Northern CPAR: Business Law and Taxation – FINAL PRE-BOARD EXAMINATIONNORTHERN CPA REVIEW th 4 Floor Pelizloy Centrum, Lower Session Road, Baguio City, Philippines Mobile Numbers: SMART 09294891758 & GLOBE 09272128204 E-mail:
[email protected] 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 1 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 2 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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. 3 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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. 4 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 5 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 6 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 7 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 8 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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. 9 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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 10 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th PB03 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. 11 NCPAR…driven for real excellence! BLT by Andrix Domingo & Rex Banggawan BLT – 5 Batch – th 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