1. Which is not an appropriate method for recognizing income derived from farming?

a. Cash basis
b. Accrual basis
c. Crop basis
d. Installment basis

2. The following accounting period applies to individual taxpayers, except:

i. Calendar year
ii. Fiscal year
iii. Short period
a. I only
b. I and II only
c. I and III only
d. I, II, and III

3. The following accounting period applies to individual taxpayers, except:

i. Calendar year
ii. Fiscal year
iii. Short period
a. I only
b. I and II only
c. I and III only
d. I, II, and III

4. For Philippine taxation purposes, who may not qualify under the doctrine of employer-
employee relationship?
a. Resident citizen
b. Non-resident citizen
c. Non-resident alien
d. Domestic corporation

5. The rule of compensation applies to the following, except:

a. Resident citizen
b. Non-resident citizen
c. NRA-ETB
d. NRA-NETB

6. ABC invested 1 million in 12% long-term deposit BSP certificate with 5 years maturity. What
is the applicable income tax on its earnings?
a. 12%
b. 20%
c. Exempt
d. None of these

7. The Philippines, under EO 37 (1986) and RA 8424 (1998), follows what type of tax system?
a. Global system
b. Schedular system
c. Semi-global or semi-schedular system
d. Semi global and semi-schedular system

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8. The progressive system of income taxation is laid down under the fundamentals of?
a. Jurisdiction
b. Territoriality
c. Necessity
d. Ability to pay

9. In the Philippines, income tax is imposed on:

I. Gross income
II. Net income
III. Passive income
a. II only
b. II and III only
c. I and II only
d. All the aforementioned

10. The following are the purpose/s of Income Tax:

I. To raise revenue
II. To place burden of on those best able to pay
III. To mitigate evils
IV. To destroy
a. I only
b. I and IV only
c. I, II and IV only
d. All the aforementioned

11. When shall fiscal year be used in computing taxable income?

a. If the taxpayer has no annual accounting period
b. If the taxpayer does not keep books of accounts
c. If the taxpayer is an individual or a partnership
d. If the taxpayer is a corporation

12. The following statements are valid as regards the likes of SGV & Co., except:
a. Formed by persons for the sole purpose of exercising their common profession
b. No part of the income of which is derived from engaging in any trade or business
c. Not considered as a taxable entity for taxation purposes
d. The partners themselves are liable, not the partnership, are liable for the payment of
income tax in their individual capacities.

13. Which is not included within the definition of income for taxation purposes?
a. Revenue
b. Profit
c. Gain
d. All are classified as income

14. Which is not a lawful source of government revenue?

a. Earnings from exercise of profession
b. Gains from dealings in securities
c. Income acquired illegally
d. Rental income held for deposit only

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15. When is income taxable?
I. When there is gain or profit
II. When realized during the year
III. Not exempt from income tax
a. I only
b. II only
c. I and II only
d. I, II and III

16. Refer to the following statements:

I. "The fact is that property is a tree, income is the fruit; labor is a tree, income the fruit;
capital is a tree, income the fruit." A tax on income is not a tax on property. "Income,"
as here used, can be defined as "profits or gains."
II. A mere increase in the value of property is not Income, but merely unrealized increase
in capital.
a. I only
b. II only
c. I and II
d. Both statement are incorrect

17. Which of the following is taxable with income tax at its gross amount when earned within
the Philippines?
a. Professional Fee c. Business Income
b. Compensation Income d. Royalty Income

18. Which of the following income is/are earned through employee and employer
relationship?
I. Professional Fee
II. Wages
III. Pension Pay
IV. Capital Gain
a. I, II, III only c. II and III only
b. I and II only d. II only

19. Refer to the following statements:

Statement 1: Remuneration for casual labor not in the course of an employers trade or
business is not considered as taxable compensation income
Statement 2: Additional benefits received by the employee for the convenience of the
employer are not taxable income of the employee.
a. Only statement 1 is correct.
b. Both statements are correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.

