FINAL PREBOARD CPAR Statement 2- If after the auction sale, the

thing pledged is not sold, the pledgee can

1. A, B, and C are partners contributing appropriate the thing pledged.
services, P20,000 and P40,000 a. True, true c. False, false
respectively. The distribution of the b. True, false d. False, true
P80,000 net assets shall be: 7. A pledged his watch to B for P20,000. A
a. A- P20,000 B-P20,000 C- failed to pay his obligation. B sold it at
P40,000 public auction for P18,000. Can B recover
b. A- P5,000 B-P25,000 C- the deficiency?
P50,000 a. Yes, even without stipulation
c. A-P32,000 B-P16,000 C- b. Yes, if there is stipulation
P32,000 c. No, even if there is stipulation
d. A-P26,667 B-P26,667 C- d. No, only if there is stipulation
P26,667 8. Using the preceding number, if the sale is
2. This is not a characteristic of pledge for P22,000, can A recover the excess?
a. Bilateral c. Nominate a. Yes, even without stipulation
b. Consensual d. Real b. Yes, if there is stipulation
3. Statement 1- Shares of stock can be the c. No, even if there is stipulation
object of pledge or mortgage d. No, only if there is stipulation
Statement 2- Real estate mortgage is an 9. A mortgaged his car to B for P200,000. A
accessory contract failed to pay his obligation. B sold it at
a. true, true b. false, false public auction for P180,000. Can B recover
c. true, false d. false, true the deficiency?
4. One or more but less than all the partners a. Yes, even without stipulation
have no authority to perform the following b. Yes, only if there is a stipulation
except: c. No, even if there is stipulation
a. Renounce a partnership claim d. No, unless there is stipulation
b. Submit a partnership claim or liability to 10. Using the preceding number, if the sale is
arbitration for P220,000, can A recover the excess?
c. Convey partnership property in the a. Yes, even without stipulation
ordinary course of partnership business b. Yes, only if there is stipulation
d. Do any act which would make it c. No, even if there is stipulation
impossible to carry on the ordinary d. No, unless there is stipulation
business of the partnership 11. A corporation is deemed dissolved
5. A limited partnership has A, as general a. Ceased operation for at least five years
partner, B, as limited partner, and C, as an b. No commencement of business
industrial partner contributing P50,000; transactions within 2 years from
P50,000 and services respectively. The issuance of certificate of incorporation
partnership failed and after disposing all its c. A member of the board is convicted of
assets to pay partnership debts there still an offense
remains a note payable in the sum of d. Majority of the members of the board
P30,000. Against whom can the creditor are dead
demand payment? 12. Which of the following corporate acts
a. A-P30,000 B-P0 C- requires the approval of the majority of the
P0 outstanding capital stock or of the
b. A-P15,000 B-P15,000 C- members of the private corporation
P0 a. To invest corporate funds in another
c. A-P15,000 B-P0 C- corporation or business.
P15,000 b. To amend the articles of incorporation.
d. A-P10,000 B-P10,000 C- c. To adopt by-laws
P10,000 d. To dissolve the corporation
6. Statement 1- Any stipulation authorizing 13. Except for one, every corporation whose
the pledgee to appropriate the thing character expires by its own limitation, or
pledged is void and without effect. annulled by forfeiture or otherwise, or
whose corporate existence for other
purpose is terminated in any other manner
 shall nevertheless be continued as a body 18. Chattel mortgage as distinguished from
corporate for three years after the time pacto de retro sale
when it would have been dissolved for the a. A principal and independent contract
purpose of the following. The exception is b. The title and possession are transferred
a. Prosecuting and defending suits by or to the vendee
against it and enabling it to settle and c. Cannot appropriate to himself the
close its affairs. property mortgaged, nor dispose of it
b. To dispose and convey its property d. Seller may exercise the right to
c. To distribute its assets repurchase
d. Continuing the business for which it 19. Mutuum as distinguished from
was established commodatum
14. Which of the following is not correct? a. Essentially gratuitous
a. A partnership begins from the moment b. Loan for consumption
of the execution of the contract, unless c. Object is generally non-consummable
it is otherwise stipulated. d. Bailor retains the ownership of the thing
b. Persons who are prohibited from giving loaned
each other any donation or advantage 20. Not an essential requisite of pledge
cannot enter into universal partnership. a. The thing pledged to be placed in the
c. A particular partnership has for its possession of the debtor or of a third
objects determinate things, their use or person by common agreement
fruits, or a specific undertaking or the b. It is constituted to secure the fulfillment
exercise of a profession or vocation. of a principal obligation
d. Articles of universal partnership entered c. The pledgor is the absolute owner of
into without specification of its nature, the thing pledged
only constitute a universal partnership d. The person constituting the pledge has
of all present property. the free disposal of the property
15. Objects of pledge, except: 21. A, B, C and D are partners. Their
a. Negotiable instruments contributions are as follows: A-P50,000; B-
b. Shares of stocks P30,000; C- P20,000; and D-services. The
c. Pieces of jewelry partnership incurred obligations to third
d. Piece of land persons, which the firm was unable to pay.
