Recenseo-2020-comprehensive-examination-reviewer-material.pdf

  • Uploaded by: Camille Castro
  • 0
  • 0
  • February 2021
  • PDF

This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA


Overview

Download & View Recenseo-2020-comprehensive-examination-reviewer-material.pdf as PDF for free.

More details

  • Words: 35,140
  • Pages: 124
Loading documents preview...
UNIVERSITY OF THE EAST- CALOOCAN COMPREHENSIVE EXAMINATION SCHEDULE 2020 I. SCHEDULE AND COVERAGE OF EXAMINATION The Comprehensive Examination for 2020 shall be administered online, through CANVAS on Monday, July 20, 2020 and divided on the following schedules, topic coverage and item specification: Schedule I Coverage:  Fundamentals of Accounting  Financial Accounting Date: July 20, 2020 Time: 10:00am – 12:00nn Coverage No. of items Fundamentals of Accounting 14 Financial Accounting 36  Financial Accounting and Reporting  Conceptual Framework and Accounting Standards  Intermediate Accounting 1 & 2  Intermediate Accounting 3 TOTAL 50 Schedule II Coverage:  Cost Accounting  Taxation  Business Laws Date: July 20, 2020 Time: 1:00pm – 3:00pm Coverage Cost Accounting  Cost Accounting and Cost Control  Strategic Cost Management Taxation  Income Taxation  Business and Transfer Taxes Business Laws  Law on Obligation and Contracts  Business Laws and Regulations  Regulatory Framework and Legal Issues in Business  Special Commercial Laws

No. of items 12

14

24

TOTAL

50

The examination will be given on a multiple- choice pattern and will be composed of both theoretical and practical questions (problems and applications)

RECENSEO 2020 COMPREHENSIVE EXAMINATION REVIEWER SUBJECTS COVERAGE OUTLINE The Recenseo 2020 Comprehensive Examination Reviewer is comprised of 472 questions focused on 5 different subjects included in the scope of comprehensive examination set by the University. The 4 recognized B.A student organizations of the University of the EastCaloocan (ATLAS- Association of Taxation and Law Students, BES Honors Society & HNS Honors society with JPIA- Junior Philippine Institute of Public Accountants) decided to tie up for this comprehensive examination reviewer to be utilized by the incoming 3 rd year students of the university. Here´s the detailed list of topics per subject reviewer: I.

FUNDAMENTALS OF ACCOUNTING (45 items) 1. Accounting Concepts and Principles 2. Financial Statements 3. Basic Accounting Equation 4. Expanded Accounting Equation 5. Financial Transaction Worksheet 6. Accounting Cycle 7. Special Journals 8. Accounting for Partnership

II.

FINANCIAL ACCOUNTING (105 items) 1. Cash and Cash Equivalents 2. Bank Reconciliation 3. Receivables 4. Inventories 5. Biological Assets 6. Property, Plant and Equipment 7. Wasting Assets 8. Intangible Assets 9. Investment in Debt and Equity Securities 10. Investment Property 11. Noncurrent Assets held for sale 12. Current Liabilities 13. Provisions and Contingencies 14. Notes Payable 15. Bonds Payable 16. Liabilities 17. Equity 18. Leases

III.

COST ACCOUNTING (63 items) 1. Cost Accounting and Control 2. Introduction to Costs Concepts and Classifications 3. Normal Costing Vs. Actual Costing 4. Cost of Goods Sold Statement 5. Job Order Costing

6. Process Costing 7. Allocation of Joint Costs and Accounting for By-Product/Scrap 8. Activity Based Costing System 9. Economic Order Quantity 10. Standard Costing IV.

TAXATION (109 items) 1. TAX – Basic Concepts and Introduction about Tax 2. TAX -- Individual 3. TAX -- Corporation 4. TAX -- Partnership 5. TAX -- Gross Income (exclusions and deductions) 6. Value Added Tax 7. Percentage Tax 8. Estate Tax 9. Donors Tax

V.

BUSINESS LAWS (150 items) 1. Obligations 2. Contracts 3. Partnership 4. Corporations 5. Cooperatives 6. Negotiable Instruments 7. Special Laws 8. Sales 9. Agency 10. Credit Transactions

NOTE: The answers for each question will be provided after each subject questionnaire portion. Thank you!

UNIVERSITY OF THE EAST Caloocan FUNDAMENTALS OF ACCOUNTING RECENSEO 2020 COMPREHENSIVE EXAM REVIEWER SUBJECT COVERAGE:  Accounting Concepts and Principles  Financial Statements  Basic Accounting Equation  Expanded Accounting Equation I.

   

Financial Transaction Worksheet Accounting Cycle Special Journals Accounting for Partnership

ACCOUNTING CONCEPTS AND PRINCIPLES

1. The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline? a. Cost c. Monetary Unit b. Economic Entity d. Conservatism 2. Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount? a. Cost c. Monetary Unit b. Economic Entity d. Conservatism 3. Which principle/guideline allows a company to ignore the change in the purchasing power of the dollar over time? a. Cost c. Monetary Unit b. Economic Entity d. Conservatism 4. Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements? a. Conservatism c. Economic Entity b. Full Disclosure d. Materiality 5. Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial? a. Conservatism c. Economic Entity b. Full Disclosure d. Materiality

II. FINANCIAL STATEMENTS 6. Which type of journal entries are made at the end of each accounting period so that the financial statements better reflect the accrual method of accounting? a. Adjusting c. Reversing b. Closing d. Journalizing 7. The generally accepted accounting principles used in the financial statements of U.S corporations are researched and developed by which organization? a. American Accounting Association (AAA) b. Financial Accounting Standards Board (FASB) c. Internal Revenue Service (IRS) d. International Financial Reporting Standard (IFRS) 8. Which financial statement will allow you to determine the gross margin for a retailer or manufacturer? a. Balance Sheet c. Statement of Cash Flows b. Statement of Comprehensive Income d. Income Statement 9. Which financial statement reports the adjustments for changes in the market value of available-for-sale investment securities and adjustments for foreign currency translation? a. Statement of Cash Flows c. Statement of Income b. Statement of Comprehensive Income d. Statement of Stockholders’ Equity 10. The amount spent for capital expenditures will be reported in which section of the statement of cash flows? a. Cash Provided/used In Financing Activities b. Cash Provided/used In Operating Activities c. Cash Provided/used In Investing Activities d. Supplemental Information III. BASIC ACCOUNTING EQUATION 11. Which of the following will cause owner’s equity to increase? a. Expenses c. Owner Draws b. Revenue d. None of the Above 12. Which of the following will cause owner’s equity to decrease? a. Net Income b. Net Worth

c. Net Loss d. Revenue

13. Using the basic accounting equation identify the missing item. Assets = 1700 Liabilities =? Capital = 200 Retained Earnings = 500 a. 1,500 b. 1,000

c. -1,000 d. 1,700

14. Using the basic accounting equation identify the missing item. Assets = 9000 Liabilities = 5000 Capital = ? Retained Earnings = -1000 a. 5,000 c. 6,000 b. 4,000 d. 3,500 15. Using the basic accounting equation identify the missing item. Assets = 4850 Liabilities = 1250 Capital = 600 Retained Earnings = ? a. -3,000 b. 3,000

c. 2,500 d. 4,000

IV. EXPANDED ACCOUNTING EQUATION 16. I. In sole proprietorship, owner’s withdrawal is a Contra-Equity account II. Business’ Expenses is a Contra-Equity account a. I & II are both TRUE c. I is FALSE; II is TRUE b. I is TRUE; II is FALSE d. I & II are both FALSE 17. Where does the main difference between the Basic and Extended Accounting Equation be more evident? a. Asset c. Equity b. Liability d. None of the Above 18. If the company has withdrawal of P50,000, expenses of P20,000, owner’s additional contributions of P30,000 and income of P25,000, there will be: a. Net Gain of P15,000 c. Breakeven b. Net Loss of P15,000 d. None of the above 19. If the company has withdrawal of P30,000, expenses of P25,000, owner’s additional contributions of P50,000 and income of P20,000, there will be: a. Net Gain of P15,000 c. Net Loss of P15,000 b. Breakeven d. None of the above 20. Owner’s Equity can be expanded to as: a. Capital + Withdrawals + Expenses + Revenue + Additional Contributions b. Capital – Withdrawals – Expenses – Revenue – Additional Contributions c. Capital + Withdrawals + Expenses – Revenue – Additional Contributions d. Capital – Withdrawals – Expenses + Revenue + Additional Contributions

V. FINANCIAL TRANSACTION WORKSHEET 21. They are accounts whose balances are reduced to zero at the end of the accounting period. a. Accounts Payable c. Real Accounts b. Nominal Accounts d. Accounts Receivable 22. It is also known as books of original entry. a. Journal b. Ledger

c. General Journal d. General Ledger

23. It is an expense paid or incurred but not yet consumed. a. Accrued Expense c. Prepaid Expense b. Depreciation Expense d. Bad Debts Expense 24. Suppose an entity pays P30,000 to its creditors by check. The journal entry should be: Accounts to be debited Accounts to be credited a. Accounts receivable Cash on hand b. Accounts payable Cash on hand c. Accounts payable Cash in Bank d. Cash Accounts payable 25. A sole proprietor borrows P50,000 cash from the bank for the purchase of computer equipment of P40,000 in the office. The remaining cash is held in hand. The journal entry should be: Account(s) to be debited Account(s) to be credited a. Equipment, P50,000 Bank loan, P50,000 b. Equipment, P40,000 Bank loan, P50,000 Cash, P10,000 c. Bank loan, P50,000 Equipment, P40,000 Cash, P10,000 d. Cash, P50,000 Equipment, P40,000 Bank loan, P10,000 VI. ACCOUNTING CYCLE 26. The Beta Company—consignee—paid the freight costs for goods shipped from the Foxtrot Incorporated—consigner. The freight costs are to be deducted from the Beta Company's payment to the Foxtrot Incorporated when the goods are sold. Until the Beta Company sells the goods, the freight costs should be included in which of the following? a. Selling expense c. Cost of merchandise sold b. Freight-out d. Account Receivable

