatory.
c.for public purpose.
d.contradicts the inherent limitations.

5. A law was passed by Congress which granted tax amnesty to those who have not paid income taxes for
a certain year without at the same time providing for the refund of taxes to those who have already paid
them. The law is:

a. valid because there is a valid classification.

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

b. not valid because those who did not pay their taxes are favored over those who have paid their
taxes.
c. valid because it was Congress which passed the law and it did not improperly delegate the power
to tax.
d. not valid because only the President with the approval of Congress may grant amnesty.

6. In case of conflict between tax laws and generally accepted accounting principles (GAAP):
a. both tax laws and GAAP shall be enforced.
b. GAAP shall prevail over tax laws.
c. tax laws shall prevail over GAAP.
d. the issue shall be resolved by the court.

7. “Schedular system of income taxation” means:

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 are excluded
in determining gross income.
d. compensation income and business/professional income are added together in arriving at gross
income.

8. The least source of our tax laws.

a. Statutes c. Constitution
b. Court decisions d. BIR rulings

9. The fair market value of real properties located in each zone or area, shall be subject to automatic
adjustment once every how many years through rules and regulations issued by the Secretary of
Finance based on the current Philippine valuation standards?
a. 3 years c. 7 years
b. 5 years d. 10 years

10. A decedent dies on January 1, 2019. The estate tax return is filed on June 1, 2019. When is the last day
to make a valid assessment?
a. January 1, 2023 c. July 1, 2022
b. June 1, 2022 d. September 1, 2022

11. Notwithstanding any contrary provision of R.A. No. 1405 and other general or special laws, the
Commissioner of Internal Revenue is authorized to inquire into bank deposit:
Case 1 – of a decedent to determine his gross estate.
Case 2 – of any taxpayer who has filed an application for compromise of his tax liability by reason of
financial incapacity provided there is waiver of his privilege under R.A. No. 1405 or under other
general or special laws.
a. True in both cases
b. False in both cases
c. True only in the first case
d. True only in the second case

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

12. Which of the following cases may not be compromised?

a. Delinquent accounts
b. Cases under administrative protest after issuance of the Final Notice of Assessment to the
taxpayer still pending in the BIR
c. Civil tax cases being disputed before the courts
d. Criminal violations involving criminal tax fraud.

13. The following are instances when penalties and/or interest imposed on the taxpayer may be abated or
cancelled on the ground that the imposition thereof is unjust and excessive, except when the:
a. filing of the return or payment of the tax is made at the wrong venue. b. taxpayer’s mistake in
payment of his tax is due to erroneous written official advice of a revenue officer.
c. assessment is brought about or a result of the taxpayer’s non-compliance with the law due to a
difficult interpretation of the said law. d. taxpayer is declared insolvent or bankrupt.

14. First statement: In civil tax cases involving collection of internal revenue taxes, prescription is construed
strictly against the government and liberally in favor of the taxpayer.

Second statement: In criminal tax cases involving tax offenses punishable under the Tax Code,
prescription is construed strictly against the government.

a. Both statements are correct

b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

15. Which of the following statements is not correct?

a. A tax refund is in the nature of a tax exemption which must be construed strictissimi juris against
the taxpayer.
b. Tax refund refers to the actual reimbursement of the erroneously or illegally collected taxes.
c. Tax refund may be utilized in the payment of internal revenue taxes, excluding withholding taxes,
for which the taxpayer is directly liable.
d. Illegally assessed or collected taxes arose when payments are made under duress or assessment
thereof having been rendered by a person who has no power to assess the tax at all.

16. First statement: The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object.

Second statement: The President shall have the power to veto any particular item or items in a bill that
penalizes crimes, but the veto shall not affect the item or items to which he does not object.

a. 1st statement is correct, 2nd statement is wrong

b. 1st statement is wrong, 2nd statement is correct
c. Both statements are wrong
d. Both statements are correct

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

17. Warrant of levy as distinguished from warrant of distraint. a. It is on real property owned by and in
possession of the taxpayer. b. It is on personal property owned by and in possession of the
taxpayer. c. It is on property owned by the taxpayer but in the possession of a third party, d. It does
not required advertisement.

18. If at any time prior to the consummation of the sale all proper charges are paid to the officer conducting
the sale, the goods or effects distrained:

a. shall be restored to the owner.

b. shall no longer be restored to the owner.
c. shall be brought to the Revenue District Officer.
d. shall be brought to the Regional District Officer.

