(RFBT)

1. Lorenzo obtained a loan from Erika amounting to P 500.00 and they agreed that the
IPhone 4s of Lorenzo will be the security for the loan. The IPhone 4s however remains in
the possession of Lorenzo. The contract between them is ________.
A. Loan only
B. Commodatum
C. Loan with chattel mortgage
D. Loan with pledge

2. This is an agreement between the vendor and the vendee in the sale of an immovable that
rescission of the contract shall of right take place if the vendee fails to pay the price at the
time agreed upon.

Pactum Commissorium

3. Which of the following is an unenforceable contract?

A. An oral agreement for the leasing of a personal property or of an interest therein for more
than one year.
B. A written agreement that by its terms is not to be performed within a year from the
making thereof.
C. Those where one of the parties is incapable of giving consent to a contract.
D. Those entered into in the name of another person by one who has been given no
authority or legal representation

4. Which of the following stipulations is valid?

A. A stipulation excluding a capitalist partner from profits.
B. A stipulation exempting a capitalist partner from losses.
C. A stipulation exempting an industrial partner from losses.
D. A stipulation excluding an industrial partner from profits.

5. Alyssa went to Sari-sari store of Mang Roger and told him that she would be getting 5
kilos of Sinandomeng Rice from his store and she will just replace the said rice with the
same kind and quantity after 10 days to which Mang Roger agreed. What is the contract
created?
A. Mutuum
B. Commodatum
C. Deposit
D. Sale
6. It is a special form of payment where the ownership of property is transferred to his
creditor to pay a debt in money.

Dation in payment/ Dacion en pago

7. Which of the following will cause the automatic dissolution of a corporation?

A. Commission by the corporation of an ultra vires act.
B. Failure to formally organize and commence the transaction of its business or the
construction of its works within 2 years from its incorporation.
C. Continuous inoperation for a period of at least 5 years.
D. Failure to adopt by-laws and submit the same to the Securities and Exchange
Commission within 30 days from the receipt of the official notice of the issuance of its
certificate of incorporation.

8. Mika pledged his Samsung Galaxy Camera to Aby to secure the loan of P 25,000.00. For
failure of Mika to redeem the security, Aby sold the same to the highest bidder at public
auction for P 17,500.00. In this case, _________.
A. Aby cannot recover the deficiency from Mika even if there is stipulation.
B. Aby cannot recover the deficiency from Mika if there is no stipulation.
C. Aby can recover the deficiency from Mika if so stipulated.
D. Aby can recover the deficiency of 7,500.00 from Mika.

9. Michelle and Julia entered into a contract whereby Michelle sold her one-year production
of eggs in his poultry farm to Julia for P 40,000.00 which amount Julia immediately gave
in cash to Michelle. The contract between Michelle and Julia is:
A. Rescissible because Julia will likely suffer damage if the eggs do not come into existence.
B. Void because the object was not existing at the time of execution of the contract.
C. Valid because future things may be the object of contracts.
D. Unenforceable because the contract was not in writing.

10. The right of a stockholder to demand payment of the fair value of his shares when he
dissents from certain corporate acts is knows as ________.

Appraisal right

11. “I promise to pay to the order of B P 10,000 30 days after sale” (Sgd) A. Which of the
following indorsements of the above promissory note is not valid?
A. “Pay to C and D” (Sgd) B.
B. “Pay to C P5,000, balance of this note” (Sgd) B if P5,000 has been paid by A.
C. “Pay to C P5,000 to D P5,000” (Sgd) B.
 D. “Pay to C and D, partners” (Sgd) B.

12. In renunciation of holder of his rights against any party to the instrument, which of the
following statements is false?
A. If the instrument is delivered to the person primarily liable without collecting, it
constitutes oral renunciation.
B. If renunciation is made in favor of any party secondarily liable, all parties subsequent
to him are discharged from liability.
C. Renunciation will not affect the rights of a holder in due course without notice.
D. If the renunciation is made in favor of the party primarily liable, it must be
made before, at or after maturity.