16. The following are the rules in case a After exhausting all the assets of the
managing partner collects a demandable partnership, there is still an unpaid balance
debt from a person who also owes the of P10,000. How much should each partner
partnership a demand debt, except pay to the creditors?
a. The sum collected shall be applied to a. A-P5,000 B-P3,000 C-P2,000
the partnership credit D-P0
b. It shall be applied to the two credits in b. A-P2,500 B-P2,500 C-P2,500
proportion to their amounts D-P2,500
c. The sum shall be fully applied to the c. A-P4,000 B-P3,000 C-P2,000
partnership credit, if the receipt given is D-P1,500
for the account of the partnership d. A-P4,000 B-P4,000 C-P2,000
d. The debtor has the right to have the D-P0
payment applied in his debt to the 22. A, B and C, co-owners of a particular
partner if it should be more onerous to parcel of land, borrowed P75,000 from X
him and Y. The three (3) debtors signed a
17. The duty to make disclosure, where promissory note on January 10, 2006
otherwise there would be a great and unfair promising to pay the creditors on or before
inequality of bargaining position by the use April 3, 2006. In addition, the debtors
of inside position as regards relation of constituted a mortgage on their property in
directors to stockholders favor of the creditors. On maturity date, X
a. Special circumstances rule demanded payment. How much can X
b. Trust fund theory collect from C upon maturity of the
c. Doctrine of corporate opportunity obligations (creditors are solidary)?
d. Incorporate theory a. P50,000 as it represents the actual
share of X in the credit.
2
 b. P25,000 as the obligation is presumed corporation, must account to the latter for
to be joint and the amount represents all such profits by refunding the same,
C’s share in the obligation. unless his act is ratified by
c. P75,000 based on the promissory note a. A vote at a regular or special meeting
d. P75,000 because the nature of the by stockholders owning or representing
obligation is solidary a majority of the outstanding capital
23. Using the preceding number, if C paid X his stock.
share in the obligations, can he, as co- b. A vote of the stockholders owning or
owner of the property, seek a partial representing at lease one-third of the
release of the mortgage constituted outstanding capital stock
thereon? c. A unanimous vote of all the
a. Yes, because C is answerable only for stockholders of the corporation
P25,000 d. A vote of the stockholders owning or
b. Yes, because C’s obligation is already representing at least two-thirds of the
extinguished outstanding capital stock
c. No, because mortgages are considered 27. When a borrower uses the thing for a
indivisible, payment in part shall not purpose different from the intended, delays
extinguish the obligation its return to the owner, receives the thing
d. No, because the obligation is solidary, under appraisal, lends to third person or
payment in part shall not extinguish the saves his property instead of the thing in
obligation secured by mortgage cases of emergency, shall be liable even in
24. The following are considered elements of cases of fortuitous events, because
the contracts of pledge and mortgage. a. The nature of the obligation requires an
Which is the exception? assumption of risk.
a. The pledgor or mortgagor must have b. The parties have expressly stipulated
the free disposal of the thing pledged or on such liability.
mortgaged c. The debtor in delay.