27. The difference between net sales and cost of merchandise sold for a merchandising business is: a. Sales c. Gross Profit b. Net Sales d. Gross Sales 28. When purchases of merchandise are made on account, the transaction would be recorded with the following entry: a. Debit Accounts Payable, credit Merchandise Inventory b. Debit Merchandise Inventory, credit Accounts Payable c. Debit Merchandise Inventory, credit Cash d. Debit Cash, credit Merchandise Inventory 29. When a corporation sells merchandise and the terms are FOB shipping point and pays the shipping costs, the seller would record the transportation costs with the following entry: a. Debit Cash, credit Accounts Receivable b. Debit Accounts Receivable, credit Sales c. Debit Accounts Receivable, credit Cash d. Debit Merchandise Inventory, credit Accounts Payable 30. Cost of Merchandise Sold would be classified as: a. Asset b. Expense

c. Liability d. Revenue

VII. SPECIAL JOURNALS 31. Mimi Co. purchased equipment from Didi Co. worth P250,000. In what special journal should the transaction be recorded? a. Cash Disbursement Journal d. Sales Journal b. Cash Receipts Journal e. General Journal c. Purchase Journal For questions 32-35: TayNew Co. purchased merchandise from OffGun Co. worth P50,000, on account. The next day, TayNew Co. fully paid their balance to OffGun Co. 32. From the point of view of TayNew Co., where should the first transaction be recorded? a. Cash Disbursement Journal d. Sales Journal b. Cash Receipts Journal e. General Journal c. Purchases Journal

33. From the point of view of TayNew Co., where should the second transaction be recorded? a. Cash Disbursement Journal d. Sales Journal b. Cash Receipts Journal e. General Journal c. Purchases Journal 34. From the point of view of OffGun Co., where should the first transaction be recorded? a. Cash Disbursement Journal d. Sales Journal b. Cash Receipts Journal e. General Journal c. Purchases Journal 35. From the point of view of OffGun Co., where should the second transaction be recorded? a. Cash Disbursement Journal d. Sales Journal b. Cash Receipts Journal e. General Journal c. Purchases Journal VII. ACCOUNTING FOR PARTNERSHIP 36. It is a contract among and between two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves. a. Corporation c. Partnership b. Sole proprietorship d. All of the above 37. Which is not among the characteristics of a partnership? a. Separate legal personality c. Limited liability b. Limited life d. Voluntary association 38. He is a partner who is not really a partner but allows his name to be used by the partnership for accommodation or for other consideration. a. Nominal partner c. Dormant partner b. Secret partner d. Silent partner 39. A partner who actively manages the affairs of the business and is known to be a partner a. Industrial partner c. General partner b. Managing partner d. Dormant partner 40. Among the various options available by determining the partners` share of profits are the following except a. Loans to the partnership b. Stated fraction or ratio c. Capital contributions d. Capital contributions and service to the partnership

41. He is a partner who actively manages the affairs of the business but is not known to be a partner. a. Managing partner c. Secret partner b. Silent partner d. Dormant partner 42. The Articles of Co-Partnership should contain clear provisions on all of the following except: a. Taxes paid by the partnership c. Withdrawals allowed to partners b. Causes of partnership dissolution d. Profit –sharing ratio 43. The non-cash contributions of the partners to form a partnership are recorded by partnership at their: a. Book value c. Dissolution value b. Agreed value d. Original value 44. When a partnership cannot pay its debts with business assets, the partners a. Are not personally liable for the debts b. Have limited personal liability c. Must convert the partnership to a joint venture d. Must use their personal assets to meet debts 45. If the partners have not drawn up an agreement, then they must share profits and loses a. Equally c. By an appropriate ratio b. By any means that will save taxes d. According to capital contributions

- END OF FUNDAMENTALS OF ACCOUNTING QUESTIONNAIRE -

ANSWER KEY FOR FUNDAMENTALS OF ACCOUNTING I. Accounting Concepts and Principles 1. B. Economic Entity 2. A. Cost 3. C. Monetary Unit 4. B. Full Disclosure 5. D. Materiality II. Financial Statements 6. A. Adjusting 7. B. Financial Accounting Standards Board (FASB) 8. D. Income Statement 9. B. Statement of Comprehensive Income 10. C. Cash Provided/used in Investing Activities III. Basic Accounting Equation 11. B. Revenue 12. C. Net Loss 13. B. 1,000 14. A. 5,000 15. B. 3,000 IV. Expanded Accounting Equation 16. A. I & II are both TRUE 17. C. Equity 18. B. Net Loss of P 15,000 19. A Net Gain of P 15,000 20. D. Capital – Withdrawals – Expenses + Revenue + Additional Contributions V. Financial Transaction Worksheet 21. B. Nominal Accounts 22. A. Journal 23. C. Prepaid Expense 24. C. Accounts Payable – Cash in Bank 25. B. Equipment P 40,000 Cash 10,000 Bank Loan P 50,000 VI. Accounting Cycle 26. D. Account Receivable 27. C. Gross Profit 28. B. Debit Merchandise Inventory, credit Accounts Payable 29. B. Debit Accounts Receivable, credit Sales 30. B. Expense

VII. Special Journals 31. A. Cash Disbursement Journal 32. C. Purchases Journal 33. A. Cash Disbursement Journal 34. D. Sales Journal 35. B. Cash Receipts Journal VIII. Accounting for Partnership 36. C. Partnership 37. C. Limited Liability 38. A. Nominal partner 39. B. Managing partner 40. A. Loans to the partnership 41. C. Secret partner 42. A. Taxes paid by the partnership 43. B. Agreed Value 44. D. Must use their personal assets to meet debts 45. D. According to capital contributions

UNIVERSITY OF THE EAST Caloocan FAR- FINANCIAL ACCOUNTING RECENSEO 2020 COMPREHENSIVE EXAM REVIEWER SUBJECT COVERAGE:         

Cash and Cash Equivalents Bank Reconciliation Receivables Inventories Biological Assets Property, Plant and Equipment Wasting Assets Intangible Assets Investment in Debt and Equity Securities

        

Investment Property Noncurrent Assets held for sale Current Liabilities Provisions and Contingencies Notes Payable Bonds Payable Liabilities Equity Leases

I. CASH AND CASH EQUIVALENTS 1. Bardagol Company received a P 940 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash P 490 and a credit to Service Revenue P 490. The correcting entry is: a. b. c. d.

debit Cash, P 940; credit Accounts Receivable, P 940 debit Cash, P 450 and Accounts Receivable, P 490; credit Service Revenue, P 940 debit Cash, P 450 and Service Revenue, P 490; credit Accounts Receivable, P 940 debit Accounts Receivable, P 940; credit Cash, P 540 and Service Revenue, P 490

2. On May 12, Park Seo Joon Company received a P 550 check from Kim Da-mi for services to be performed in the future. The bookkeeper for Park Seo Joon Company incorrectly debited Cash for P 550 and credited Accounts Receivable for P 550. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should: a. b. c. d.

debit Cash, P 550 and credit Unearned Service Revenue, P 550 debit Accounts Receivable, P 550 and credit Service Revenue, P 550 debit Accounts Receivable, P 550 and credit Cash, P 550 debit Accounts Receivable P 550 and credit Unearned Service Revenue, P 550

3. As of December 31, 2020, Itaewon Class Corporation’s Cash and Cash Equivalent has balance per book in the amount of P 1,765,000. Included in the cash account are: Compensating cash fund of P 300,000; Cash for the retirement of bonds payable of P 600,000; Contingency fund of P 500,000; Three-months money market funds of P 750,000 and short term operating funds of P 50,000. At what amount should the cash and cash equivalents be reported in the statement of financial position as of December 31, 2020? a. P 365,000 b. P 665,000

c. P 1,165,000 d. P 1,765,000

4. Money Heist Corporation records reveal the following data at year-end: Commercial paper maturing in four months Uncashed tax refund check Petty cash 2-months certificates of deposit Balance in Union Savings and Loan savings account Postage Balance in United Bank Checking Account Treasury Notes maturing in six months Cash on hand Postdated customer check Employee travel advance Treasury bill maturing in one month

P 1,200,000 550,000 100,000 1,000,000 2,500,000 50,000 (250,000) 2,200,000 500,000 125,000 75,000 2,500,000

What is the correct amount of cash and cash equivalents that will appear as a current asset on Money Heist Corporation’s balance sheet? a. P 6,050,000 b. P 6,150,000

c. P 6,225,000 d. P 7,150,000

5. Crash Landing on You Co. Reported a total cash and cash equivalent of P 6,325,000 on December 31, 2020, which includes the following information:  Two certificates of deposits each totaling P 500,000. These certificate of deposit have a maturity of 120 days.  A check that is dated January 12, 2021 which is due in 30 days.  A commercial paper of P 2,100,000 which is due in 30 days.  Currency and coins on hand amounted to P 7,700.

