(Diagnostic Exam) Advanced Studies in Taxation

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

[Diagnostic Exam] Advanced Studies in


Taxation
Choose the BEST answer from each of the following items

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GRADUATED RATES OF INCOME TAX

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The following are the mandated information in a VAT invoice or VAT official * 1 point
receipt, except:

TIN of the seller and a statement he is VAT registered

Total amount that the purchaser pays or is obligated to pay with the indication that
such amount includes the VAT

If the same is VAT exempt of VAT Zero-rated, it shall be printed or written


prominently in the invoice or receipt

In case of mixed sale in the same invoice or receipt, it shall indicate the breakdown,
which is vatable, zero-rated and/or exempt. Seller should not issue separate invoices
for aforementioned components of the sale.

The following are the consequences of issuing a VAT invoice/receipt by a * 1 point


non-VAT registered person, except:

Shall be liable to 25% surcharge

Shall not be allowed to claim input VAT thereon

Shall be liable to the percentage tax thereon, if any

The purchaser in whose favor the VAT invoice/receipt was issued, shall be allowed
to claim input VAT thereon.

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

During the year 2020, Mr. Cole Bee, a Certified Public Accountant is * 1 point
engaged in the practice of his profession. He is not VAT registered. He had
the following gross receipts during 2020 (Net of any business tax)

1st quarter                                            P  750,000

2nd quarter                                           P   500,000

3rd Quarter                                           P1,800,000

4th Quarter                                           P1,000,000

Purchases from VAT Supplier             P     75,000

 
VAT payable is:

P486,000

P477,000

P111,000

P120,000

The following are the requisites of donation, except: * 1 point

Acceptance of the donor

Delivery whether actual or constructive

Donative intent

Capacity of the donor to gratuitously dispose his property

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The following are the modes of a valid donation, except * 1 point

Verbal/oral donation whereby the gift is a ballpoint pen valued at Php500.

Donation in writing of an Apple Watch Series 7 valued at Php35,000

Donation in writing of a parcel of land whereby both the deed of donation and its
acceptance is made in public document.

Oral donation of a shoe valued at Php20,000

Sale or importation of the following are exempt from the VAT and OPT * 1 point

beginning January 1, 2021 to December 31, 2023, except

Capital equipment, its spare parts and raw materials necessary for the production of
personal protective equipment components such as coveralls, gown, surgical cap,
surgical mask, N-95 mask, scrub suits, goggles, and face shield, double or surgical
gloves, dedicated shoes, and shoe covers, for COVID-19 prevention

All drugs, vaccines and medical devices specifically prescribed and directly used for
the treatment of COVID 19

Drugs for the treatment of COVID 19 approved by the FDA for use in clinical trials,
including raw materials directly necessary for the production of such drugs

Prescription drug and medicines for cancer, mental illness, tuberculosis and kidney
disease.

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

First Statement: Sale of precious metals to the BSP is exempt from the VAT. * 1 point

Second Statement: Zero-rated sales and effectively zero-rated sales are


synonymous.

True; True

False; False

True; False

False; True

The estate tax is determined by multiplying 6% of: * 1 point

Gross estate within and outside of the Philippines of a decedent who was Chinese
and resident of the Philippines.

Net taxable estate within the Philippines of a decedent who was resident and citizen
of China.

Gross estate within the Philippines of a decedent who was resident and citizen of
China.

Net taxable estate within and outside of the Philippines of a decedent who was a
resident and citizen of China.

Intangible properties located in the Philippines is included in the gross * 1 point

estate of the following except:

Resident and citizen of the Philippines

Resident of the Philippines and citizen of Japan

Resident and citizen of the United States of America, with reciprocity

Resident of Japan and citizen of the United states of America, with reciprocity

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The following are intangible properties in the Philippines, except: * 1 point

Franchise which must be exercised in the Philippines

Shares, obligations or bonds issued by any corporation or sociedad anonima


organized or constituted in the Philippines in accordance with its laws

Shares, obligations or bonds issued by any foreign corporation sixty-five percent


(65%) of the business of which is located in the Philippines

Shares, obligations or bonds issued by any foreign corporation if such shares,


obligations or bonds have acquired business situs in the Philippines

Which among the following lease of residential units is subject to the VAT * 1 point