(MAS)

1. Lady Eagles Inc. has a current ratio of 4 to 1. The inventory purchased on account last
month was paid this month. What is the effect of this transaction on the current ratio and
working capital respectively
a. Rise and decline
b. Rise and no effect
c. No effect on both
d. Decline and rise

2. One Big Fight Corporation produces and sells a single product. The selling price is P25
and the variable cost is P15 per unit. The corporation's fixed costs is P100,000 per month.
Average monthly sales is 11,000 units. If the One Big Fight Corporation pays corporate
income tax at the rate of 30% and it desires to earn an after-tax profit of P21,000, how
much sales (in units and in pesos) must it generate?
13000 units and P 325,000.00

3. Lovely Corporation is considering a 10-year capital investment project with forecasted

revenues of P 4,000,000 per year and forecasted cash operating expenses of P 2,900,000
per year. The initial cost of the equipment for the project is P 2,300,000, and Lovely
expects to sell the equipment for P 900,000 at the end of the tenth year. The equipment
will be depreciated over 7 years. The project requires a working capital investment of P
800,000 at its inception and another P 600,000 at the end of Year 5. Assuming a 30%
marginal tax rate and ignoring the time value of money, the expected net cash flow from
the project in the tenth year is _____________.
P 2,800,000

4. The expected rate of return for the stock of Laure Enterprises is 20%, with a standard
deviation of 15%. The expected rate of return for the stock of Rondina Associates is 10%,
with a standard deviation of 9%. The riskier stock is ___________.
 A. Laure because its return is higher.
B. Laure because its standard deviation is higher.
C. Rondina because its standard deviation is higher.
D. Rondina because its coefficient of variation is higher.

5. The following information is available for Pons Company.

2017 2016

Accounts Receivable P 360,000 P 400,000

Inventory 280,000 320,000

Net credit sales 3,000,000 1,400,000

Cost of goods sold 1,200,000 1,060,000

Net Income 300,000 170,000

The receivables turnover for 2017 is ________.

7.9 times

6. At a break-even point of 400 units sold, the variable cost is P 4,000 and the fixed cost is P
2,000. What will the 401st unit sold contribute to profit before income taxes?

P 5.00

7. The financial analyst of BDL Corporation provided the following financial ratios:

Current ratio 4:1

Gross profit rate 25%

Quick ratio 3.5:1

Ending current liabilities P 250,000

Inventory turnover 7x

Beginning inventory P 175,000

How much is the gross profit?

P 408,333

8. Cheng Firm is analyzing two possible capital structures – 30 percent and 50 percent debt
ratios. The firm has Return on Total Assets of 20% where their net income before tax is P
2,000,000. The common stock is valued at P 50 per share. Having a marginal tax rate of
50 percent on ordinary income for the firm, the number of common shares outstanding
for each of the capital structures would be ____________
A. 30 percent debt ratio: 30,000 shares and 50 percent debt ratio: 50,000 shares
B. 30 percent debt ratio: 50,000 shares and 50 percent debt ratio: 70,000 shares
C. 30 percent debt ratio: 70,000 shares and 50 percent debt ratio: 100,000 shares
D. 30 percent debt ratio: 70,000 shares and 50 percent debt ratio: 50,000 shares

9. A (n) _________ in current assets _________ net working capital, thereby _________ the
risk of technical insolvency.
A. Increase; increases; reducing
B. Increase; decreases; increasing
C. Decrease; increases; increasing
D. Decrease; decreases; reducing

10. Galanza Enterprises has assembled the following data pertaining to certain costs that
cannot be easily identified as either fixed or variable. Galanza Enterprises has heard
about High-Low method of measuring cost functions and has decided to use it in this
situation.

Cost Hours

P 24,900 5,250

24,000 5,500

36,400 7,500

44,160 9,750

45,000 9,500

What is the estimated total cost at an operating level of 8,000 hours?