Additional Information: - Crash Landing on You Co. has agreed to maintain a cash balance of P500,000 in one of its banks at all times and it is not available for withdrawal and to ensure future credit availability (this amount was included in the above balance). How much is the correct amount of cash and cash equivalents that Crash Landing on You Co. should report in its December 31, 2020 statement of financial position? a. P 2,600,000 b. P 3,100,000

c. P 4,700,000 d. P 5,200,000

II. BANK RECONCILIATION Use the following information for answering questions 6-9. The following information was included in the bank reconciliation for Spirited Away Corporation for July 2019: Checks and charges recorded by bank in July, including a July service charge of P 2,800, P 932,000; Service charge made by bank in June and recorded in books in July, P 1,200; Customer’s NSF check returned as a bank charge in July (no entry made in books), P 6,000; Customer’s NSF check returned in June, recorded by the company in July, P 15,000; Checks issued in July for P 20,000 recorded by the company as, P2,000; Erroneous bank charge in July, P 20,000; Erroneous bank credit in June corrected in July, P 30,000 and Erroneous book receipt in June corrected in July, P 5,000 On February 1, 2020, Spirited Away Corporation factored receivables with a carrying amount of P 300,000 to Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. The following data concerning the inventory record of Spirited Away Corporation during the year. Cost Retail Beginning Inventory Purchases Freight-in Net markups Net markdowns Sales

P 490,000 ,240,000 60,000 -

P 700,000 3,200,000 200,000 140,000 3,360,000

6. What is the unadjusted disbursement per book on July 31, 2019? a. P 909,400 b. P 918,800

c. P 922,000 d. P 927,600

7. Assume that Spirited Away Corporation factors the receivables on a without guarantee (recourse) basis. The loss to be reported is: a. P 0 b. P 9,000

c. P 15,000 d. P 24,000

8. Assume that Spirited Away Corporation factors the receivables on a with guarantee (recourse) basis. The amount of cash received is a. P 276,000 b. P 285,000

c. P 291,000 d. P 300,000

9. The ending inventory at retail should be a. P 420,000 b. P 600,000

c. P 640,000 d. P 740,000

10. Which of the following is false about erroneous bank charges? a. b. c. d.

Cash balance per bank is understated Disbursements per bank is overstated It should be recorded as a debit to cash in bank account It should be added to balance per bank in preparing bank reconciliation

III. RECEIVABLES Use the following information for answering questions 11-12. As of December 31, 2019, Howl’s Moving Castle Co. has a note receivable from My Neighbor Totoro Inc. with face amount of P 200,000 that pays an annual interest of P 20,000 every December 31 of the year. The historical effective interest rate is 10%. As of December 31, My Neighbor Totoro Inc. Is in financial difficulty and indicates it will be unable to make all payments according to the contractual terms. Below shows the cash flow schedule involving the receivable from My Neighbor Totoro Inc.

December

Contractual Cash Flows

Expected Cash Flows

Loss Cash Flows

2020

20,000

16,000

4,000

2021

20,000

16,000

4,000

2022

220,000

166,000

54,000

11. What amount of impairment loss should Howl’s Moving Castle Co. recognize on the above receivable as of December 31, 2019? a. P 46,830 b. P 47,513

c. P 66,830 d. P 67,513

12. Assume that the prevailing market rate of interest at the time the receivable was received was 8%, what amount of impairment loss should Howl’s Moving Castle Co. recognized on December 31, 2019? a. P 42,867 b. P 46,296

c. P 46,830 d. P 50,000

13. Which of the following items are true about PREMIUM on notes receivable? I. II. III. IV.

Face value of note > Present value of note Face value of note < Present value of note Normal rate > Effective rate Normal rate < Effective rate

a. I and III b. I and IV

c. II and III d. II and IV

14. The following information pertains to the receivable of Teen Wolf Company for the year ended December 31, 2019: Unassigned Assigned Jan 1, 2019 balance 2,000,000 3,000,000 Sales on account 10,000,000 Collection net of sales discounts 6,000,000 1,750,000 Sales discounts 100,000 50,000 Write-off 50,000 25,000 Sales return 60,000 30,000

Also, during the year Teen Wolf Company factored some of its unassigned receivables during a net proceeds of P 750,000 and recognized in its profit or loss a loss of P 130,000 as a result of the transfer. Also at the close of the business year December 31, 2019 recognized a provision for uncollectible, future returns and discounts on all outstanding receivables for a total amount of P 250,000. What is the amortize cost of the receivables as of December 31, 2019? a. P 4,660,000 b. P 5,805,000

c. P 6,055,000 d. P 6,935,000

15. On January 2, 2018, ABC Company received an P900,000, 8%, 2-year note from DEF Company as settlement for an outstanding past due account. The prevailing market rate of interest on January 2, 2018 was 9%. The interest is payable every December 31 and the interest due in 2018 were collected on time. In 2019, DEF Company was in financial crisis, and as a result of this development, ABC Company expects that the interest accruing for 2019 will still be collected on December 31, but a reduced principal will be collected in equal annual installment over the next three years starting December 31, 2020. As of December 31, 2019 the market rate of interest for a similar instrument is 10% What amount of impairment loss/bad debts should ABC Company recognize on December 31, 2019 related to its notes receivable? a. None b. P 140,611

c. P 205,039 d. P 349,541

IV. INVENTORIES 16. The XYZ Department Store uses a calendar year and the Average retail inventory method (assuming stable prices). It is the practice of the company to record sales net of 2% discount. Information relating to the computation of the inventory at December 31 is as follows: COST RETAIL Inventory, January 1 P 320,000 P 800,000 Sales 6,076,000 Purchases 3,100,000 6,987,000 Freight In 80,000 Net markups 400,000 Net markdowns 200,000 Total Sales discounts (including P50,000 Employee discounts) 175,000

Included in the purchases were inventory purchased with a cost of P 700,000 and with a retail price of P 987,000. The terms of the purchased includes the right of the seller to buy back the inventory on March 31, next year. At the end of the accounting year, the company made a physical count and the amount of inventory end at retail was P 200,000. What is the cost of the missing inventory? a. None b. P 80,000

c. P 240,000 d. P 480,000

Use the following information for answering questions 17 and 18. Units

Unit Cost

Total cost

3,000

P 9.77

P 29,310

January 6

2,000

10.30

20,600

January 26

2,700

10.71

28,917

Balance at January 1: Purchases

Sales January 7

(2,500)

January 31

(4,000)

Balance at January 31

1,200

17. Assuming that Rich does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar? a. P 12,606 b. P 12,284

c. P 12,312 d. P 12,432

18. Assuming that Rich maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar? a. P 12,606 b. P 12,284

c. P 12,312 d. P 12,432

Use the following information for answering questions 19 and 20. An entity provided the following records connected to its inventory transactions: Date and Transaction

Units

Unit Cost

January 1- Balance

40,000

P 20

February 10- Sale

30,000

April 12- Purchase

60,000

September 20- Sale

59,000

November 28- Purchase

40,000

P 25

P 30

The entity used the moving average method. At December 31, the entity determined that the NRV per unit is P 23. (Round to two decimal places) 19. What is the cost of the inventory at December 31? a. P 1,173,000 c. P 1,475,000 b. P 1,275,000 d. P 1,466,890 20. What amount of cost of goods sold should be reported at December 31? a. P 2,225,000 c. P 2,033,110 b. P 2,327,000 d. P 2,025,000 V. BIOLOGICAL ASSETS Use the following information for answering questions 21 to 23. A herd of 50, 1-year old and 50, 2-year old animals were held by Rainbow Company at January 1, 2019. The company also purchased 20 animals aged 1.5 and 20 animals aged 2.5 on July 1, 2019. The following are their fair value of the biological assets: Age of Animals

Jan. 1, 2019

July 1, 2019

Dec. 31, 2019

1.0 year old

P 2,500

P 3,000

P 3,500

1.5 year old

3,750

4,500

5,250

2.0 year old

5,000

6,000

7,000

2.5 year old

6,250

7,500

8,750

3.0 year old

7,500

9,000

10,500

1,000

1,200

0.0 year old 0.5 year old

2,000

Additional Information: - 20 Animals were born during on July 1. 2019 21. How much of the increase in the fair value of the biological assets due to price change? a. P 179,000 b. P 180,000

c. P 184,000 d. P 194,000

22. How much of the increase in the fair value of the biological assets due to physical change? a. P 420,000 b. P 436,000

c. P 440,000 d. P 456,000

23. What is the fair value of the biological assets as of December 31, 2019? a. P 1,085,000 b. P 1,145,000

c. P 1,225,000 d. P 1,265,000

Use the following information for answering questions 24 and 25. Wander Company is in business of cattle farming. A herd of 200 3-year old and 180 4-year old cattle are held on January 1, 2018. On July 2018, 50 calves were born. The only change during the year is the increase in their physical attributes due to ageing. The relevant data are as follows: Fair value of a 3-year old cattle at Jan. 1, 2018

P 4,500

Fair value of a 4-year old cattle at Jan. 1, 2018

6,000

Fair value of a 0-month old calf at Jul. 1, 2018

1,000

Fair value of a 0-month old calf at Dec. 31, 2018

1,300

Fair value of a 6-month old calf at Dec. 31, 2018

1,700

Fair value of a 3-year old cattle at Dec. 31, 2018

4,950

Fair value of a 4-year old cattle at Dec. 31, 2018

6,750

Fair value of a 5-year old cattle at Dec. 31, 2018

8,700

24. How much is the increase in the fair value of the biological asset due to physical change? a. P 731,000 b. P 761,000

c. P 781,000 d. P 791,000

25. How much is the increase in the fair value of the asset attributable to price change? a. P 220,000 b. P 230,000

c. P 235,000 d. P 240,000

VI. PROPERTY, PLANT AND EQUIPMENT 26. A company purchased land to be used as the site for the construction of a plant. Timber was cut from the building site so that construction of the plant could begin. The proceeds from the sale of the timber should be: a. b. c. d.

classified as other income. netted against the costs to clear the land and expensed as incurred. deducted from the cost of the plant. deducted from the cost of the land.

27. A method which excludes salvage value from the base for the depreciation calculation is: a. straight-line b. sum of years’ digits

c. double declining balance d. productive output

28. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were: a. less than the current market value b. greater than cost

c. greater than book value d. less than book value

29. Bright Company purchased factory equipment which was installed and put into service January 3, 2002 at a total cost of P 1,280,000. Salvage value was estimated at P 80,000. The equipment is being depreciated over 8 years by the double declining balance method. For the year 2003, how much depreciation expense should Bright record on this equipment? a. P 225,000 b. P 240,000

c. P 300,000 d. P 320,000

Use the following information for answering questions 28 to 30. Harper is contemplating exchanging a machine used in its operations for a similar machine on May 31, 2002. Harper will exchange machines with either Austin Corporation or Lubin Company, or will trade in the machine with Sub, Inc., a dealer in these machines. The data relating to the machines are presented below:

Original cost of machine Accumulated depreciation through May 31, 2002 Fair value at May 31, 2002

Harper P162,500

Austin P180,000

98,500 80,000

70,000 95,000

Lubin P150,000

Sub P140,000

65,000 60,000

0 165,000

30. If Harper exchanges its used machine and P 15,000 cash for Austin’s used machine, the gain that Harper should recognized from this transaction for financial reporting purposes would be: a. P 0 c. P 15,000 b. P 2,526 d. P 16,000 31. If Harper exchanges its used machine for Lubin’s used machine and also receives P 20,000 cash, the gain that Harper should recognize from this transaction for financial reporting purposes would be: a. P 0 b. P 4,000

c. P 16,000 d. P 25,000

32. If Harper exchanges its used machine and P 85,000 cash for Sub’s machine, the gain that Harper should recognize from this transaction for financial reporting purposes would be: a. P 0 b. P 8,242

c. P 16,000 d. P 25,000

VII. WASTING ASSETS 33. Depletion expense a. b. c. d.

is usually part of cost of goods sold. includes tangible equipment costs in the depletion base. excludes intangible development costs from the depletion base. excludes restoration costs from the depletion base.