No of Residential Units - 50 | Monthly Rent per unit - P10,000

No of Residential Units - 40 | Monthly Rent per unit - P15,000

No of Residential Units - 10 | Monthly Rent per unit - P17,000

No of Residential Units - 17 | Monthly Rent per unit - P15,500

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

A residential house and lot located in the City of Manila have the following * 1 point
fair market values:

                     Lot                                           P   5,000,000

                     House                                         10,000,000

        The assessment levels are 20% for the lot and 50% on the house.
The real property taxes due and payable on the residential house and lot,
where the city of Manila is imposing the maximum basic real property tax
rate,  is:

P 120,000

P 135,000

P 180,000

P 300,000

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Which of the following shall be allowed as deductions from gross sales?  * 1 point

A.     Sales returns and allowances for which a proper credit or refund was
made during the month or quarter to the buyer for sales previously recorded
as taxable sales

B.     Discounts determined and granted at the time of sale, which are
previously indicated in the invoice, the amount thereof forming part of the
gross sales duly recorded in the books of accounts.

C.     Sales discounts indicated in the invoice at the time of sale, the grant of
which is dependent upon the happening of a future event

A, B, and C

A and B

A and D

B and C

Ms. A operates a convenience store and also offers bookkeeping services * 1 point

to her clients. In 2018, her gross sales amounted to Php 1,200,000 and her
receipts from bookkeeping services amounted to Php 400,000. She
incurred cost of sales and operating expenses amounting to Php 700,000
and Php 300,000, respectively.

 
Her income tax liability for the year, if she signified her intention to be taxed
at 8% income tax rate in 1st quarter return is

Php 108,000

Php 128,000

Php 48,000

Php 28,000

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Ms. A the cost accountant of ABC Corporation, earned annual * 1 point


compensation income of Php 1,500,000, inclusive of 13th month pay and
other benefits in the amount of Php 120,000, but net of mandatory
contribution  to SSS, Philhealth and Pag-ibig of Php 25,000. Aside from
employment income, she owns a convenience store, with gross sales of
Php 2,400,000. Her cost of sales and operating expenses are Php 1,100,000
and Php 500,000, respectively and with non-operating income of Php
100,000.

 
If Ms. A opted to be taxed   at 8% income tax rate of his gross sales of his
income from business, her tax due is 

Php 292,800

Php 513,000

Php 293,000

Php 312,800

Which of the following government owned and controlled corporation shall * 1 point

pay such rate of tax upon their taxable income as imposed upon
corporations.

SSS

PAGCOR

LOCAL Water District

PHIL Health Insurance Corporation

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

ABC Corporation was dissolved and liquidating dividends were declared * 1 point

and paid to the stockholders. What tax consequence follows?

ABC Corporation should deduct a final tax of 10% from the dividends.

The stockholders should declare their gain from their investments and pay income
tax at ordinary rates.

The dividends are exempt from tax.

ABC Corporation should withhold a 10% creditable tax.

MBG Corporation secured an income tax holiday for 5 years as a pioneer * 1 point
industry. On the fourth year of the tax holiday, MGC Corporation declared
and paid cash dividends to its stockholders,  all of whom are individuals.
Are the dividends taxable?

The dividends tax exempt because of MGC Corporation’s tax holiday

The dividends are taxable if they exceeded 50% of MBG Corporation’s retained
earnings

The dividends are exempt if paid before the end of MGC Corporation fiscal year

The dividends are taxable, the tax exemption of MGC Corporation does not extend to
its stockholders

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Mr. Alas sells shoes in Makati through a retail store. He pays the VAT in his * 1 point
sales to the BIR and the municipal license tax based on the same gross
sales to the City of Makati. He comes to you for advice because he thinks
he is being subjected to double taxation. What advice will you give him?

The City of Makati does not have this power

Yes, there is double taxation and it is oppressive

Yes, there is double taxation and this is illegal in the Philippines.

Double taxation is allowed where one tax is imposed by the national government and
the other by the local government

Congress passed a sin tax law that increased the tax rates on cigarette by * 1 point
1,000%. The law was thought to be sufficient to drive many cigarettes
companies out of business, and was questioned in court by a cigarette
company that would go out of business because it would not be able to pay
the increased tax. The cigarette company is.