P 36,670
 11. For several years, the Southern Division of BDL Company has maintained a positive
residual income. Southern is currently considering investing in a new project that will
lower the division’s overall return on investment (ROI) but increase its residual income.
What is the relationship between the expected rate of return on the new project, the firm’s
cost of capital, and the division’s current ROI?
A. The expected rate of return on the new project is higher than the firm’s cost of
capital, but lower than the division’s current return on investment.
B. The expected rate of return on the new project is higher than the division’s current
return on investment, but lower than the firm’s cost of capital.
C. The firm’s cost of capital is higher than the expected rate of return on the new project,
but lower than the division’s current return on investment.
D. The division’s current return on investment is higher than the expected rate of return
on the new project, but lower than the firm’s cost of capital.

12. The following data relate to product no. 100 of Palec Corporation.

Direct material standard: 3 square feet at P2.50 per square foot

Direct material purchases: 30,000 square feet at P2.60 per square foot

Direct material consumed: 29,200 square feet

Manufacturing activity, product no. 100: 9,600 units completed

The direct-material price variance is:

A. P 2,880U
B. P 2,920F
C. P 2,920U
D. P 3,000F
E. P 3,000U

(AUD)
1. Republic Act 9298 is otherwise known as
A. Revised Accountancy Act of 2004
B. Philippine Accountancy Act of 2004
C. Revised Accountancy Law of 2004
D. Philippine Accountancy Law of 2004

2. The following are assurance engagements, except:

A. Financial Statements Audit
B. Review of Financial Statements
C. Tax Consulting
D. Information System Reliability Services

3. A member of the Board of Accountancy (BOA) shall, at the time of his/her appointment ,
possess which of the following qualifications?
A. Must be a natural-born citizen of the Philippines
B. Must be a Filipino citizen
C. Must be a Filipino citizen and a resident of the Philippines
D. Must be a natural-born citizen and a resident of the Philippines

4. Which of the following statements is false?

I. The major difference between other professional groups and CPAs is competence.
II. Independence in appearance exists when the auditor is actually able to maintain an
unbiased attitude throughout the audit.
III. An operational audit attempts to measure the effectiveness and efficiency of a specific
unit of an organization.
IV. A CPA shall not permit others to carry out on his behalf, either with or without
compensation, acts which, if carried out by the CPA, would place him in violation of
the Code of Ethics.

I and II

5. Reyes Company reported net income of P 34,000 for the year ended December 31, 2016
which included depreciation expense of P 8,400 and a gain on sale of equipment of P
1,700. The equipment had an historical cost of P 40,000 and accumulated depreciation of
P 24,000. Each of the following accounts increased during 2016 (Assume that the
increases in the following accounts are due to cash transactions only)
Patent P 9,800
Prepaid rent* 4,500
Available for sale investment 8,000
Bonds Payable 5,000
*to be consumed within 12 months from the balance sheet date
 What amount should be reported as net cash provided (used) by investing activities for
the year ended December 31, 2016?
(P 100)

6. The following statements relate to CPA Examination ratings. Which of the following is
incorrect?
A. To pass the examination, candidates should obtain a general weighted average of 75%
and above, with no rating in any subject less than 65%.
B. Candidates who obtain a rating of 75% and above in at least 4 subjects shall receive a
conditional credit for the subjects passed.
C. Candidates who failed in four complete examinations shall no longer be allowed
to take the examination the fifth time.
D. Conditioned candidates shall take an examination in the remaining subjects within
two years from the preceding examination.

7. On January 2016, the board of directors of Bulldogs Corporation authorized the grant of
100 stock option per employee to supplement the salaries of 500 employees. Each stock
option permits the purchase of one share of Bulldogs Corporation ordinary share at a
price of P25 per share (par value P20). The market price of the stock on January 1, 2016
is P40 per share.

The options, which have a market value of P12 per option vest, or become exercisable,
beginning on January 1, 2019, if the employees stay with the Company for the entire
three-year vesting period and provided that the average revenue growth rate during the
vesting period is at 20%. Additional 25 option per employee will vest if the average
revenue growth rate over the vesting period is at 40%. The options expire on December
31, 2020.