34. The most common method of recording depletion for accounting purposes is the a. percentage depletion method. b. decreasing charge method.

c. straight-line method. d. units-of-production method.

35. Of the following costs related to the development of natural resources, which one is not a part of depletion cost a. b. c. d.

Acquisition cost of the natural resource deposit Exploration costs Tangible equipment costs associated with machinery used to extract the natural resource Intangible development costs such as drilling costs, tunnels, and shafts

36. Tolan Resources Company acquired a tract of land containing an extractable natural resource. Tolan is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,200,000 after restoration. Relevant cost information follows: Land Estimated restoration costs

$ 9,000,000 1,800,000

If Tolan maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material? a. $ 3.90 b. $ 4.50

c. $ 4.80 d. $ 5.40

37. In January, 2007, Miley Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2007, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Miley should expense for 2007? a. $ 640,000 b. $ 800,000

c. $ 840,000 d. $ 1,120,000

VIII. INTANGIBLE ASSETS Information concerning tiny Corporation’s intangible assets are as follows: (a) On January 1, 2002, Tiny signed an agreement to operate a franchise for an initial franchise fee of P 85,000. Of this amount, P 25,000 was paid when the agreement was signed and the balance is payable in four annual payments of P 15,000 each beginning January 1, 2003. The present value at January 1, 2002, of the four annual payments discounted at 14% (the implicit rate for a loan at this type) is P43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Tiny’s revenue from the franchise for 2002 was P 900,000. Tiny estimates the useful life of the franchise to be ten years. (b) Tiny incurred P 78,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2002. Legal fees and other costs associated with registration of the patent totaled P 48,000. Tiny estimates that the useful life of the patent will be eight years. (c) A trademark was purchased from Wall Company for P 40,000 on July 1, 1999. Expenditures totaling P 68,000 were paid on July 1, 2002. Tiny estimated that the useful life of the trademark will be 20 years from the date of acquisition. 38. How much is the amortization of franchise? a. P 0 b. P 6,870

c. P 17,175 d. P 8,500

39. How much is the amortization of patent? a. P 0 b. P 4,800

c. P 6,000 d. P 2,400

40. How much is the amortization of trademark? a. P 0 b. P 2,000

c. P 4,000 d. P 6,000

41. How much is the unamortized cost of franchise at December 31, 2002? a. P 68,700 b. P 51,525

c. P 61,830 d. P 60,200

42. How much is the unamortized cost of patent at December 31, 2002? a. P42,000 b. P48,000

c. P45,600 d. P43,200

43. How much is the unamortized cost of trademark at December 31, 2002? a. P 101,000 b. P 99,000

c. P 104,000 d. P 102,000

44. Intangible assets should be carried (benchmark treatment): a. b. c. d.

gross cost fair value on balance sheet date revalued amount minus accumulated amortization and accumulated impairment losses cost minus accumulated impairment losses and accumulated amortization

45. How should a research and development cost be accounted for? a. should be capitalized when incurred and then amortized over the estimated useful life. b. should be expensed in the period incurred unless contractually reimbursable. c. may be either capitalized or expensed when incurred, depending upon the fact of the situation. d. should be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have significant future benefits. IX. INVESTMENT IN DEBT AND EQUITY SECURITIES 46. Which securities are purchased with the intent of selling them in the near future? a. Marketable equity securities b. Available-for-sale securities

c. Trading securities d. Held-to-maturity securities

47. Changes in fair value of securities are reported in the income statement for which type of securities? a. Marketable equity securities b. Available-for-sale securities

c. Trading securities d. Held-to-maturity securities

48. Which category includes only debt securities? a. Marketable equity securities b. Available-for-sale securities

c. Trading securities d. Held-to-maturity securities

49. A debit balance in the account Market Adjustment--Available-for-Sale Securities at the end of a year should be interpreted as a. the net unrealized holding gain for that year. b. the net realized holding gain for that year. c. the net unrealized holding gain to date. d. the net realized holding gain to date. 50. Northwick Company acquired 10,000 shares of the common stock of Shaver Corp. in July 2005. The following January, Shaver announced a $ 100,000 net income for 2005 and declared a cash dividend of $ .50 per share on its 100,000 shares of outstanding common stock. The Northwick Company dividend revenue from Shaver Corp. in January 2005 would be: a. $ 0. c. $ 5,000. b. $ 2,500. d. $ 10,000 51. On January 2, 2005, Adler Co. acquired 2,000 shares of Boxworth Co. common stock for $8,000 and classified these shares as available-for-sale securities. During 2005, Adler received $ 6,000 of cash dividends. Adler's share of Boxworth's 2005 earnings (net income) was $5,000. The fair value of Boxworth's stock on December 31, 2005, was $7 per share. Adler should report what amount in 2005 related to Boxworth Co.? a. Revenue of $ 6,000 b. Revenue of $ 12,000 c. A $ 1,000 decrease in the investment account d. A $ 1,000 increase in the investment account 52. Martin Co. purchased the following portfolio of available-for-sale securities during 2005 and reported the following balances at December 31, 2005. No sales occurred during 2005. All declines are considered to be temporary. Security

Cost

Market Value at 12/31/05

X

$ 80,000

$ 82,000

Y

140,000

132,000

Z

32,000

28,000

Martin Co. should report what amount related to the securities transactions in its 2005 income statement? a. $ 0

c. $ 10,000 unrealized loss

b. $ 2,000 unrealized loss

d. $ 12,000 unrealized loss

X. INVESTMENT PROPERTY 53. Which of the following terms does this statement define: “the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction”? a. Cost b. Deemed Cost

c. Fair Value d. Present Value

54. Which of the following does not define investment property? a. b. c. d.

Property held to earn rentals Property held for capital appreciation Property used in the production or supply of goods or services A and C

55. Investment property whose fair value cannot be measured reliably without undue cost or effort on an ongoing basis is accounted for after initial recognition: a. b. c. d.

as inventory in accordance with Section13. as property, plant and equipment in accordance with Section 17. as a financial asset in accordance with Section 11. as an intangible asset with a finite useful life in accordance with Section 18.

56. Which of the following statements is true with regards to an investment property? a. An investment property generates cash flows largely independently of the other assets held by an entity b. The value in use of investment property is significantly higher than of owner-occupied property c. An investment property unlike owner-occupied property shall not be depreciated over its useful life d. An investment property unlike owner-occupied property shall always be measured at its historical cost 57. On 1 January 20X1 an entity acquired a building for CU95,000, including CU5,000 nonrefundable purchase taxes. The purchase agreement provided for payment to be made in full on 31 December 20X1. Legal fees of CU2,000 were incurred in acquiring the building and paid on 1 January 20X1. The building is held to earn lease rentals and for capital appreciation. An appropriate discount rate is 10 per cent per year.

The entity shall measure the initial cost of the building at: (a) CU88,364 (c) CU102,000 (b) CU97,000 (d) CU107,000 XI. NON-CURRENT ASSETS HELD FOR SALE 58. An entity accounted for noncurrent assets using the cost model on July 1, 2021 the entity classified an equipment as held for sale. At the date, the carrying amount was P 5,000,000. The fair value was estimated at P 3,500,000 and thee cost of disposal at P 100,000. On December 31, 2021, the equipment was sold for net proceeds of P2,500,000. What amount should be reported as an impairment loss for 2021? a. 1,600,000 b. 2,500,000

c. 1,500,000 d. 900,000

Use the following information for answering questions 57 to 60: An entity purchased an equipment for P5,000,000 on January 1, 2022. The equipment had a useful life of 5 years with no residual value. On December 31, 2022, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was P3,500,000. On December 31, 2023. The entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 2023, the fair value less cost of disposal of the equipment was P 2,700,000. 59. What is the carrying amount of the equipment on December 31, 2022 before classification as held for sale? a. 5,000,000 b. 4,000,000

c. 3,500,000 d. 4,500,000

60. What amount of impairment loss should be recognized in 2022? a. 1,500,000 b. 1,000,000

c. d.

500,000 0

61. What amount should be included in profit or loss in 2023 as a result of the reclassification of the equipment to property, plant and equipment? a. 800,000 gain b. 800,000 loss

c. 300,000 gain d. 300,000 loss

62. What is the carrying amount of the equipment on December 31, 2024? a. 2,700,000 b. 1,800,000

c. 2,000,000 d. 3,000,000

Use the following information for answering questions 61-63. An entity accounted for land using the revaluation model. On October 1, 2019, the entity classified a land as held for sale. At the date, the carrying amount of the land was P 5,000,000 and the balance in the revaluation surplus was P 1,500,000. At the same date, the fair value of the land was estimated at P 5,500,000. The estimated cost of disposal is P 100,000. On December 31, 2019, the fair value less cost of disposal of the land did not change. On October 1, 2020, the land was sold for P 7,000,000. 63. What is the impairment loss in 2019? a. 100,000 b. 500,000

c. 400,000 d. 0

64. What amount should be reported as gain on disposal of land in 2020? a. 1,600,000 b. 1,500,000

c. 3,600,000 d. 3,500,000

65. What amount of OCI is reclassified to retained earnings in 2020? a. 1,500,000 b. 2,500,000

c. d.