b. The pledgor or mortgagor must be the d. The law expressly so provides
absolute owner of the thing pledged or 28. A distribution by a corporation of shares of
mortgaged stock held by it in another corporation is
c. Both are accessory contracts a. Case of declaration of stock dividend
d. The thing maybe appropriated if the b. Situation equivalent to a sale of assets
debtor cannot pay c. Situation equivalent to a merger or
25. P appointed A as his agent orally to sell his consolidation
parcel of land for P20,000. ten days later, A d. Property dividend or an actual
sold the same property for P300,000 distribution of corporate assets
through a public instrument executed 29. A delivered to B 10,000 pieces of Davao
between him and B. What is the effect and fabricated shell craft jewelry for the
status of sale between A and B? purpose of selling them at P1.00 each. Out
a. The sale is valid because A was of the proceeds of the expected sale, B is
authorized and it was executed in a to receive a 10% commission. After 3 days,
public instrument. however, B sold all items at P1.50 each to
b. The sale is unenforceable because the C, but on 30-day credit. A compelled B to
agent went beyond the scope of his pay. Which is correct?
authority for selling the land for a price a. B must pay P10,000 immediately
higher than the price agreed upon. b. B cannot be compelled to pay at all
c. The sale is void because there was no c. B must pay P15,000 immediately
valid appointment of A as agent of P. d. B must pay P5,000 immediately and
d. The sale can be ratified although the P10,000 after 30 days
appointment of A was done orally 30. In real estate mortgage, the mortgagor can
because the sale between A and B was sell the mortgaged property
in a public instrument. a. With the consent of the mortgagee in
26. Where a director by virtue of his office, writing
acquired for himself opportunity which b. Even without the consent of the
belongs to the corporation, thereby mortgagee
obtaining profits to the prejudice of such
3
 c. Only with the consent of the mortgagee d. Instruments containing the words “I
in writing or orally promise to pay” signed by two or more
d. Only after paying his obligation to the persons, such persons are deemed
mortgagee jointly and severally liable
31. P wrote a letter authorizing A to sell his 36. Which of the following is not negotiable?
parcel of land situated in Boracay. A sold a. Pay to B or order P10,000. Sgd. A to C
the land in writing to X but the agent (A) did Accepted: For P5,000 only Sgd. C
not give the money to P. The sale of the b. Pay to Jose P10,000. Sgd. Juan to
land by A to X is Pedro
a. Void, because the authority of A is not Accepted: For P10,000 Sgd. Pedro
in public instrument. c. Pay to Maria or bearer P10,000. Sgd.
b. Unenforceable, because the authority Jose to Juan and Pedro
of A is not in public instrument. Accepted: If Maria passes the CPA
c. Inexistent, because the authority of A is Board Examination. Sgd. Juan
in private writing. d. Pay to the order of B P10,000 at 123
d. Valid and enforceable CM Recto Avenue, Manila. Sgd. A to C,
32. The negotiable character of an instrument J.P Rizal St. Makati
is affected by a provision Accepted: Payable at 123, JP Rizal St.,
a. Authorizing the sale of collateral Makati City. Sgd. C
securities in case the instrument is not 37. Where an indorsement is conditional, may
paid at maturity. the marker make payment although the
b. Authorizing a confession of judgment if condition has not been fulfilled?
the instrument is not paid at maturity. a. Yes, he may disregard the condition
c. Giving the marker an election to require without incurring any liability.
something to be done in lieu of b. Yes, he may disregard the condition but
payment of money. he becomes liable if the endorsee fails
d. Waiving the benefit of any law intended to fulfill the condition
for the protection of the obligor. c. No, the qualified indorsement becomes
33. This is a negotiable instrument part of the contract
a. I promise to pay to bearer P10,000 d. No, the person who received payment
Sgd. A will hold the proceeds subject to the
b. Pay to B or order P10,000 Sgd. A right of the conditional indorser
c. I promise to pay B or order P10,000 in 38. M issues a promissory note payable to P or
two installments. Sgd. A bearer. Which of the following is not
d. Pay to B or order P10,000, 30 days correct?