By the end of 2016, none of the employees left the company and that the company
estimates that none will leave until the vesting period ends. Furthermore, the actual
revenue growth rate in 2016 was at 25%. The company expects the rate will be sustained
over the next two years.
Assuming that 5 employees left the company by the end of 2017, and it was estimated
that another 10 employees will leave by the end of 2018. Furthermore, the actual revenue
growth rate in 2017 was at 32.5% and that the company expects that this rate will be
sustained over the following year, what is the amount recognized as expense in 2017?
P 285,000

8. Because an examination in accordance with the Philippine Standards on Auditing is

influenced by the possibility of material errors, the auditor should conduct the
examination with an attitude of
A. Professional responsiveness
B. Conservative advocacy
 C. Objective judgment
D. Professional skepticism

9. Creamline Company, lessor, leased an equipment under an operating lease. The lease
term is 5 years and the lease payments are made in advance on January 1 of each year as
shown in the following schedule:
January 1, 2016 P 1,000,000
January 1, 2017 1,000,000
January 1, 2018 1,400,000
January 1, 2019 1,700,000
January 1, 2020 1,900,000

On December 31, 2017, what amount should be recognized as Rent Receivable?

P 800,000

10. Bali Pure Company distributed coupons to promote new products. On October 1, 2016,
the entity mailed 100,000 coupons for P45 off each box of cereal purchased.

The entity expected 12,000 of these coupons to be redeemed before the December 31,
2016 expiration date.

It takes 30 days from the redemption date for the entity to receive the coupons from the
retailers. The entity reimbursed the retailers an additional P5 for each coupon redeemed.

On December 31, 2016, the entity had paid retailers P 250,000 related to these coupons
and had 5,000 coupons on hand that had not been processed for payment.

What amount should be reported as liability for coupons on December 31, 2016?

A. P 350,000
B. P 290,000
C. P 250,000
D. P 225,000

11. Which one of the following analytical procedures would be most helpful in alerting the
auditor to the possibility of obsolete inventory?
A. Compare current year manufacturing costs with previous years’.
B. Compare inventory turnover ratio with previous years’.
C. Compare gross margin percentage with previous years’.
D. Compare unit costs of inventory with previous years’.

12. Eleazar Estates acquired land and an existing building on August 1, 2017 in exchange for
60,000 ordinary shares. The real property tax billed showed an assessed value of P
3,000,000.00 for the land and the management estimates that the value of the building is
 P 2,000,000.00. The shares have a par value of P100 and a fair value of P150 per share.
Eleazar Estates also incurred the following costs:
Remodeling cost prior to occupancy 200,000
Cost of new wing attached to the building 750,000
Cost of grading and leveling 50,000
Cost of new split type air-conditioning units 300,000
Assessment by city for sewerage project 10,000
Driveways and parking bays 550,000
Payment to tenants to vacate the building 100,000
Unpaid property taxes on land and building assumed by Eleazar Estates 375,000

The total cost of the building is:

A. P 4,650,000
B. P 4,800,000
C. P 5,025,000
D. P 5,100,000

13. Which of the following procedures is the least essential attribute of a cash disbursement
control system?
A. Use of multiple bank accounts
B. Establishment of a petty cash fund
C. Checks are signed only when supported by adequate documentation and verification
D. Supervision of all cash disbursement and record-keeping functions

(FAR)

1. When converting from cash basis to accrual basis of accounting, which of the following
adjustments should be made to cash payments for expenses to arrive at the accrual basis
expenses?
A. Add ending prepaid expenses
B. Add beginning prepaid expenses
C. Subtract beginning prepaid expenses
D. Add beginning accrued expenses

2. The following account balances are shown in the accounting records of Gaston Company:

January 1, 2017 December 31, 2017

Accounts Payable P 530,000 480,000

Cash 620,000 ?

Merchandise Inventory 860,000 780,000

Accounts Receivable 670,000 910,000

 Sales for 2017 amounted to P 7,980,000 while Cost of Goods Sold was P 5,830,000. Cash
operating expenses amounted to P 1,070,000. All Sales and Purchases were made on
credit. Assuming that there were no other relevant transactions, what is the cash balance
at December 31, 2017?