500,000 0

XII. CURRENT LIABILITIES 66. Which of the following items is a current liability? a. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months. b. Bonds due in three years. c. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months. d. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue.

67. Which of the following is a current liability? a. Preferred dividends in arrears b. A dividend payable in the form of additional shares of stock c. A cash dividend payable to preferred stockholders d. All of these 68. A Which of the following is a current liability? a. A long-term debt maturing currently, which is to be paid with cash in a sinking fund b. A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue c. A long-term debt maturing currently, which is to be converted into common stock d. None of these 69. Holbert Corporation has $ 2,500,000 of short-term debt it expects to retire with proceeds from the sale of 75,000 shares of common stock. If the stock is sold for $ 20 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? a. $ 1,500,000 b. $ 2,500,000

c. $ 1,000,000 d. $ 0

70. Grogan Corporation has $ 1,800,000 of short-term debt it expects to retire with proceeds from the sale of 60,000 shares of common stock. If the stock is sold for $ 20 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? a. $ 1,200,000 b. $ 1,800,000

c. $ 600,000 d. $ 0

71. On January 1, 2007, Didde Co. leased a building to Ellis Corp. for a ten-year term at an annual rental of $ 80,000. At inception of the lease, Didde received $ 320,000 covering the first two years' rent of $ 160,000 and a security deposit of $ 160,000. This deposit will not be returned to Ellis upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $ 320,000 should be shown as a current and long-term liability, respectively, in Didde's December 31, 2007 balance sheet? Current Liability Long-term Liability a. $ 0 $ 320,000 b. $ 80,000 $ 160,000 c. $ 160,000 $ 160,000 d. $ 160,000 $ 80,000

XIII: PROVISION AND CONTINGENCIES 72. Which of the following is the proper way to report a gain contingency? a. As an accrued amount. b. As deferred revenue. c. As an account receivable with additional disclosure explaining the nature of the contingency. d. As a disclosure only. 73. Which of the following contingencies need not be disclosed in the financial statements or the notes thereto? a. b. c. d.

Probable losses not reasonably estimable Environmental liabilities that cannot be reasonably estimated Guarantees of indebtedness of others All of these must be disclosed.

74. Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? a. b. c. d.

Amount of loss is reasonably estimable and event occurs infrequently. Amount of loss is reasonably estimable and occurrence of event is probable. Event is unusual in nature and occurrence of event is probable. Event is unusual in nature and event occurs infrequently.

75. A contingency can be accrued when a. it is certain that funds are available to settle the disputed amount. b. an asset may have been impaired. c. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred. d. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated. 76. Vernon Co. is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Vernon's lawyer states that it is probable that Vernon will lose the suit and be found liable for a judgment costing Vernon anywhere from $1,200,000 to $6,000,000. However, the lawyer states that the most probable cost is $3,600,000. As a result of the above facts, Vernon should accrue

a. a loss contingency of $1,200,000 and disclose an additional contingency of up to $4,800,000. b. a loss contingency of $3,600,000 and disclose an additional contingency of up to $2,400,000. c. a loss contingency of $3,600,000 but not disclose any additional contingency. d. no loss contingency but disclose a contingency of $1,200,000 to $6,000,000. 77. Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements, a liability has been incurred for obligations related to product warranties. The amount of the loss involved can be reasonably estimated. Based on the above facts, an estimated loss contingency should be a. b. c. d.

accrued. disclosed but not accrued. neither accrued nor disclosed. classified as an appropriation of retained earnings.

78. Mayberry Co. has a loss contingency to accrue. The loss amount can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The amount of loss accrual should be a. zero. b. the minimum of the range.

c. the mean of the range. d. the maximum of the range.

79. On January 3, 2007, Alton Corp. owned a machine that had cost $200,000. The accumulated depreciation was $120,000, estimated salvage value was $12,000, and fair market value was $320,000. On January 4, 2007, this machine was irreparably damaged by Reed Corp. and became worthless. In October 2007, a court awarded damages of $320,000 against Reed in favor of Alton. At December 31, 2007, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Alton’s attorney, Reed’s appeal will be denied. At December 31, 2007, what amount should Alton accrue for this gain contingency? a. $320,000. b. $260,000.

c. $200,000. d. $0.

XIV. NOTES PAYABLE 80. Among the short-term obligations of Lance Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Madison National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Lance Company as a. current liabilities. b. deferred charges.

c. long-term liabilities. d. intermediate debt.

81. Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account has a debit balance. b. The Discount on Notes Payable account should be reported as an asset on the balance sheet. c. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. d. All of these are true. 82. What is a discount as it relates to zero-interest-bearing notes payable? a. The discount represents the lender's costs to underwrite the note. b. The discount represents the credit quality of the borrower. c. The discount represents the cost of borrowing. d. The discount represents the allowance for uncollectible amounts. 83. On February 10, 2010, after issuance of its financial statements for 2009, House Company entered into a financing agreement with Lebo Bank, allowing House Company to borrow up to $4,000,000 at any time through 2012. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of loan. House Company presently has $1,500,000 of notes payable with First National Bank maturing March 15, 2010. The company intends to borrow $2,500,000 under the agreement with Lebo and liquidate the notes payable to First National. The agreement with Lebo also requires House to maintain a working capital level of $6,000,000 and prohibits the payment of dividends on common stock without prior approval by Lebo Bank. From the above information only, the total short-term debt of House Company as of the December 31, 2010 balance sheet date is a. $0. b. $1,500,000.

c. $2,000,000. d. $4,000,000.

84. On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February 14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows Irey to borrow up to $1,500,000 at one percent above the prime rate for three years. On February 2, 2011, Irey borrowed $1,200,000 from County Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2010 balance sheet which is issued on March 5, 2011 is a. $0. b. $300,000.

c. $500,000. d. $800,000.

85. Included in Vernon Corp.'s liability account balances at December 31, 2010, were the following: 7% note payable issued October 1, 2010, maturing September 30, 2011 8% note payable issued April 1, 2010, payable in six equal annual installments of $150,000 beginning April 1, 2011

$250,000 600,000

Vernon's December 31, 2010 financial statements were issued on March 31, 2011. On January 15, 2011, the entire $600,000 balance of the 8% note was refinanced by issuance of a long-term obligation payable in a lump sum. In addition, on March 10, 2011, Vernon consummated a noncancelable agreement with the lender to refinance the 7%, $250,000 note on a long-term basis, on readily determinable terms that have not yet been implemented. On the December 31, 2010 balance sheet, the amount of the notes payable that Vernon should classify as short-term obligations is a. $175,000. b. $125,000.

c. $50,000. d. $0.

XV. BONDS PAYABLE 86. An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition a. any costs of issuing the bonds must be amortized up to the purchase date. b. the premium must be amortized up to the purchase date. c. interest must be accrued from the last interest date to the purchase date. d. all of these.

Use the following information for answering questions 87 and 88. On October 1, 2010 Macklin Corporation issued 5%, 10-year bonds with a face value of $1,000,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 87. The entry to record the issuance of the bonds would include a credit of a. $25,000 to interest Payable. b. $40,000 to Discount on Bonds Payable. c. $960,000 to Bonds Payable. d. $40,000 to Premium on Bonds Payable. 88. Bond interest expense reported on the December 31, 2010 income statement of Macklin Corporation would be a. $11,500 b. $12,500

c. $13,500 d. $23,000

Use the following information for answering questions 89 and 90. On October 1, 2010 Bartley Corporation issued 5%, 10-year bonds with a face value of $500,000 at 104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. 89. The entry to record the issuance of the bonds would include a a. credit of $12,500 to interest Payable. b. credit of $20,000 to Premium on Bonds Payable. c. credit of $480,000 to Bonds Payable. d. debit of $20,000 to Discount on Bonds Payable. 90. Bond interest expense reported on the December 31, 2010 income statement of Bartley Corporation would be a. $6,750 b. $11,500

c. $5,750 d. $6,250

XVI. LIABILITIES 91. Liabilities are a. any accounts having credit balances after closing entries are made. b. deferred credits that are recognized and measured in conformity with generally accepted accounting principles. c. obligations to transfer ownership shares to other entities in the future. d. obligations arising from past transactions and payable in assets or services in the future. 92. Which of the following is not considered a part of the definition of a liability? a. Unavoidable obligation. b. Transaction or other event creating the liability has already occurred. c. Present obligation that entails settlement by probable future transfer or use of cash, goods, or services. d. Liquidation is reasonably expected to require use of existing resources classified as current assets or create other current liabilities. 93. A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should a. be accrued during the period when the compensated time is expected to be used by employees. b. be accrued during the period following vesting. c. be accrued during the period when earned. d. not be accrued unless a written contractual obligation exists. 94. During 2006, Younger Co. introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales

Actual Warranty Expenditures

2006

$ 600,000

$

9,000

2007

1,500,000

45,000

2008

2,100,000

135,000

$4,200,000

$189,000

What amount should Younger report as a liability at December 31, 2008? a. $0 b. $15,000

c. $204,000 d. $315,000

95. Milner Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Milner Frosted Flakes boxes and $1.00. The company estimates that 60% of the boxtops will be redeemed. In 2007, the company sold 675,000 boxes of Frosted Flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Milner Company $2.50 each, how much liability for outstanding premiums should be recorded at the end of 2007? a. $25,000 b. $37,500

c. $62,500 d. $87,500

XVII. EQUITY 96. Which dividends do not reduce stockholders' equity? a. Cash dividends b. Stock dividends

c. Property dividends d. Liquidating dividends

97. Which one of the following disclosures should be made in the equity section of the balance sheet, rather than in the notes to the financial statements? a. Dividend preferences b. Liquidation preferences

c. Call prices d. Conversion or exercise prices

98. Presented below is information related to Hale Corporation: Common Stock, $1 par Paid-in Capital in Excess of Par—Common Stock Preferred 8 1/2% Stock, $50 par Paid-in Capital in Excess of Par—Preferred Stock Retained Earnings Treasury Common Stock (at cost)

$4,300,000 550,000 2,000,000 400,000 1,500,000 150,000

The total stockholders' equity of Hale Corporation is a. $8,600,000. b. $8,750,000.

c. $7,100,000. d. $7,250,000.