Wrong because taxes are the lifeblood of the government

Wrong because the law recognizes that the power to tax is the power to destroy

Correct because no government can deprive a person of his livelihood

Correct because Congress, in this case, exceeded its power to tax

Which statement is wrong?  * 1 point

Generally, there is no limit on the amount of tax that may be imposed

The money contributed as tax becomes part of the public funds

The power of tax is subject to certain constitutional limitations

The power of taxation may be exercised by the government, its political subdivision
and public utilities

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The Philippines adopted the semi – global tax system, which means that * 1 point

All taxable incomes, regardless of the nature of income, are added together to
arrived at gross income, and all allowable deductions are deducted from the gross
income to arrive at the taxable income.

All income subject to final withholding taxes are liable to income tax under the
schedular tax system, while all ordinary income as well as income not subject to
final withholding taxes are liable to income tax under the global tax system

All taxable incomes are subject to final withholding taxes under the scheduler tax
system

All the taxable incomes from sources within is a resident of the Philippines are liable
to income tax

Which among the following taxpayers is required to used only the calendar * 1 point
year for tax purposes

partnership exclusively for the design of government structure projects considered


as practice of civil engineering

Joint – stock company formed for the purpose of undertaking construction projects

Business partnership engaged in energy operations under a service contract with the
government

Joints account engaged in trading of mineral ores.

The proceeds received under a life insurance endowment contract is not * 1 point
considered part of gross income

if it so stated in the life insurance endowment policy

If the price of the endowment policy was not fully paid

Where payment is made as a result of the death of the insured

Where the beneficiary was not the one who took out the endowment contract

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Which among the following concepts of taxation is the basis for the situs of * 1 point
income taxation 

Lifeblood doctrine of taxation

Symbiotic relation in taxation

Compensatory purpose of taxation

Sumptuary purpose of taxation

The municipal council passed an ordinance imposing an occupation tax on * 1 point


profession or occupation of a “plant accountant”. A is the only person with
such an occupation in the municipality. Which of the following is correct?

The ordinance violates the constitutional rule of equality of taxation

The ordinance is a “class legislation” since he it does not subject to occupation tax
the other accountants

A can successfully challenge the validity of the ordinance as being discriminatory


since he is the only adversely affected

The ordinance is valid exercise of the council’s power to enact laws to raise revenue
under the Local Government Code since the ordinance conforms to the uniformity
clause.

The government is said to be exempt from taxation. Which of the following * 1 point
is an exemption to this rule?

A contract entered into by the AFP and SM where SM furnishes the AFP with combat
boots

The government employee buying 30 printers for office use

A contractor for the government claiming exemption from contractor’s tax

DSWD claiming tax exemption on goods donated by the LGU of Albay

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

A person cannot be allowed to deduct * 1 point

Interest expense incurred during the taxable year

Business expenses sustained in a transaction between related parties

Losses incurred not compensated for by insurance

Bad debt which have been ascertained to be worthless as it is very difficult collect
and the debtor has no more leviable properties

The following organizations shall not be taxed in respect to income * 1 point


received by them as such, except

Non – profit hospitals

Government educational institution

Non – stock and non – profit educational institution

Cemetery company owned and operate exclusively for the benefit of its members

Which of the following fringe benefit if given to managerial employee is * 1 point


exempt from fringe benefit tax

Expenses for foreign travel

Household personnel, such as driver, made and others

Educational assistance to the employee of his daughter

Contribution of the employer for the benefit of the employee to retirement, insurance
and hospitalization benefit plan

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Which of the following is not a condition imposed by the Constitution for * 1 point
the exercise of the power of eminent domain?

The payment of just compensation

The observance of due process in taking of private property

The existence of public use for the taking of a private property

The consent of the owner of the private property to sell the same to the government.

Items 32 and 33 are based on the following information: * 1 point

A Filipino decedent died single (but head of family), leaving a family home
which consists of a piece of land that he inherited 3-1/2 years ago (with a
value at that time of P6,000,000) with a fair market value of P8,000,000 at
the time of his death, and a house thereon which he built at a cost of
P6,500,000, and a fair market value at the time of his death of P4,500,000. 
Other properties in his gross estate have a fair market value of P5,500,000.
Unpaid obligations at the time of his death amounted to P3,000,000.