after the death of Y. Sgd. A a. If indorsed by P to A and A also
34. This is not a negotiable instrument indorsed it to B, B may negotiates the
a. I promise to pay to the order of bearer note to C by mere delivery
P10,000. Sgd. A b. If indorsed by P to A and A also
b. I promise to pay B or his agent indorses it to B, P is liable to A and B
P10,000. Sgd. A c. If indorsed by P to A and A also
c. I promise to pay B or order US$1,000. indorses it to B and B negotiates the
Sgd. A note to C by delivery. A is liable to B
d. I promise to pay to the order of B and C
P10,000. Sgd. A d. If P negotiates the note to A by delivery
35. Rules on construction where instrument is and A indorses it to B, B may negotiate
ambiguous, except the note to C by delivery.
a. If not dated, the date is considered to 39. What indorsements are not necessary to
be the date of issuance. the holder’s title?
b. Where the signature is placed and is Answer 1- Any indorsements thereon,
not clear in what capacity the person where the instrument is originally payable
intended to sign, he is deemed an to bearer
accommodation party Answer 2- All indorsements subsequent to
c. Between printed and written provision, a qualified indorsement, where the
the written provisions prevail instrument is originally payable to order
A. true, true
4
 B. false, false 46. It is said that taxes are what we pay for
C. true, false civilized society. Without taxes, the
D. false true government would be paralyzed for lack of
40. Which of the following is not correct? the motive power to motivate active and
a. Where the instrument is negotiated operate.
back to a prior party, all intervening a. Lifeblood theory
indorsements are not necessary to the b. Necessity theory
holder’s title c. Benefit-protection theory
b. Where the instrument is originally d. Recipcrocal theory
payable to order, the holder may not 47. The power to tax is exclusively lodged with
strike out the payee’s indorsement the legislature, however, there are
c. The indorser whose indorsement is exceptions provided by the Constitution,
struck out and all indorsers are thereby which of the following is not:
relieved from liability on the instrument a. Authority of the President to fix tariff
d. The holder may at anytime strike out an rates, import and export quotas,
indorsement which is not necessary to tonnage and wharfage dues, and other
his title duties and imposts
c b. Power of local government units to levy
41. Which of the following is not summary taxes, fees and charges.
remedy of the Government to enforce tax c. Delegation to administrative agencies
collection? for implementation and collection of
a. Distraint c. Levy taxes.
b. Civil Action d. Tax Lien d. Designation to private entities the
enforcement and collection of taxes.
42. Which of the following cases may not be 48. Which of the following is the least
compromise by the Bureau of Internal Constitutional limitations?
Revenue Commissioner? a. Due process c. Non-impairment
a. Delinquents accounts clause clause
b. Cases under administrative protest b. Equal protection d. Progressivism
c. Fraud cases clause
d. Cases covered by pre-assessment 49. The following taxes, fees and charges are
notice deemed to be national revenue taxes,
43. A fifty (50%) percent surcharge shall be except:
impose on: a. Documentary stamp taxes
a. Failure to file any return and pay the tax b. Community taxes
due thereon. c. Excise taxes
b. Failure of return with an internal officer d. Income taxes
other than those designated by law. 50. Which of the following is not an authority of
c. Willful neglect to file a tax return as the Bureau of Internal Revenue
prescribed by law. Commissioner?
d. Failure to pay deficiency tax within the a. Authority to administer oaths and to
prescribed period required by law. take testimony
44. The legal interest rate for tax delinquency b. Authority to make arrests and seizures
is? c. Authority to deputized members of the
a. Six (6% percent. Armed Forces of the Philippines and
b. Eight (8%) percent. members of the Philippine National
c. Twelve (12%) percent. Police to enforce tax laws
d. Twenty (20%) percent. d. Authority to assign or reassign internal
45. Which of the following is not a requisite of revenue officers and employees of the
tax regulations (BIR revenue regulations): BIR to other special duties connected
a. It must be reasonable and germane to with the enforcement or administration
the purpose of the law. of the tax laws
b. It must be within the authority conferred 51. Which of the following is correct?
or under the color of valid title. a. A protest should be filed by the
c. It must be given retroactive application. taxpayer, otherwise the assessment
d. It must be published.