19. A written notice informing a Taxpayer that the findings of the audit conducted on his books of accounts and
accounting records indicate that additional taxes or deficiency assessments have to be paid.
a. Notice of Informal Conference
b. Preliminary Assessment Notice
c. Letter of Authority
d. Formal Assessment Notice

20. For requests for reconsideration, the taxpayer shall submit all relevant supporting documents in support of
his protest within how many days from date of filing of his letter of protest, other-wise, the assessment
shall become final?
a. Sixty (60) days c. Twenty (20) days
b. Thirty (30) days d. None of the choices

21. If the taxpayer is adversely affected by the resolution of the CTA in Division on his Motion for
Reconsideration, he may file a petition for review with the CTA en banc within how many days?
a. Sixty (60) days c. Twenty (20) days
b. Thirty (30) days d. Fifteen (15) days

22 to 25 are based on the following: In 2018, Ms. Glai Espenilla Bangug, a financial comptroller of
EB Company, earns annual compensation of P1,500,000, inclusive of 13th month and other benefits
in the amount of P80,000 and mandatory SSS contribution of P3,500 and Philhealth contribution of
P2,000. Aside from her employment income, she owns a convenience store, VAT
registered, with gross sales of P3,000,000. Sales discount amounts to P300,000; sales returns
and allowances amount to P150,000. Her cost of sales and operating expenses are P1,000,000
and P600,000 respectively and with non operating income of P100,000. Payments for the first
three (3) quarters amount to P300,000.

22. Can she avail of the 8% income tax rate?

a. Yes, because her gross sales do not exceed the VAT threshold. b. No,
because she is VAT-registered.
c. Yes, because she is a mixed income earner.

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

d. No, because her total income including compensation income exceed the VAT threshold.

23. How much is her total taxable income?

a. P2,913,500 c. P2,464,500
b. P2,550,000 d. None of the choices

24. How much is her tax due when she files her final tax return?
a. P338,640 c. P482,320
b. P366,000 d. None of the choices

25. How much is the output VAT, if any?

a. P306,000 c. P360,000
b. P342,000 d. None of the choices
26. How much is the income tax due for the first quarter?
a. P40,000 c. Zero
b. P20,000 d. None of the choices

27. How much is the income tax payable for the second quarter?
a. P100,000 c. P20,000
b. P 80,000 d. None of the choices

28. How much is the income tax payable for the third quarter?
a. P220,000 c. P120,000
b. P150,000 d. None of the choices
29. How much is income tax payable for the final return?
a. P574,000 c. P340,000
b. P560,000 d. None of the choices

30. How much is the percentage tax under Section 116 for the third quarter?
a. P210,000 c. Not subject to Sec. 116
b. P 45,000 d. None of the choices

31. How much is output VAT for the fourth quarter, if any?
a. P840,000 c. P120,000
b. P480,000 d. None of the choices

32. An alien employee of an offshore banking unit has the following income for the year 2018:
Salary received from offshore banking unit (OBU) P10,000,000 Honoraria and allowances
received from the OBU 5,000,000 Interest income from a domestic bank on his peso deposits
50,000 Capital gain from sale of shares in a domestic corporation 100,000

How much is the tax from his gross income in the Philippines?

a. P4,860,000 c. P1,500,000
b. P2,250,000 d. None of the choices

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

33. Under the TRAIN, the books of accounts shall be audited and examined yearly by independent Certified
Public Accountants and their income tax returns accompanied with a duly accomplished Account
Information Form (AIF) which shall contain, among others, information lifted from certified
balance sheets, profit and loss statements, schedules listing income-producing properties and the
corresponding income therefrom and other relevant statements if the:
a. gross annual sales, earnings, receipts or output exceed Three million pesos (P3,000,000).
b. gross quarterly sales, earnings, receipts or output exceed Three million pesos (P3,000,000).
c. gross annual sales, earnings, receipts or output amount to Three million pesos (P3,000,000) or
more.
d. gross quarterly sales, earnings, receipts or output exceed One Hundred Fifty Thousand (P150,000).

34 and 35 are based on the following: Assume that “Mr. Era”, resident citizen, bought shares of stock in
2017 at a cost of P100,000. He donated these shares to “Mr. Aio”, a close resident alien friend, on
January 1, 2017, during which time, the said shares has a fair market value of P 1,000,000 and on
the basis of such fair market value, “Mr. Era” paid the corresponding donor’s tax. “Mr. Aio”,
the donee, sold the shares on February 1, 2018 for a consideration of P 2,000,000.
34. How much is the capital gain (loss) from sale of shares of stock?
a. P1,900,000 c. P950,000
b. P1,000,000 d. P500,000

35. How much was the capital gains tax, if any?

a. P285,000 c. P185,000
b. P205,000 d. None of the choices

Mang Tits, has an apartment building situated at Mabalacat, Pampanga.