20. Which of the following is a taxable compensation income?

a. Separations pay due to resignation.
b. Retirement pay under BIR approved retirement plan.
c. Separations pay due to disability.
d. Terminal pay by fact of death.

21. Which of the following is a taxable compensation income?

a. Professional fee net of creditable withholding tax.
b. Separations pay due to closure of the employers business.
c. Terminal pay inclusive of 31,000.00 13th month pay.
d. Separations pay due to early retirement.

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22. Refer to the following statements:
Statement 1: All vacation leave and sick leave with pay are taxable compensation income?
Statement 2: All unused vacation leave converted into cash are taxable?
a. Only statement 1 is correct.
b. Both statements are correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.

23. Which of the following is considered as taxable compensation income?

a. Retirement pay under a duly BIR approved benefit plans.
b. Free housing given to employee under the rule of employer benefit
c. Free housing given to employee under the rule of employee benefit
d. Retirement pay

24. Which of the following is a taxable income compensation income?

a. Cost of living allowance.
b. De minimis benefits.
c. Retirement benefit under BIR approved retirement plans.
d. Retrenchment pay

25. Compensation income is earned when an employee-employer relationship exist. Which of

the following does not represent compensation income?
a. Honorarium of the company lawyers as a speaker in a company sponsored seminar.
b. Professional fee of a tax practitioner in KPMG
c. Emergency pay
d. Sick leave with pay

26. Transportation allowance is nontaxable if

I. Pre-computed on a daily basis.
II. Paid to employee while in duty.
III. Received by employee under employers benefit rule.
a. I only c. II and III
b. I and II d. I, II and III

27. Which of the following is not a compensation income?

a. Retirement pay c. Allowances
b. Professional fee d. Wages

28. A stock dividend received in 200x from a domestic corporation by a nonresident individual
not doing business in the Philippines is
a. Subject to 10% final tax. c. Subject to 20% tax.
b. Subject to 25% tax. d. Not subject to tax.

29. Which of the following will result to earning of income by the debtor?
a. Cancellation of existing payables without any financial consideration.
b. Cancellation of existing payables for services rendered to creditor.
c. Cancellation of existing payables to offset equivalent amount of collectible
d. Cancellation of existing payables due to bankruptcy of the debtor.

30. Which of the following is income to the receipts?

a. Stock option c. Pre-emptive stock right
b. Stock dividend d. Stock warrant

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31. Which of the following is/are not taxable benefits to employees?
I. Living quarter furnished to the employee for the convenience of the employer
II. A handsome company driver
III. Living quarter furnished outside the employers premises
a. I only c. II and III
b. I and II d. II only

32. Refer to the following statements:

Statement 1: Remuneration for casual labor not in the normal course of business is not
considered compensation.
Statement 2: Remuneration for casual labor performed by a corporation is considered
compensation.

a. Only statement 1 is correct.

b. Both statements are correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.

33. Property dividend received by a resident citizens from domestic corporation is taxable at
a. Fair value of the property at the date of declaration.
b. Fair value of the property at the date of settlement.
c. Cost of the property at date of declaration.
d. Cost of the property at date of settlement.

34. Cost of services may be defines as

a. Cost of services to provide services.
b. Cost of facilities directly utilized to provide services.
c. All direct costs and direct expenses necessary to provide services.
d. All costs involved in providing services.

35. Refer to the following statements

Statement 1: Income that is not realized is not taxable, but illegal income is taxable.
Statement 2: Income received under a mistake of fact or law is to be included as part of the
gross taxable income.

a. Only statement 1 is correct.

b. Both statements are correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.

36. All of the following are income within, except

a. Dividends declared by Domestic Corporation.
b. Salaries earned by Filipino overseas contract workers.
c. Interest on bonds issued by Domestic Corporation.
d. Income from business located in the Philippines.