5
 becomes final and no longer be d. The case is not dilatory.
questioned in court 56. Transitional Input Tax Rate is:
b. A protest may be filed by the taxpayer a. 1.5% b. 8% c. 10% d. 2%
anytime before the BIR collects the tax 57. One of the following is not an ordinary
c. The assessment should be made by deduction for purposes of Net Taxable
the BIR collects the tax
Estate.
d. The assessment shall include only tax
a. b. Medical c. d.
proper
Funeral expense Judicial Taxes
a
expense expense
52. Which of the following statements is
correct? 58. The following person’s signature must
a. A pre-assessment notice shall be appear in the corporations income tax
required before an assessment may be return, except:
made. a. President c. Treasurer
b. The taxpayer shall be informed of the b. Vice President d.External
law and the facts on which the Auditor
assessment is made, otherwise the 59. Deduction for funeral expenses shall be
assessment shall be void. allowed, except:
c. The Commissioner may refund a tax a. Only if paid out of the estate
even without a claim refund from the b. For a non-resident alien limited to
taxpayer where on the face of the amount that was actually incurred in the
return upon which the payment was Philippines
made, such a payment clearly appears c. Shall in no case to exceed 5% of the
to have been erroneously made. gross estate
d. A suit may be brought even after the d. Shall in no case to exceed P200,000
lapse of two years from the date of 60. Which of the following is deductible from
payment, if any supervening cause the gross estate?
arises after payment. a. Income tax paid on income received
53. The authorities of the BIR commissioner after death
include the following, except: b. Property taxes not accrued prior to
a. Compromise the payment of any death
internal revenue tax. c. Estate tax paid to a foreign country
b. Abate a tax liability d. Donor’s tax accrued prior to death
c. Credit or refund tax that had been 61. Which one is incorrect? Losses are
erroneously received deductible if:
d. Inquire into bank deposit a. Arising from natural calamity or
54. The following are grounds to cancel a tax fortuitous event
liability by the BIR commissioner, except b. Not compensated by insurance
a. The tax unjustly or excessively c. A property included in the Philippine
assessed gross estate
b. The administration and collection costs d. Incurred during the settlement of the
involved do not justify the collection of estate
the amount of tax 62. Deductions from gross estates for transfers
c. A reasonable doubt as to the validity of for public purposes, except
the claim against the taxpayer a. Means legacy in a last will and
d. Illegal collection of tax testament to the government
55. Which of the following not a requisite to toll b. Means device in the last will to the
the collection of taxes to be made by the government
Bureau of Internal Revenue, upon proof of c. Include any kind of transfer in favor of
the following to the Court of Tax Appeals: the government
a. It will jeopardize the interest of the d. Do not include legacies to charitable
taxpayer; institutions
b. It will jeopardize the interest of the 63. Which of the following is not an attribute of
Government; characteristic of taxes?
c. Filing of a bond double the amount of a. A tax is a forced charge
tax assessed; b. It is payable in money
6
 c. It is progressive d. Any officer or employee of an
d. It is levied for public purposes authorized agent bank assigned to
64. Importance of taxes is: transmit tax returns.
a. It is the lifeblood of the Government 69. Occupying the forefront of tax law
b. It is personal to the taxpayer enforcement is the:
c. It is a revenue measure a. Department of c. Legislative
d. It is for public purpose Finance Department
65. Which of the following is not a nature of b. Bureau of Internal d. Executive
taxing power? Revenue Department
a. It is an attribute of the sovereignty. 70. The powers and duties of the Bureau of
b. It is inherent in the state. Internal Revenue comprehend the
c. It is exclusively exercised by legislature. following, except?
d. It is plenary, comprehensive and a. Assessment and collection of all
unlimited. national and local revenue taxes.
66. Taxes proceed upon the theory that the b. Enforcement of all forfeitures, penalties
existence of the government is a necessity; and fines in connection connected with
it cannot continue without the means to pay the collection of national internal
its expenses; and for those means, it has revenue taxes.
the right to compel all citizens and property c. Execution of judgment in all cases
within its limits to contribute decided in its favor by the Court of
a. Benefit- c. Lifeblood Appeals, and the ordinary courts.