A. P 1,080,000
B. P 1,490,000
C. P 2,560,000
D. P 3,050,000

3. An asset with a market value of P 4,000,000 is leased on January 1, 2016. Five annual
lease payments are due each on December 31 beginning December 31, 2016. The
guaranteed residual value on December 31, 2020, last day of the lease term, is P
1,600,000. The lessor’s implicit rate is 8%. What is the annual lease payment?
P 729,090.59

4. Gopico Company has an overdue 8% note payable to Wong Bank of P 8,000,000 and
accrued interest for one year of P 640,000. As a result of restructuring agreement on
January 1, 2016, Wong Bank agreed to the following provisions:
 The principal obligation is reduced to P 7,000,000.
 The accrued interest of P 640,000 is forgiven.
 The date of maturity is extended to December 31, 2019
 Annual interest of 10% is to be repaid in 4 years every December 31.

The present value of 1 at 8% for 4 periods is 0.735 and the present value of an ordinary
annuity of 1 at 8% for 4 periods is 3.31. What is the gain on the restructuring of the debt
recognized in profit or loss for the year 2016?

P 1,178,000

5. A company declared a cash dividend on its ordinary shares in December 2009, payable in
January 2010. Retained Earnings would __________.
A. Decrease on the date of payment
B. Increase on the date of declaration
C. Not be affected on the date of payment
D. Not be affected on the date of declaration

6. The profit for 2017 of Tan Company before any deduction for bonus and income tax
amounted to P 2,500,000. Under an incentive compensation plan, the general manager is
entitled to a year-end bonus of 10% of the profit before deducting the bonus but after
deducting the income tax. Income tax rate is 30%. The manager’s bonus for 2017 was
A. P 227,273
B. P 180,412
 C. P 250,000
D. P 175,000

7. In preparing its bank reconciliation for the month of April 2017, Madayag Corporation
has the following available information:
Balance per bank statement, 4/30/17 P 39,140
NSF check returned with 4/30/17 bank statement 450
Deposits in transit, 4/30/17 5,000
Outstanding checks, 4/30/17 5,200
Bank service charges for April 2017 20

What should be the correct balance of cash at April 30, 2017?

A. P 39,370
B. P 38,940
C. P 38,490
D. P 38,470

8. Legal fees incurred by a company in defending its patent rights should be expensed when
the outcome of litigation is: successful unsuccessful
A. YES NO
B. YES YES
C. NO YES
D. NO NO

9. The following information pertains to Macandili Company’s biological assets at

December 31, 2017:

Carrying value at January 1, 2017 P 10,000,000

FV less cost to sell of biological assets purchased 4,000,000

Gain arising from change in fair value less cost to sell attributable to

price change 800,000

Gain arising from change in fair value less cost to sell attributable to

physical change 1,500,000

Decrease due to sales 2,000,000

Decrease due to harvest 800,000

At what amount should the biological assets be presented on the statement of financial
position at December 31, 2017?

P 13,500,000
 10. On January 1, 2016, Valdez Company granted 60,000 share options to employees. The
share options will vest at the end of three years provided the employees remain in service
until then. The option price is P 60 and the par value per share is P 50.

At the date of grant, the entity concluded that the fair value of the share options cannot be
measured reliably. The share options have a life of 4 years which means that the share
options can be exercised within one year after vesting.

The share prices are P 62 on December 31, 2016, P 66 on December 31, 2017, P 75 on
December 31, 2018 and P 85 on December 31, 2019. All share options were exercised on
December 31, 2019. What is the compensation expense for 2018?

A. P 900,000
B. P 300,000
C. P 450,000
D. P 660,000

11. Dani Company’s transaction for the year ended December 31, 2017 included the
following:
 Purchased real estate for P 825,000 cash which was borrowed from a bank
 Sold investment securities for P 750,000
 Paid dividends of P 900,000
 Issued 500 ordinary shares for P 375,000 cash
 Purchased machinery and equipment for P 187,500 cash
 Paid P 675,000 toward a bank loan

How much is the net cash used in investing activities for the year 2017?