37. What is the final tax rate applicable to interest income earned from a regular savings
deposit?
a. 5% c. 10%
b. 20% d. 20%

38. Mrs. GP is a mining operator. Her mineral lands are not covered by any lease contract. The
tax Mrs. GP has to pay based on the actual market value of the gross output or mineral
products extracted is
a. Excise tax. c. Rental.
b. Royalties. d. ad-valorem tax.
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39. Which of the following is taxable?
a. P100,000 interest on long-term deposit or investment
b. P12,000 prize in a supermarket raffle
c. P200,000 gain on sale of 10-year bonds
d. P1M winnings from Phil. Lotto

40. Which payments made by the lessee under such terms of the lease contract should be
considered as additional rent income of the lessor?
a. If a lessee paid directly to the government a real estate tax on the property of the
lessor
b. If the amount received by the lessor is in the nature of a security deposit for the
faithful compliance by the lessee or the terms of the contract
c. If the amount received by the lessor is in the nature of a loan extended by the lessee to
the lessor.
a. Only A
b. Only A and C
c. Only B and C
d. A, B,and C

41. After 10 years of romantic relationship, A decided to end his relationship with B which
made B very angry, B with anger in her eyes boxed, kicked and berated A. A tried to pacify
B, but B slipped, lost control and fell to the ground requiring hospitalization. To buy peace,
A decided to shoulder the medical expenses for the injuries suffered by B. The amount is
a. Taxable income B
b. Deductible expense of A
c. Subject to final tax
d. Exempt from income tax

42. Which of the following statements is correct?

a. The power of taxation reaches even the citizens abroad and their income
earned from sources outside the Phils.
b. Priest and religious institutions are exempt from income and property
taxes.
c. Separation benefits received by terminated employees resulting from a
deadlock in their collective bargaining agreement are exempt from
income tax
d. The value of a property received as a gift, or under a will or testament or
through legal succession is exempt from taxation

43. One of the following is taxable income

a. Gifts, bequests and devices
b. Amounts received as rewards for giving information instrumental in the discovery of
violation of the Tax Code and seizure of smuggled goods
c. Proceeds from life insurance
d. Separation pay received by an employee due to a cause beyond his control

44. Which of the following statements is correct as regards a resident citizen?

a. Income from illegal activities are subject to final tax
b. Income tax refunds constitute taxable income to the taxpayer
c. Recovery of bad debts previously written off is part of taxable income
d. As a rule, contest awards and prizes are subject to 20% final tax if they amount to more
than P10,000, otherwise they will be part of taxable income.

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45. Which of the following statement is not correct?
a. Minimum wage earners sh.all be exempt from the payment of income tax
b. Holiday pay, overtime pay, night shift differential and hazard pay shall be exempt from
income tax
c. Prizes and awards granted to athletes in local and international sports competitions
and tournaments whether held in the Philippines or abroad and sanctioned by their
national sports associations are exclusions from gross income
d. Benefits received from or enjoyed under the Social Security System are exclusions from
Gross Income

46. One of the following is part of taxable income subject to schedular rate
a. Compensation for damages
b. The share of a partner in the undistributed net income of a general co-partnership
c. Living quarters and meals furnished and given to an employee for the convenience of
the employee
d. Facilities or privilege of relatively small value offered by the employer as a
means of promoting the health, goodwill, contentment, or efficiency of the employee

47. Which is not a creditable withholding income tax?

a. Expanded withholding income tax
b. Withholding income tax on passive income
c. Withholding income tax at source
d. Withholding income tax on compensation income

48. As a rule, this is not part of taxable income

a. Profit sharing
b. Hazard pay
c. Overtime pay
d. 13th month pay

49. This is a taxable income

a. Retrenchment pay
b. SSS I GSIS benefits
c. Separation pay due to resignation
d. Refund of Philippine Income Tax

50. Which of the following is taxable income?

a. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation
b. Damages awarded as a consequence of a libel and slander suits
c. Interest on Philippine lotto winnings
d. None of the above

--- End of quizzer ---

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