Protection Theory d. Effecting and administering the
Theory supervisory and police powers
b. Necessity d. Territoriality conferred to it by the Tax Code or other
Theory Theory laws.
67. Which of the following will not interrupt the 71. The power to interpret the provisions of the
running of the prescriptive period for Tax Code and other tax laws shall be under
assessment and collection of taxes: the exclusive and original jurisdiction of the:
a. When the Commissioner is prohibited a. The Commissioner of the BIR
from making the assessment or b. The Secretary of Finance
beginning distrait and levy or a c. The Court of Tax Appeals
proceeding in court and for thirty (30) d. The Regular Courts
days thereafter. 72. The power to decide disputed
b. When the taxpayer requests for the assessments, refunds of internal revenue
reinvestigation which is granted by the taxes, fees or other charges, penalties
Commissioner. imposed in relation thereto, or other
c. When the taxpayer is out of the matters arising under the Tax Code or
Philippines. other laws administered by the Bureau of
d. When the taxpayer cannot be located Internal Revenue is vested with:
in the address given by him in the a. The Commissioner of the BIR
return. b. The Secretary of Finance
68. Which of the following are not deputized c. The Court of Tax Appeals
agents for the collection of national internal d. The Regular Courts
revenue taxes? 73. It is the official action of an administrative
a. The Commissioner of Customs and his officer in determining the amount of tax due
subordinates with respect to the from a taxpayer, or it may be a notice to the
collection of national internal revenue effect that the amount stated therein is due
taxes on imported articles. from the taxpayer with a demand fro
b. The head of the appropriate payment of the tax or deficiency stated
government office and his subordinates therein.
with respect to the collection of energy a. Tax investigation
tax. b. Tax audit
c. Banks duly accredited by the c. Tax assessments
Commissioner with respect to receipt of d. Tax mapping
payments of internal revenue taxes 74. To escape a liability for a deficiency estate
authorized to be made through banks. tax, after paying the estate tax, must
7
 secure a written discharge of personal c. P1,150,000
liability from: d. P2,450,000
a. The heirs 79. The following are the reasons which
b. The commissioner necessitates the filing of an administrative
c. The probate court claim for refund with the BIR, except:
d. The court where the estate is being a. To afford the Commissioner an
settled opportunity to consider the claim.
75. When an estate is settled extra-judicially, b. To give the Commissioner a
the estate tax return may be filed and paid: chance to correct the errors of
a. By any of the heirs, with the right of subordinate officers.
reimbursement from the other heirs c. To notify the Government that
b. Only by the heir with written authority such taxes have been questioned and
from the other heirs the notice should be borne in mind in
c. By each of the heirs, the payment being estimating the revenue available for
for his distributive share in the estate expenditures.
tax d. To give ample time to the
d. None of the above Commissioner in preparing the cash to
76. For a finding a fraudulent return by the BIR be disbursed for the taxpayer’s refund.
to prosper: 80. 1st Statement: A resident corporation is
Statement No. 1: Fraud must be allowed to deduct depreciation expense
intentional, consisting of deception willfully regardless of the property’s location.
and deliberately done or resorted to in 2nd Statement: A private educational
order to avoid payment of the tax. institution may at its option elect either to
Statement No. 2: Fraud cannot be deduct capital expenditures during the
presumed but must be proved. Fraudulent taxable year or to deduct allowable for
intent can not be deducted from mistakes depreciation thereof.
however frequent they may be, especially a. True; False
if, such mistakes emanate from erroneous b. True; True
classification of items in accounting c. False; True
methods utilized for determination of tax d. False; False
liabilities.
a. True; False
b. True; True
c. False; True
d. False; False
77. Net capital loss carryover will not be
claimed by, except:
a. Individual taxpayers
b. Estate taxpayers
c. Trust taxpayers
d. Corporate taxpayers
78. Decedent who is married with a surviving
spouse and one legitimate child and two
illegitimate children. Left the following
properties.
Real properties
Family home
Other real property (exclusive)
Family lot (exclusive)
Funeral expenses
Taxes and losses
Medical expenses

What is the total net taxable estate?

a. P1,250,000
b. P2,250,000
8