A. P 75,000
B. P 1,012,500
C. P 562,500
D. P 262,500

(AFAR)

1. Estranero Company sells new automobiles. A new escapade costing P 700,000 was sold
on October 1, 2016 for P 1,060,000; a 2005 Toyota Corolla model was accepted as down
payment and an allowance of P 300,000 was accepted on the trade-in. The balance is
payable in 32 equal monthly installments starting November 1, 2015. Estranero Company
anticipates selling price of P 350,000 after reconditioning it for P 22,500. Selling costs
equal to 5% of selling price is also anticipated. The gross profit on reconditioned
 automobiles is expected to be 20%. How much is the realized gross profit for 2016
related to the above transaction? (Assume a calendar year accounting period)
A. P 104,250
B. P 86,250
C. P 118,019
D. P 103,500

2. The various documents and records which were recovered immediately after a fire gutted
its premises, Gervacio Marketing Co. gathered the following information (The company
uses the installment method of accounting)

2013 2014 2015

Installment Sales P 500,000 P 800,000 P (?)

` Cost of installment sales (?) 600,000 (?)

Gross profit on installment sales (?) (?) 282,000

Collection on:

2013 sales 50,000 250,000 100,000

2014 sales - 200,000 500,000

2015 sales - - 400,000

Realized GP on Installment sales 11,000 (?) 241,000

Based on the information given above, the cost of installment sales for the year 2015 was

A. P 900,000
B. P 932,000
C. P 918,000
D. P 940,000

3. Nabor Manufacturing Company uses a process cost system with FIFO method of costing
to account for cost. Units of product are started in the Forming Department and then
transferred to the Finishing Department where they are completed. Units are inspected at
the end of the production process (discrete) in the Forming Department and an average of
5% of units started is considered normal. Data related to April in the Forming Dept. are:

UNITS:
Units in beginning inventory, 100%M, 35%CC 10,000
Units started in process 90,000
 Units transferred to next department 80,000
Units in process end, 100%M, 65%CC 15,000

COSTS:
Costs- prior period Costs this period
Materials P 12,600 P 360,000
Labor 7,700 111,390
Overhead 14,000 222,780

The total costs of goods allocated to units transferred out is: ____________
P 628,760

4. Under a modified wage plan, Dimdim works for eight hours a day and earns P 2.00 for
each finished unit she produces. However, she is guaranteed P 60.00 per hour as
minimum wage. Her production this week was as follows;
HOURS WORKED PIECES FINISHED

Monday 8 250

Tuesday 8 280

Wednesday 8 200

Thursday 8 220

Friday 8 300

How much is debited to Factory Overhead Control?

P 120

5. Heart Strong Partnership has the following account balances before liquidation:
Cash P 14,000
Non-cash assets 295,000
Loan to Wong 6,000
Receivable from Lo 800
Expenses 89,200
Liabilities 45,000
Loan from Morado 2,000
Lo, Capital (40%) 50,000
Wong, Capital (40%) 76,000
Morado, Capital (20%) 40,000
Revenues 192,000

During December, some non-cash assets were sold for a loss of P 2,500. Liquidation
expenses of P 10,000 were paid and additional expenses amounting to P 3,500 were
expected to be incurred through the following months of liquidating the partnership.
 Liabilities to outsiders amounting to P 30,000 were paid. What is the book value of non-
cash assets sold for Wong to receive P 27,500?
P 101,950

6. Alyssa, Mika and Rachel have capital balances of P 240,000, P 400,000 and P 144,000,
respectively and they share profits in the respective ratio of 4:2:1. Mika received P
208,000 as a result of the liquidation of the partnership. Liquidation expenses paid
amounting to P 32,000. Loss on assets realization is: __________.
P 496,000

7. In 2016, Tigresses Company sold a used machine to Tamaraws, Inc. for P 900,000,
resulting in a gain of P 270,000. On that date, Tamaraws paid P 150,000 cash and signed
a P 750,000 note bearing interest at 10%. The note was payable in three annual
installments of P 250,000 beginning January 2, 2017. Tigresses appropriately accounted
for the sale under the installment sales method. Tamaraws made a timely payment of the
first installment on January 2, 2017, of P 325,000 that included interest.