99. The total paid-in capital (cash collected) related to the common stock is a. $4,300,000. b. $4,850,000.

c. $5,250,000. d. $4,700,000

100. Winger Corporation owned 900,000 shares of Fegan Corporation stock. On December 31, 2010, when Winger's account "Investment in Common Stock of Fegan Corporation" had a carrying value of $5 per share, Winger distributed these shares to its stockholders as a dividend. Winger originally paid $8 for each share. Fegan has 3,000,000 shares issued and outstanding, which are traded on a national stock exchange. The quoted market price for a Fegan share was $7 on the declaration date and $9 on the distribution date. What would be the reduction in Winger's stockholders' equity as a result of the above transactions? a. $3,600,000. b. $4,500,000.

c. $7,200,000. d. $8,100,000.

XVIII. LEASES Use the following information for questions 101 to 105. Bohl Co. purchases land and constructs a service station and car wash for a total of $360,000. At January 2, 2007, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $400,000 and immediately leased from the oil company by Bohl. Fair value of the land at time of the sale was $40,000. The lease is a 10-year, noncancelable lease. Bohl uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Bohl at termination of the lease. A partial amortization schedule for this lease is as follows: Payments

Interest

Amortization

Jan. 2, 2007

101.

$400,000.00

Dec. 31, 2007

$65,098.13

$40,000.00

$25,098.13

374,901.87

Dec. 31, 2008

65,098.13

37,490.19

27,607.94

347,293.93

Dec. 31, 2009

65,098.13

34,729.39

30,368.74

316,925.19

From the viewpoint of the lessor, what type of lease is involved above? a. Sales-type lease b. Sale-leaseback

102.

Balance

c. Direct-financing lease d. Operating lease

What is the discount rate implicit in the amortization schedule presented above? a. 12% b. 10%

c. 8% d. 6%

103.

The total lease-related expenses recognized by the lessee during 2008 is which of the following? (Rounded to the nearest dollar.) a. $64,000 b. $65,098

104.

What is the amount of the lessee's liability to the lessor after the December 31, 2009 payment? (Rounded to the nearest dollar.) a. $400,000 b. $374,902

105.

c. $73,490 d. $61,490

c. $347,294 d. $316,925

The total lease-related income recognized by the lessee during 2008 is which of the following? a. $ -0b. $2,667

-

c. $4,000 d. $40,000

END OF FINANCIAL ACCOUNTING (FAR) QUESTIONNAIRE-

ANSWER KEY FOR FINANCIAL ACCOUNTING I. Cash and Cash Equivalents 1. C. debit Cash, P450 and Service Revenue, P490; credit Accounts Receivable, P940 2. D. debit Accounts Receivable P550 and credit Unearned Service Revenue, P550 3. A. P 365,000 4. D. P 7,150,000 5. C. P 4,700,000 II. Bank Reconciliation 6. D. P 927,600 7. B. P 9,000 8. A. P 276,000 9. B. P 600,000 10. B. Disbursements per bank is overstated III. Receivables 11. B. P 47,513 12. D. P 50,000 13. C. II and III 14. B. P 5,805,000 15. B. P 140,611 IV. Inventories 16. C. P 240,000 17. B. P 12,284 18. D. P 12,432 19. D P 1,466,890 20. B. P 2,327,000 V. Biological Assets 21. D. P 194,000 22. D. P 456,000 23. D. P 1,265,000 24. C. P 781,000 25. D. P 240,000 VI. Property, Plant and Equipment 26. D. deducted from the cost of the land. 27. C. double declining balance 28. D. less than book value 29. B. P 240,000 30. A. P 0

31. B. P 4,000 32. A. P 0 VII. Wasting Assets 33. A. is usually part of cost of goods sold. 34. D. units-of-production method. 35. C. Tangible equipment costs associated with machinery used to extract the natural resource 36. C. $4.80 - ($9,000,000 + $1,800,000 – $1,200,000) ÷ 2,000,000 = $4.80. 37. C. $840,000 - [($3,400,000 – $200,000 + $1,000,000) ÷ 2,000,000] × 400,000 = $840,000. VIII. Intangible Assets 38. B. P 6,870 39. C. P 6,000 40. D. P 6,000 41. C. P 61,830 42. A. P 42,000 43. B. P 99,000 44. D. cost minus accumulated impairment losses and accumulated amortization. 45. B. should be expensed in the period incurred unless contractually reimbursable. IX. Investment in Debt and Equity Securities 46. C. trading securities 47. C. trading securities 48. D. Held-to-maturity securities 49. C. the net unrealized holding gain to date. 50. C. $ 5,000. 51. A. Revenue of $6,000 52. A. $ 0 X. Investment Property 53. A. Cost - Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other IFRSs, eg IFRS 2 Share-based Payment. [IAS 40.5] 54. C. Property used in the production or supply of goods or services - Investment property is property (land or a building—or part of a building—or both) held (by the owner or by the lessee as a right-of-use asset) to earn rentals or for capital appreciation or both, rather than for:  (a) use in the production or supply of goods or services or for administrative purposes; or  (b) sale in the ordinary course of business. [IAS 40.5] 55. B. as property, plant and equipment in accordance with Section 17.

56. A. An investment property generates cash flows largely independently of the other assets held by an entity - Investment property is held to earn rentals or for capital appreciation or both. Therefore, an investment property generates cash flows largely independently of the other assets held by an entity. [IAS 40.7] 57. A. CU 88,364 - (a) calculation—(CU95,000 purchase price excluding refundable taxes) ÷ 1.1 = CU86,364 - present value of the purchase price + CU2,000 direct costs (legal fees) = CU88,364 XI. Non-current assets held for sale 58. D. 900,000 59. B. 4.000,000 60. C. 500,000 61. B. 800,000 loss 62. B. 1,800,000 63. A. 100,000 64. A. 1,600,000 65. B. 2,500,000 XII. Current Liabilities 66. C. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months. 67. C. All of these 68. D. None of these 69. A. $ 1,500,000 - 75,000 × $20 = $1,500,000. 70. A. $ 1,200,000 - 60,000 × $20 = $1,200,000. 71. B. $80,000 and $160,000. XIII. Provision and Contingencies 72. D. As a disclosure only. 73. D. All of these must be disclosed. 74. B. Amount of loss is reasonably estimable and occurrence of event is probable. 75. C. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred. 76. B. a loss contingency of $3,600,000 and disclose an additional contingency of up to $2,400,000. 77. A. accrued 78. B. the minimum of the range 79. D. $0, gain contingencies are not accrued. XIV. Notes Payable 80. A. current liabilities 81. B. The Discount on Notes Payable account should be reported as an asset on the balance sheet 82. C. The discount represents the cost of borrowing.

83. B. $1,500,000. 84. D. $800,000 $2,000,000 – $1,200,000 = $800,000. XV. Bonds Payable 85. D. $0 - both notes have been refinanced by long-term obligations 86. D. All of these 87. D. $40,000 to Premium on Bonds Payable. - ($1,000,000 × 1.04) – $1,000,000 = $40,000 premium. 88. A. $11,500 [($1,000,000 × .05) × 3/12] – [($40,000 ÷ 10) × 3/12] = $11,500. 89. B. credit of $20,000 to Premium on Bonds Payable. ($500,000 × 1.04) – $500,000 = $20,000 premium. 90. C. $5,750 [($500,000 × .05) × 3/12] – [($20,000 ÷ 10) × 3/12] = $5,750. XVI. Liabilities 91. D. obligations arising from past transactions and payable in assets or services in the future. 92. D. Liquidation is reasonably expected to require use of existing resources classified as current assets or create other current liabilities. 93. C. be accrued during the period when earned. 94. D. $315,000 - ($4,200,000 × .12) – $189,000 = $315,000. 95. B. 37,500 - {[(675,000 × .60) – 330,000] ÷ 3} × $1.50 = $37,500. XVII. Equity 96. B. Stock dividends 97. B. Liquidation preferences 98. A. $8,600,000 - $4,300,000 + $400,000 + $550,000 + $2,000,000 + $1,500,000 – $150,000 = $8,600,000. 99. B. $4,850,000 - $4,300,000 + $550,000 = $4,850,000. 100. B. $4,500,000 - (900,000 × $7) – [($7 – $5) × 900,000] = $4,500,000. XVIII. Leases 101. C. Direct Financing Lease

102. B. 10% $40,000 $400,000 ———— = 10% or ————— = 6.1446* $400,000 $65,098.13

103. D. 104. D. 105. B. -

*6.1446 = PV factor of ordinary annuity of $1 for 10 years at 10%. $61,490 [($400,000 – $40,000) ÷ 15] + $37,490 = $61,490. $316,925 (See amortization table.) $2,667 ($400,000 – $360,000) ÷ 15 = $2,667.

UNIVERSITY OF THE EAST Caloocan COST ACCOUNTING COMPREHENSIVE EXAM REVIEWER SUBJECT COVERAGE:  Cost Accounting and Control  Introduction to Costs Concepts and Classifications  Normal Costing Vs. Actual Costing  Cost of Goods Sold Statement  Job Order Costing

I.