32.  The vanishing deduction is:

P2,000,000

P5,000,000

P4,000,000

P2,250,000

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

33. The total deduction for family home is: * 1 point

P4,500,000

P5,500,000

P10,000,000

P12,500,000

One of the following statements is correct. The donor’s tax return: * 1 point

Must be filed within thirty days from the date of donation.

Must be filed within thirty days after the end of the calendar year.

Must be accompanied by a certificate of an independent Certified public Accountant


if the gross gift is over P250,000 or more.

In the case of husband and wife making donations, one donor’s tax return shall be
filed and signed by either the husband or the wife.

On March 6, 2022, a Filipino citizen donated house and lot with fair market * 1 point
value of P500,000 to his illegitimate child on account of marriage on
January 1, 2022.  Gift tax return was filed and tax paid on July 5, 2022.

 
The donor’s tax due, including increments, as of July 5, 2022 is

P15,000

P15,750

P19,500

P 23,250

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The deduction from the Philippine gross estate is: * 1 point

P 580,000

P1,080,000

P1,450,000

P980,000

Taxpayer died February 2, 2021.  No judicial proceedings were instituted for * 1 point

the settlement of his estate.  Return was filed and tax of P60,000 was paid
May 2, 2022.

 
The estate tax due, including increments, as of May 2, 2022 is:

P78,000

P78,750

P93,000

P94,500

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The tax credit for foreign donor’s tax paid is: * 1 point

P14,000

P25,000

P36,000

P39,000

Which of the following is not a sale and therefore is not subject to the * 1 point
value-added tax?

Transfer, use or consumption not in the ordinary course of business of goods or


properties ordinarily intended for sale or use in the course of business.

Distribution or transfer to shareholders or investors of share in the profits of a VAT-


registered person.

Distribution or transfer to creditors in payment of debt.

Consignment sales.

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The value-added tax payable for Wonder Corp.’s calendar month ended * 1 point
January 31, 2022 is:

P50,500

P60,000

P64,900

P74,400

Output tax is: * 1 point

P84,000

P72,000

P60,000

P48,000

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The output VAT in the first quarter of 2021 is: * 1 point

P12,000

P24,000

P26,000

None

The value-added tax payable for March is: * 1 point

P190,400

P192,000

P204,000

P260,400

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The franchise tax due for the quarter is: * 1 point

P60,000

P50,000

P75,000

P54,000

Beneco is a holder of franchise to distribute and sell electricity. In a * 1 point


particular quarter, its gross receipts amounted to P2,000,000 from
distribution and sale of electricity. It has also receipts from the lease of its
auditorium and theater amounting to P600,000. The value-added tax or
percentage tax due for the quarter is:

P40,000 percentage tax

P72,000 value-added tax

P52,000 percentage tax

P312,000 value-added tax

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

Gloria invested P500,000 in the shares of stock of Tabako Corp. The * 1 point
corporation’s shares are listed and are traded in the local stock exchange.
Gloria sold the shares for P350,000 through the local stock exchange. The
percentage tax on the sale is:

P6,000

P3,500

P2,100

P1,750

First statement: The monthly percentage tax returns of taxpayers shall be * 1 point
filed, and taxes paid, not later than the 20th day following the end of the
month.

 
Second statement: With respect to taxpayers enrolled with EFPS, the
deadline for e-filing the monthly percentage tax return and e-paying the tax
thereon shall be 5 days later than that set in the first statement.

Both statements are correct.

Both statements are incorrect.

Only the first statement is correct.

Only the second statement is correct.

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The income tax return of a parent includes the income of an unmarried * 1 point
child:

If the child is minor and the income was derived from property inherited by the child,
where the estate tax was paid.

If the child is minor and the income was derived from property received as gift from
a living parent, where the donor’s tax was not paid.

If the child is minor and the income was derived from property received as gift from
the living parent, where the donor’s tax was paid.

If the child is minor and the income was derived from his labor.

Aside from the ordinary corporate income tax of 30% (effective January 1, * 1 point

2022), what other tax may be imposed on corporations under the income
tax law?

Minimum corporate income tax

Passive income tax

Capital gains tax

All of these

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1/26/23, 5:20 PM [Diagnostic Exam] Advanced Studies in Taxation

The income tax payable if the corporation is: * 1 point

A B

C D

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