What amount of deferred gross profit should Tigresses report at December 31, 2017?
A. P 150,000
B. P 180,000
C. P 172,500
D. P 225,000

8. The following information has been taken from the cost records of Jules Company for the
past year:
Raw material used in production P 300,000.00
Total manufacturing costs charged to production during the year (includes direct material,
direct labor, and overhead equal to 60% of direct labor cost) 686,000
Cost of goods available for sale 826,000
Selling and administrative expense 25,000

INVENTORIES BEGINNING ENDING

Raw Material P 56,000.00 P 65,000.00
Work in Process 48,000.00 30,000.00
Finished Goods 90,000.00 110,000.00

The cost of raw material purchased during the year and the amount of manufacturing
overhead is ____________.
P 309,000 and P 144,750

9. The proposed effective date of IFRS 15, Revenue from Contracts with Customers, will be
when?
January 1, 2018
 10. Maroon Company sells merchandise to its 75% owned subsidiary at 25% gross profit
rate. The cost of sales amounted to P 562,500. At the end of the period, the subsidiary
reported that 30% are still in the inventory. The cost of sales of the parent and subsidiary
for the period amounted to P 5,200,000 and P 2,800,000 respectively. The consolidated
cost of sales amounted to:
P 7,306,250

11. The net cost of normal spoilage in a job order costing system in which spoilage is
common to all jobs should be
A. Assigned directly to the jobs that caused the spoilage
B. Charged to manufacturing overhead during the period of spoilage
C. Charged to a loss account during the period of spoilage
D. Allocated only to jobs that are completed during the period

12. A, B and C are in the process of liquidating their partnership. They have the following
capital balances and profit and loss percentages:
Capital Balance Profit/Loss %
A P 5,000 debit 20%
B 18,000 credit 50%
C 6,000 credit 30%

The partnership balance sheet shows cash of P 5,000, non-cash assets of P14,000, and no
liabilities. Assuming no liquidation expenses, what safe payment could be made?
A. P 5,000 split between B and C by a ratio of 5/8 and 3/8, respectively.
B. P 5,000 to B only.
C. P 1,000 to A, P 2,500 to B, and P 1,500 to C.
D. P 18,000 to B only.
E. No payment to partner is necessary.

13. In 2017, Erichgg Company sold a used machine to Riri Co. for P 900,000, resulting in a
gain of P 270,000. On that date, Riri paid P 150,000 cash and signed a P 750,000 note
bearing interest at 10%. The note was payable in three annual installments of P 250,000
beginning January 2, 2018. Erichgg appropriately accounted for the sale under the
installment sales method. Riri made a timely payment of the first installment on January
2, 2018, of P 325,000 that included interest.
What amount of deferred gross profit should Erichgg report at December 31, 2018?
A. P 150,000
B. P 180,000
C. P 172,500
D. P 225,000

(TAX)
 1. Ms. Lazaro, a single rank-and-file employee, received the following during the taxable
year:

Fringe benefits 15,000

De minimis benefits 4,000

Basic salary 300,000

13th month pay and other bonuses` 50,000

Overtime pay 25,000

Holiday pay 25,000

Salary deductions

SSS Loans 2,000

SSS Contributions 3,000

Withholding tax on salary 15,000

PAG-IBIG Contributions 1,000

PhilHealth Contributions 1,000

How much is the taxable net compensation income? P 310,000

2. Ponggay Corporation realized a net income from its business operation in 2017 of P
650,000. Its asset transactions during the year are as follows:

Holding period Amount

Capital gain 7 months P 40,000

Capital gain 3 years 20,000

Capital loss 12 months 35,000

Capital loss 10 years 26,000

Ordinary gain 12 months 18,000

Ordinary loss 16 months 12,000

How much is Ponggay Corporation’s taxable income in 2017? P 656,000

3. When there is doubt, tax laws are construed

a. Strictly against the government and the taxpayer.

b. Liberally in favor of the government and the taxpayer.

c. Strictly against the government and liberally in favor of the taxpayer.

d. Liberally in favor of the government and strictly against the taxpayer.

