1.

Schedular system of income taxation means

a. All types of income are added together to arrive at gross income.
b. Separate graduated rates are imposed on different types of income.
c. Capital gains are excluded in determining gross income.
d. Compensation income and business/professional income are added
together in arriving at gross income.
2. All appropriation, revenue or tariff bills, authorizing increase of the public debt,
bills of local application, and private bills shall originate exclusively in the
a. Office of the President
b. House of Representative
c. Senate
d. Supreme Court
3. Remy Martin, single supporting the following:
i. Jonny Walker, illegitimate son 16 years old, studying in the
University of California Los Angeles, living with Remy Martins
diplomat brother in Los Angeles.
ii. Carlos, father, living with him. Remy Martin is giving 50% of the
entire support needed; the other 50% is being provided by his
sister, Chivas.
Remy Martin can claim a total exemption of
a. P 50,000
b. P 75,000
c. P100,000
d. Answer not given
4. Taxpayers are husband and wife. The gross compensation income of the wife is
P60,000 while the business income of the husband is P100,000. They have six (6)
qualified dependent children but within the year one child died. Their total
exemption is
a. P100,000
b. P200,000
c. P225,000
d. P250,000
5. Mdm. I, widow, earning an annual compensation income of P120,000 has the
following dependent children in 2008:
Aubrey baby, born on January 31
Barbara celebrated her 21st birthday last June 12
Cristeta married on January 1
Diana gainfully employed effective July 1
Eliza died of dengue fever on September 30

Assuming Mdm. I has two employers, her taxable income in 2009:

a. P120,000
b. P 70,000
c. P 45,000
d. Answer not given
6. Maliksi, single, supporting his 58-year old mother, is a business income earner.
During the year, his net income was P150,000. He also paid a total premium of
P3,000 to an insurance company for his health insurance. How much is his
taxable income?
 a. P100,000
b. P 97,600
c. P 97,000
d. Answer not given
7. Elvis and Madonna, husband and wife, have the following data in 2007:
Elvis Madonna
Compensation income (gross of 10% tax) P105,000 P90,000
Rent income (net of 5% WT) 76,000
Royalties on books 70,000
Dependent children 6
Withholding tax on compensation 10,000 7,000

During the year, the spouses had an income of P120,000 and expenses of P65,000
which cannot be identified as solely earned by the wife or the husband.

The income tax payable/overpayment of Elvis is -

a. P18,700
b. P10,200
c. P 4,700
d. P 8,700
8. Based on problem no. 7, the income tax payable/overpayment of Madonna is
a. P 6,700
b. P20,100
c. P11,600
d. P 4,600
9. Based on problem no. 7, the final tax on the passive income is
a. P14,000
b. P 7,000
c. None
d. Answer not given
10. Optional standard deduction is not allowed to
a. Resident alien
b. Non-resident citizen
c. Non-resident alien not engaged in trade or business
d. Domestic corporation
11. Which of the following is subject to income tax?
a. SSS and GSIS
b. Philippine Health Insurance Corporation (PHIC)
c. Professional Regulation Commission (PRC)
d. Philippine Amusement and Gaming Corporation (PAGCOR)
12. Alliance Corporation, a corporation engaged in business in the Philippines and
abroad, has the following data in 2007:
Gross income, Philippines P975,000
Expenses, Philippines 750,000
Gross income, USA 770,000
Expenses, USA 630,000
Interest on bank deposit 25,000
 The income tax due if the corporation is Domestic, Resident foreign, Nonresident
foreign?
a. P116,800; P72,000; P320,000; respectively.
b. P127,750; P78,750; P350,000; respectively.
c. P312,000; P515,850; P116,800; respectively.
d. P109,500; P67,500; P300,000; respectively.
13. Tralala Corporation, a domestic corporation has the following record of income
and expenses during the year.
Gross Income P1,540,000
Expenses 654,000
Dividend from a resident foreign corporation 95,000
Royalties, Philippines 230,000
Royalties, US 175,000
Interest on time deposit with Metrobank 18,000
Interest on money market placement 25,000

The taxable income on Tralala Corporation is

a. P886,000
b. P1,156,000
c. P641,000
d. P616,000
14. Based on problem no. 13, the total final withholding taxes on Tralala Corporation
is
a. P51,475
b. P72,600
c. P103,120
d. P148,100
15. Super B Corporation which started with its operation in 1990 has the following
records in 2007:
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Gross profit P500,000 P850,000 P800,000 P770,000
Expenses 400,000 770,000 640,000 575,000
Dividend domestic company 15,000 15,000 20,000 20,000
Interest peso bank deposit 3,000 5,000 3,750 2,250
Income tax withheld 5,000 7,000 8,000 6,750
Rent income, gross of 5%
withholding tax 36,000 36,000 48,000 48,000

The company had an excess payment of P12,500 in 2006 from which it had
decided to claim tax credit on the excess

The income tax payable at the end of the first quarter is

a. P43,520
b. P36,720
c. P28,300
d. P24,220
16. Based on problem no. 15, the income tax payable at the end of the second quarter
is
a. P35,880
b. P28,320
 c. P31,800
d. (35,680)
17. If the gross income from unrelated activity exceeds 50% of the total gross income
derived by any private educational institution, the rate shall be 35% based on the
entire taxable income. This principle is known as
a. Constructive receipt
b. Tax benefit rule
c. End result doctrine
d. Predominance test

18. Maikli Corporation has the following data:

2006 2007
Sales P1,700,000 P2,300,000
Cost of sales 1,050,000 1,425,000
Operating expenses 615,000 480,000

The income tax payable in 2007 is

a. P13,000
b. P12,250
c. P35,000
d. P32,500
19. Based on problem no. 18, the income tax payable by Maikli Corporation in 2007
is
a. P 15,700
b. P 17,500
c. P124,600
d. P137,500
20. The accounting entry in 2007 to record the carry forward of excess MCIT against
normal income tax liability in 2006 is
a. Deferred charges MCIT P 1,800
Income tax payable P 1,800
b. Provision for income tax P124,600
Income tax payable P124,600
c. Income tax payable P 750
Deferred charges MCIT P 750
d. Retained earnings P 1,800
Deferred charges MCIT P 1,800