 Process Costing  Allocation of Joint Costs and Accounting for By-Product/Scrap  Activity Based Costing System  Economic Order Quantity  Standard Costing

COST ACCOUNTING AND CONTROL

1. The following is also known as overhead costs or on costs. a. Cost of direct labor c. Direct expenses b. Cost of indirect labor d. Indirect expenses 2. Cost accounting is a specialized branch of accounting which deals with a. Classification, recording, allocation and control of costs b. Classification, processing, allocation and directing c. Classification, recording, planning and control of costs d. Classification, recording, allocation and directing 3. To calculate the probable cost of the product, knowledge of following factors involves a. Production time required b. Use of previous estimates of comparable parts c. Effect of change in facilities on costing rates d. All of the above 4. Expenditure incurred on material, labor, machinery, production and inspection are summed up to find the? a. Total cost of product c. Factory cost of product b. Selling price of product d. None of the above 5. Which of the following calculate the actual cost of product? a. Cost estimation c. Both (A) and (B) b. Costing d. None of the above 6. Cost of preparing drawings for the manufacture of a particular product is a. Cost of direct labor c. Direct expenses b. Cost of indirect labor d. Indirect expenses

II. INTRODUCTION TO COSTS CONCEPTS AND CLASSIFICATIONS 7. It is a foregoing, measuring in monetary terms, incurred or potentially to be incurred to achieve a specific objective. a. Cost c. Receivable b. Income d. Management 8. Joss Co. has the option to choose whether to choose Tay Co., which they can possibly gain P200,000, and Mild Co., which the can possibly gain P120,000. If Joss Co. chose the option from Tay Co. based on the possible benefits that they can earn, the cost that Josh Co. is considering is: a. Differential Costs c. Sunk Costs b. Opportunity Costs d. Common Costs 9. Manufacturing costs consists of the following EXCEPT: a. Direct Materials c. Manufacturing Overhead b. Direct Labor d. Product Costs 10. The following are the ONLY relevant costs for decision-making EXCEPT: a. Differential Costs c. Sunk Costs b. Opportunity Costs d. ALL are relevant for decision-making 11. These costs are also referred to as order-getting and order-filling costs. a. Administrative Costs c. Marketing Costs b. Period Costs d. Product Costs III. NORMAL COSTING VS. ACTUAL COSTING 12. It is a method of cost accounting that records the cost on the actual basis, means cost of labor, material and overhead are recorded at their actual value. This method is important to reduce wastage at workplace. a. Normal Costing c. Marginal Costing b. Actual Costing d. Absorption Costing 13. It is a method in cost accounting, wherein the accountant finds production cost that is based on the estimated price of input which is multiplied by the actual quantity of material and other input used by the company. a. Normal Costing c. Marginal Costing b. Actual Costing d. Absorption Costing 14. Which of the following is not a component of normal costing? a. Actual cost of materials b. Actual cost of labor c. Actual overhead costs incurred allocated using the actual quantity of the allocation base experienced during the reporting period. d. A standard overhead rate that is applied using the product's actual usage of whatever allocation base is being used (such as direct labor hours or machine time)

15. The manufacturing overhead cost allocated to individual jobs is classified as? a. Manufacturing overhead allocated c. Manufacturing overhead applied b. Cost overhead applied d. Both A and C 16. In normal costing, the manufacturing overhead allocated is also called? a. Manufacturing overhead applied c. Cost overhead applied b. Labor overhead applied d. Budget overhead applied IV. COST OF GOODS SOLD STATEMENT 17. If the raw material consumed is P90, 000; the opening and closing stock of the raw material is P50,000 and P30,000, respectively. What would be the value of purchases? a. P10,000 c. P70,000 b. P20,000 d. P60,000 18. Perry Company had the following account balances and operations for the month of July: Direct materials consumed, P10,400; Direct labor, P8,000; Factory Overhead, P8,800; Work in process inventory, beg., P2,400; Work in process inventory, end., P1,800; Finished goods inventory, beg., P1,200; Finished goods inventory, end., P1,000. The total manufacturing cost for the month of July was: a. P27,200 c. P28,000 b. P27,800 d. P28,200 19. Refer to no.18, what is the total cost of goods sold? a. P27,200 b. P27,800

c. P28,000 d. P28,200

20. Refer to no.18, what is the total cost of goods manufactured? a. P27,200 c. P28,000 b. P27,800 d. P28,200 21. At the beginning of the year, Manuel Company had a finished goods inventory of P3,000,000. During the year, its cost of goods sold was P19,000,000; sales were P2,000,000 with a 20% gross profit. Compute for the ending cost of finished goods inventory. a. P4,000,000 c. 16,000,000 b. P6,000,000 d. None of the above 22. A company had a beginning finished gods inventory of P15,000, ending finished goods inventory of P20,000 and cost of goods sold of 80,000. What was the cost of goods manufactured? a. P80,000 c. P75,000 b. P85,000 d. P65,000

23. Identify the missing amount from the given data of Company Gamma: Finished goods, May 1…………………………………... P 400,000 Cost of Goods Manufactured…………………………… 2,600,000 Sales………………………………………………………. 3,500,000 Gross Profit on sales……………………………………... 35% Finished goods, May 31………………………………….. ? a. 725,000 b. 4,475,000 24. The largest expense of most manufacturing firms is? a. Salaries expense b. Amortization Expense V.

c. 5,275,000 d. 7,725,000

c. Cost of Sales d. Rent Expense

JOB ORDER COSTING

25. In a job order cost accounting system, which account would be debited in recording a purchase invoice for raw materials? a. Raw Materials Inventory c. Factory Overhead b. Goods in Process Inventory d. Finished Goods Inventory 26. In a job order cost accounting system, which account would be debited in recording a materials requisition for direct materials? a. Raw Materials Inventory c. Raw Materials Purchases b. Factory Overhead d. Goods in Process Inventory 27. The predetermined overhead rate is $6.10 per direct labor hour. Job 213 required 210 direct labor hours of which 150 hours were incurred during the current accounting period. How much overhead should be applied to Job 213 during the current accounting period? a. $ 366 c. $1,218 b. $ 915 d. $1,281 28. Use the following information for answering the question: Direct materials used: $20,000 Factory overhead: $40,000 Beginning goods in process: $0 Ending goods in process: $12,000 Cost of goods manufactured: $65,000 What was the amount of direct labor? a. $17,000 b. $77,000

c. $ 5,000 d. $48,000

29. Job 21 was unfinished at the end of the accounting period. The total cost assigned to the job is $12,000 of which $3,000 is direct material. Factory overhead is allocated to goods in process at 150% of direct labor cost. What was the amount of direct labor charged to Job 21? a. $9,000 c. $4,000 b. $3,600 d. $3,000 VI. PROCESS COSTING 30. It is a method of costing used mainly in manufacturing where units are continuously massproduced through one or more processes. a. Job order Costing c. Standard Costing b. Process Costing d. Standard Process Costing 31. This is when a loss occurs over and above the normal expected loss. This may be due to reasons such as faulty machinery or errors by laborers. a. Normal gain c. Abnormal gain b. Abnormal loss d. Normal loss 32. A method of costing is based on the assumption of that the opening work-in-progress units are the first to be completed. a. LIFO method c. FIFO Method b. Average Cost Method d. Weighted Average Cost Method 33. In process costing, costs follow a. Price rise b. Product flow

c. Price declines d. Finished goods

34. When average costing is used, the opening inventory costs are a. Kept separate from the costs for the new period b. Added to the costs of the new period c. Subtracted from the new costs d. Averaged with other costs to arrive at total cost. VII. ALLOCATION OF JOINT COSTS AND ACCOUNTING FOR BY PRODUCT/SCRAP 35. Joint Costs are allocated to joint products to… a. Obtain a cost per unit for financial statement purposes. b. Provide accurate management information on production costs of each type of product. c. Compute variances from expected costs for each joint product. d. Allow the use of high-low analysis by the company. 36. Which of the following components of production are allocable as joint costs when a single manufacturing process produces several salable products? a. Direct material and direct labor only b. Direct labor and overhead only c. Direct material, direct labor, and overhead d. Direct material and overhead only

37. Which of the following statements is true regarding by-products or scrap? a. Process costing is the only method that should result in by-products or scrap. b. Job order costing systems will never have by-products or scrap. c. Job order costing systems may have instances where by-products or scrap result from the production process. d. Process costing will never have by-products or scrap from the production process. 38. Waste created by a production process is a. Accounted for in the same manner as defective units. b. Accounted for as an abnormal loss. c. Material that can be sold as an irregular product. d. Discarded rather than sold. 39. Which of the following is a false statement about scrap and by-products? a. Both by-products and scrap are salable. b. A by-product has a higher sales value than does scrap c. By-products and scrap are the primary reason that management undertakes the joint process. d. Both scrap and by-products are incidental outputs to the joint process. 40. The split-off point is the point at which a. Output is first identifiable as individual products. b. Joint costs are allocated to joint products. c. Some products may first be sold. d. All of the above. 41. The definition of sunk cost is… a. A cost that cannot be recovered regardless of what happens b. A cost that relates to money poured into the ground c. Considered the original cost of an item. d. Also known as opportunity cost. 42. For the purposes of allocating joint costs to joint products using the relative sales value at split-off method, the costs beyond split-off… a. Are allocated in the same manner as the joint costs. b. Are deducted from the relative sales value at split-off. c. Are deducted from the sales value at the point of sale. d. Do not affect the allocation of the joint costs. VIII. ACTIVITY BASED COSTING SYSTEM 43. Activity-based costing is a costing method that assigns overhead and indirect costs to related products and services. a. True b. False

44. Which of the following IS not a feature of Activity-Based Costing? a. Recognizes several levels of costs b. Accumulates costs into related cost pools c. Uses multiple cost drivers to assign costs to products and services d. None of the above 45. Which of the following situations where Activity-Based Costing is not advisable to be used by a company? a. They have a wide variety of products or services b. High overhead costs are proportional to the unit volume of individual products c. Profit margins are difficult to explain d. None of the above For numbers 46 and 47: Meade Company uses activity-based costing. The company produces two products: computers and PDA’s. The annual production and sales volume of computers is 8000 units and of PDA’s is 6000 units. There are three activity cost pools with the following expected activities and estimated total costs: Expected Activity Cost Estimated Cost Activity Expected Total Pool computers Activity PDA’s Activity 1 P20,000 100 400 500 Activity 2

P37,000

800

200

1,000

Activity 3

P91,200

800

3,000

3,800

*The activity rate for activities 1, 2, and 3 are 40, 37, and 24 respectively. 46. Using Activity-Based Costing, the cost per unit of computers is approximately: a. P2.40 c. P6.60 b. P3.90 d. P10.59 47. Using Activity-Based Costing, the cost per unit of PDA’s is approximately: a. P2.40 c. P12.00 b. P3.90 d. P15.90 IX. ECONOMIC ORDER QUANTITY 48. Which of the following is an assumption of the economic-order-quantity decision model? a. The quantity ordered can vary at each order point. b. Demand ordering costs and carrying costs fluctuate. c. There will be timely labor costs. d. No stockouts occur.