4. The following taxpayers are not entitled to foreign tax credit, except
A. Resident alien with income from within and without the Philippines
B. Non-resident citizen with income from within and without the Philippines
C. Resident citizen with income only from the Philippines
D. Resident citizen with income only from abroad

5. Jaja, a civil engineering working student, was employed as a Minimum Wage Earner.
Upon passing the licensure examination, she was immediately promoted to Assistant
Manager in June, and was given a raise in salary which is more than the Statutory
Minimum Wage (SMW). Will her entire compensation during the year be taxable and
subject to withholding tax?
A. Yes. The SMW that she received from January to May and received in the period of June
to December of the taxable year shall be subject to the income tax and withholding tax.
B. No. The SMW that she received from January to May and received in the period of June
to December of the taxable year shall not be subject to the income tax and the
withholding tax.
C. The SMW that she received from January to May of the taxable year shall be
exempt from income tax. Only her salary received in the period of June to
December of the taxable year shall be subject to the income tax and the withholding
tax if the same exceeds her personal and additional exemptions.
D. The SMW that she received from January to May of the taxable year shall be subject to
income tax. The salary received in the period of June to December of the taxable year
shall be exempt to the income tax.
6. Mr. Miguel de Guzman is employed as sales account officer at Morado Motor Oil and
Lubricants, Inc. In 2016, his monthly salary was P 14,000. In addition, he is also entitled
to 5% gross commission on his total sales which was P 5.2 million in 2016. He was also
given monthly gasoline and entertainment allowance of P 12,000 per month without the
need to liquidate the said amount. He also received his 13th month pay equivalent to one
month salary. The company withheld P 10,400 on his compensation income and 10% on
his commission income. Mr. De Guzman is single and no one is depending upon him for
chief support. How much is to be included as gross income in 2016?

P 572, 000

7. Jhoana insured her life with an insurance company. Under the contract, she will pay a
monthly premium of P 4,000 for 10 years. In case of death before 10th year, her
beneficiary will receive an indemnification in the amount of P 150,000. If he is still living
on the 10th year, she will receive the face value of P 750,000. If Jhoana dies on the 4th
year, her beneficiary will report an income of?

P0

8. Ms. Pacres received the following during the taxable year:

Clothing allowance P 8,000

Medical cash allowance 8,000

Christmas gift – iPod 8,000

Gift given for length of service – rubber shoes 8,000

Rice allowance 8,000

How much is the taxable de minimis benefits?

P 14,000

9. In 2017, Tajima Food Services, Inc. had the following accounts in its books:

Fringe benefits expense P 1,000,000

Fringe benefits tax expense 200,000

Fringe benefits tax payable 60,000

How much fringe benefits were given to its rank and file employees during the year?

P 575,000

10. Which of the following is true regarding a non-resident citizen?

I. A citizen who has been previously considered as non-resident citizen and who arrives
in the Philippines at anytime during the taxable year to reside permanently in the
Philippines shall likewise be treated as a non-resident citizen for the taxable year in
which he arrives in the Philippines with respect to his income derived from sources
abroad until the date of his arrival in the Philippines.
II. One who comes to the Philippines for a definite purpose which in its nature would
require an extended stay and to that end makes his home temporarily in the
Philippines, although it may be his intention at all times to return to his domicile
abroad.
III. A citizen of the Philippines who leaves the Philippines during the taxable year to
reside abroad, either as an immigrant or for an employment on a permanent basis.
IV. A citizen of the Philippines who establishes to the satisfaction of the Commissioner
the fact of his physical presence abroad with a definite intention to reside therein.
V. A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time
during the taxable year.

I, III, IV, V