Owner’s Declaration showed the following valuation:
Land - P 9,000,000
Building - P 4,000,000
Assessor’s Value per assessment rolls:
Land – P7,000,000
Building – P6,000,000

Land use Assessment Levels

Residential 20%
Agricultural 40%
Commercial, Industrial and Mineral 50%
Timberland 20%
Special classes: cultural, scientific 15%
Hospital, and water districts 10%

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 ACC 178: Updates in Tax and Business Regulations
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Commercial/Industrial Building
FMV Over But Not Over Assessment Level
300,000.00 30%
300,000.00 500,000.00 35%
500,000.00 750,000.00 40%
750,000.00 1,000,000.00 50%
1,000,000.00 2,000,000.00 60%
2,000,000.00 5,000,000.00 70%
5,000,000.00 10,000,000.00 75%
10,000,000.00 80%

36. How much is the assessed value?

a. P9,000,000
b. P8,000,000
c. P14,000,000
d. P16,000,000

37. How much is the Basic real property tax?

a. P180,000
b. P160,000
c. P90,000
d. P80,000

38. What is the maximum penalty for local taxes?

a. 12%
b. 24%
c. 36%
d. 72%

39. Assessed value shall be classified based on:

a. actual use
b. owners declaration
c. assessor’s declaration
d. owners declaration or assessor’s value whichever is higher

Anthony Cabe, single, an American but resident of Friendship Road, Angeles, Pampanga, died in
year 2018 left the following properties:
Gross estate in Philippines
Family Home P7,000,000 Agricultural land inherited P8,000,000 Cash and investment
P15,000,000

Gross estate Foreign country

Dodge Calibre P12,000,000 Tiny House P8,000,000

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

Funeral expenses P200,000 Administrative expenses P2,000,000 Claims against the estate
P5,000,000 Unpaid mortgage P2,000,000

40. How much is the gross estate?

a. P50,000,000
b. P30,000,000
c. P20,000,000
d. 0

41. How much is the total ordinary deductions?

a. P5,000,000
b. P7,000,000
c. P9,000,000
d. P9,200,000

42. How much is the special deduction?

a. P12,000,000
b. P15,000,000
c. P7,500,000
d. P7,000,000

43. How much is the estate tax due?

a. P1,680,000
b. P1,860,000
c. P2,160,000
d. P2,610,000

44. Azure corporation a domestic corporation duly registered under Philippines laws, made the following
donation for the year as follows:
March 31, Shares of stock of Azure Corporation to its shareholders amounting to
Php 25,000,000.
June 30, Land to subsidiary Corporation amounting Php77,000,000.
September 30, Cash to corporate manager and officers total amount of Php11,000,000.
December 31, Php100,000 donation to a private school for the construction of
school building.
What type of tax is imposed on March 31 donation?
a. Final Tax
b. Net Income Tax
c. Donor Tax
d. Exempt from tax
45. What type of tax is imposed on June 30 donation?
a. Final Tax
b. Net Income Tax
c. Donor Tax

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

d. Exempt from tax

46. What type of tax is imposed on September 30 donation?

a. Final Tax
b. Net Income Tax
c. Fringe Benefit Tax
d. Donor Tax

47. What type of tax is imposed on December 31 donation?

a. Final Tax
b. Net Income Tax
c. Donor Tax
d. Exempt from tax

48. Andrea Pascual, Certified Public Accountant, employed by CAM Corporation in its Internal Audit
Group, has inside information to believe she will profit from the corporation if she invest in its
stockholding’s so she decided to realize what she knows and made the following:
On April of 2021 Purchase 50,000 shares for Php50 of CAM Corporation.
Again Purchase another 50,000 shares for Php60 of CAM Corporation on May 3, 2021 May 8,
2021 CAM declared 10% stock dividend after annual stockholders meeting a day after book
value per share doubled its value.
May 9 Andrea Sold 100,000 shares for Php100
What is the capital gains tax?
a. 750,000
b. 495,000
c. 675,000
d. 0

49. What is the documentary stamp tax?

a.100,000
b. 75,000
c. 50,000
d. 25,000

50. James Deakin, purely engaged in business, on cash basis, had the following for the given year:
Gross Revenue Php800,000
Cost of Sales 200,000
Business expenses 150,000
Other (non-operating) business income:
Interest from bank deposit Php20,000
Gain from sale of capital asset bought more than a year 50,000
How much is James Deakin taxable income if he opted OSD?

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 ACC 178: Updates in Tax and Business Regulations
Module #24 Student Activity Sheet

a. 530,000
b. 505,000
c. 410,000
d. 385,000

51. Income tax due if he availed the 8% GRT?

a. 68,000
b. 69,600
c. 48,000
d. 46,000

Bong & Billy are partners in a GPP which realized a Sales of P8,000,000 with corresponding cost
of sales P5,000,000 and Operating Expenses P2,000,000 in year 2018. Bong, single, benefactor of
senior citizen has his own income of P400,000 and cost of sales and expenses P30,000 and
P230,000, respectively. While, Billy, with one qualified dependent generated P450,000 income and
incurred cost of sales and expenses P200,000 and P50,000, respectively. They share 70:30 in the
profits.
Bong and Billy incurred unliquidated expenses of P100,000 & P50,000, respectively, for
the partnership.

52. Taxable income of Bong if he claims itemized deductions:

a. P850,000
b. P840,000
c. P740,000
d. P665,000

53. Taxable income of Billy if he opted for OSD:

a. P500,000
b. P570,000
c. P475,000
d. P495,000

54. A Co. and B Co., domestic corporation, both in the construction business, formed a
joint venture to build houses, a government project duly licensed with PCAB, had the ff:
Joint venture A Co. B Co.
Income Php80,000,000 2,000,000 3,000,000 Expenses 60,000,000 1,200,000
2,000,000

What is the income tax of the Joint venture?

a. 6,000,000
b. 20,000,000
c. 1,800,000
d. 0

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 ACC 178: Updates in Tax and Business Regulations
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55. What is the taxable income of the joint venture?

a. 1,800,000
b. 20,800,000
c. 10,800,000
d. 3,240,000

56. If the joint venture is not approved by PCAB, what is the taxable income of the venture?
a. 6,000,000
b. 3,000,000
c. 20,000,000
d. 0

Mr. Jose Marie Fabella signified his intention to be taxed at 8% income tax. In the given year he
earned the following:
Rentals for first 9 months - P250,000/month
Rentals for last 3 months - P1,000,000/month
Proper withholding of tax was made.
57. How much is the tax due on the 3rd quarter?
a. P160,000
b. P180,000
c. P22,500
d. P25,000
58. How much is the gross receipts/percentage tax due on the 4th quarter?
a. 0
b. P67,500
c. P420,000
d. P525,000

59. How much is the tax due on his final return in case Mr. Fabella opted for OSD?
a. P398,000
b. P445,500
c. P745,500
d. P858,000

60. When is he required to update his registration from non-VAT to VAT?

a. October 31, 2018
b. November 30, 2018
c. December 31, 2018
d. January 1, 2019

Dong Company, engaged in restaurant business, uses accrual basis of accounting in

its financial statements. Its operation for the year ended shows the following:

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 ACC 178: Updates in Tax and Business Regulations
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Gross Revenue on account to customers 3,500,000 Gross Receipts from senior citizens, net of 20%
discount 400,000 Purchases, directly attributable to customers other than senior citizens, net of VAT
300,000 Purchases, cannot be attributed, net of VAT 200,000 Direct Cost 2,000,000 Purchase of
Equipment, used for all services rendered 600,000 Increase in Accounts Receivable (VAT inclusive)
224,000 Operating Expenses 1,000,000

61. Compute the Output VAT?

a. 420,000
b. 468,000
c. 396,000
d. 372,000

62. Compute the creditable input VAT?

a. 132,000
b. 129,000
c. 123,000
d. 120,000

63. Determine the amount of Gross Income?

a. 900,000
b. 2,000,000
c. 3,500,000
d. 4,000,000

64. Determine the amount of allowable deduction?

a. 1,000,000
b. 1,112,000
c. 1,500,000
d. 1,600,000

Wener Company is engaged in a hardware business. It uses accrual basis of accounting in

its financial statements.
Gross Revenue 3,500,000 Sales Returns 200,000
Increase in Accounts Receivable, VAT inclusive 224,000 Increase in Inventory, net of VAT 150,000
Purchases 1,000,000 Supplies (40% from VAT registered) VAT exclusive 600,000 Services (60% from
VAT registered) VAT exclusive 500,000 Other Operating Expenses 200,000

65. Compute the Output VAT?

a. 420,000
b. 396,000
c. 372,000
d. 360,000

66. Determine the creditable input VAT?

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 ACC 178: Updates in Tax and Business Regulations
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a. 120,000
b. 184,800
c. 166,800
d. 108,000

67. Determine the Taxable Income?

a. 1,000,000
b. 1,082,800
c. 1,350,000
d. 1,500,000

68. Imposition of fixed license fee for the sale of Bible and other religious items is a violation of ______?
a. exemption of nonprofit organization from taxation
b. exemption of religious organization from property taxation
c. no appropriation for religious freedom
d. non-infringement of religious freedom

69. Applicants availing the 20% discount of senior citizens must present which of
following documents.
I. I. Company ID
II. II. LGU Senior Citizen ID
III. III. Passport
a. True, false, true
b. False, False, true
c. True, true, False
d. False, true, true

70. Gerry Alinog was being prosecuted by the BIR for failure to pay his income tax liability for Calendar
Year 2015 despite several demands by the BIR in March 2017. The information was filed with the
RTC only last June 2022. What is the remedy of Gerry Alinog?
a. Gerry should file a motion to quash the Information on the ground of prescription b.
Gerry should answer the Information
c. Gerry should file a protest with the Commissioner of BIR
d. Gerry should appeal to the CTA

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