49. The economic order quantity ignores: a. Purchasing costs b. Relevant ordering costs

c. Stockout costs d. Both A and C

50. The purchase-order lead time is the: a. Difference between the times an order is placed and delivered. b. Difference between the products ordered and the products received. c. Discrepancies in purchase orders. d. Time required to correct errors in the products received. 51. Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs plus relevant: a. Carrying costs c. Quality costs b. Stockout costs d. Purchasing costs The following information applies to Labs Plus, which supplies microscopes to laboratories throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation. Annual demand (weekly demand = 1/52 of annual demand) Orders per year Lead time in days Cost of placing an order 52. What is the reorder point? a. 1,040 units b. 857 units

20,800 units 20 15 $100

c. 1,560 units d. 2,080 units

The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order Relevant carrying costs per year: Required annual return on investment Required others costs per year

$300 10% $2.80

Annual demand is 20,000 packages per year. The purchase price per package is $32 53. What is the economic order quantity? a. 2,000,000 units b. 1,414.21 units

c. 150,000 units d. 3,464.00 units

54. What are the relevant costs at the economic order quantity? a. $1,414.21 c. $8,485.28 b. $4,242.65 d. $9,000 55. What are the relevant costs, assuming the quantity ordered equals 1,000 units? a. $3,000 c. $6,000 b. $500 d. $9,000

X. STANDARD COSTING 56. A primary purpose of using a standard cost system is a. To make things easier for managers in the production facility. b. To provide a distinct measure of cost control. c. To minimize the cost per unit of production. d. B and C are correct. 57. Standard costs may be used for a. Product costing b. Planning

c. Controlling d. All of the above

58. A total variance is best defined as the difference between total a. Actual cost and total cost applied for the standard output of the period. b. Standard cost and total cost applied to production. c. Actual cost and total standard cost of the actual input of the period. d. Actual cost and total cost applied for the actual output of the period. 59. A large labor efficiency variance is prorated to which of the following at year-end? Work-In-Progress Final Goods Cost of Goods Sold Inventory Inventory a. No No No b. No Yes Yes c. Yes No No d. Yes Yes Yes For items 60-63, the following July information is for Marley Company: Standards: Material 3.0 feet per unit @ $4.20 per foot Labor 2.5 hours per unit @ $7.50 per hour Actual: Production Material Labor

2,750 units produced during the month 8,700 feet used; 9,000 feet purchased @ $4.50 per foot 7,000 direct labor hours @ $7.90 per hour

(Round all answers to the nearest dollar.) 60. Refer to Marley Company. What is the material price variance (calculated at point of purchase)? a. $2,700 U c. $2,610 F b. $2,700 F d. $2,610 U

61. Refer to Marley Company. What is the material quantity variance? a. $3,105 F c. $3,105 U b. $1,050 F d. $1,890 U 62. Refer to Marley Company. What is the labor rate variance? a. $3,480 U c. $2,800 U b. $3,480 F d. $2,800 F 63. Refer to Marley Company. What is the labor efficiency variance? a. $1,875 U c. $1,877 U b. $938 U d. $1,125 U

- END OF COST ACCOUNTING QUESTIONNAIRE -

ANSWER KEY OF COST ACCOUNTING

I. Cost Accounting and Control 1. D. Indirect Expenses 2. A. Classification, recording, allocation and control of costs. 3. D. All of the above 4. C. Factory cost of product 5. B. Costing 6. C. Direct Expenses II. Introduction to Cost Concepts and Classifications 7. A. Cost 8. B. Opportunity Cost 9. D. Product Cost 10. C. Sunk Costs 11. D. Product Costs III. Normal Accounting Vs. Actual Costing 12. B. Actual Costing 13. A. Normal Costing 14. C. Actual Overhead costs incurred allocated using the actual quantity of the allocation base experienced during the reporting period. 15. D. Both A and C 16. A. Manufacturing overhead applied IV. Cost of Goods Sold Statement 17. C. P 70,000 18. A. P 27,200 19. C. P 28,000 20. B. P 27,800 21. D. None of the above 22. B. P 85,000 23. A. 725,000 24. C. Cost of Sales V. Job Order Costing 25. A. Raw Materials Inventory 26. D. Goods in Process Inventory 27. B. $ 915 28. A. $17,000 29. B. $3,600 VI. Process Costing 30. B. Process Costing 31. B. Abnormal loss 32. C. FIFO Method 33. B. Product flow 34. A. Kept separate from the costs for the new period. VII. Allocation of Joint Costs and Accounting for by Product/Scrap 35. A. Obtain a cost per unit for financial statement purposes.

36. C. Direct material, direct labor and overhead. 37. C. Job order costing systems may have instances where by-products or scrap result from the production process. 38. D. Discarded rather than sold. 39. C. By-products and scrap are the primary reason that management undertakes the joint process. 40. D. All of the above 41. A. A cost that cannot be recovered regardless of what happens. 42. D. Do not affect the allocation of the joint costs. VIII. Activity Based Costing System 43. A. True 44. D. None of the above 45. B. High overhead costs are proportional to the unit volume of individual products. 46. C. P 6.60 47. D. P 15.90 IX. Economic Order Quantity 48. D. No stockouts occur 49. D. Both A and C 50. A. Difference between the times an order is placed and delivered. 51. A. Carrying Costs 52. B. 857 units 53. B. 1,414.21 units 54. C. $ 8,485.28 55. D. $ 9,000 X. Standard Costing 56. B. To provide a distinct measure of cost control. 57. D. All of the above 58. D. Actual cost and total cost applied for the actual output of the period. 59. D. Yes—Yes—Yes 60. A. $ 2,700U 61. D. $ 1,890U 62. C. $ 2,800U 63. B. $ 938U

UNIVERSITY OF THE EAST Caloocan TAXATION RECENSEO 2020 COMPREHENSIVE EXAM REVIEWER SUBJECT COVERAGE: INCOME TAXATION  Basic Concepts and Introduction about Tax  Individual  Corporation  Partnership  Gross Income (exclusions and deductions)

   

Value Added Tax Percentage Tax Estate Tax Donors Tax

I. INTRODUCTION TO TAXATION 1. Which of the following is defined as a state power, a legislative process, and a mode of government cost distribution? a. Tax b. Tax System

c. Taxation d. Tax Amnesty

2. It is the initial package of the Comprehensive Tax Reform Program (CTRP) signed into law on December 19, 2017. a. Republic Act no. 9504 b. Republic Act no. 10963

c. Republic Act no. 8424 d. Republic Act no. 9337

3. Which of the following is not an example of situs of taxation? a. Regular Tax Situs b. Business Tax Situs

c. Personal Tax Situs d. Property Tax Situs

4. It occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing. a. Judicial Non-interference b. Marshall Doctrine

c. Prospectivity of tax laws d. Double Taxation

5. It refers to any act or trick that tends to illegally reduce or avoid the payment of tax. a. Tax avoidance b. Tax exemption

c. Tax evasion d. Tax condonation

6. Which of the following is also known as "tax holiday", refers to the immunity privilege or freedom from being subject to a tax which other are subject to? a. Tax amnesty b. Tax exemption

c. Tax evasion d. Tax condonation

7. Which refers to any act or trick that reduces or totally escapes taxes by any legally permissible means? a. Tax avoidance b. Tax amnesty

c. Tax evasion d. Tax condonation

8. Statement 1: Taxation is an enforced proportional contribution levied by the lawmaking body of the state to raise a revenue for public purpose. Statement 2: Tax is generally payable in money. a. Statement 1 is true and statement 2 is false. b. Statement 1 is false and statement 2 is true.

c. Both statements are true. d. Both statements are false.

9. These are tax imposed by the national government expect for one a. Regressive Tax b. Income Tax

c. Excise Tax d. Donor's Tax

10. Which refers to the methods or schemes of imposing, assessing, and collecting taxes? a. Tax b. Tax System

c. Taxation d. Tax Amnesty

II. INCOME TAXATION: INDIVIDUAL TAX PAYER 11. An individual can be considered as non-resident alien engaged in business when he stays here in the Philippines for: a. at least 183 days b. more than 180 days c. less than 180 days

d. more than 1 year e. none of the above

12. Which is not subject to regular/basic tax? a. Salary/compensation b. Ordinary gains c. Prize

d. Income from business or profession e. None of the above

13. What is the basis of Graduated Tax Table? a. Net profit b. Gross profit c. Expense

d. Income e. None of the above

14. How much is the tax rate of resident citizen’s interest income bank deposit for 3 years and 3 months? a. None b. 5% c. 12%

d. 20% e. None of the above

15. What is the capital gains tax rate for real property? a. 6% b. 15% c. 10%

d. 20% e. None of the above

Use the following information for the next two questions: Carmelita, a businesswoman, earned a sale of P3,000,000 and had an expense of P1,300,000. 16. How much is the basic income tax of Carmelita? a. 220,000 b. 240,000 c. 420,000

d. 400,000 e. None of the above

17. How much is the basic income tax of Carmelita if she opted to be tax at 8%? a. 220,000 d. 400,000 b. 240,000 e. None of the above c. 420,000 Use the following information for the next two question. Juanito, a resident alien, provided the following information for 2018: Gross business income, Philippines Business expense, Philippines

3,300,000 1,400,000

Royalty income on book published in Philippines

40,000

Prize in a contest he joined in Manila

20,000

Dividend received from a domestic corporation

60,000

Interest income, Philippines (4years and 5months)

10,000

18. How much is the passive income of Juanito? a. 3,430,000 b. 130,000 c. 14,500

d. 14,000 e. None of the above

19. How much is the final tax of passive income of Juanito? a. 3,430,000 b. 130,000 c. 14,500

d. 14,000 e. None of the above

20. During the year 2018, John and Carmela sold their principal residence for P10,000,000 in San Alfonso. They inherited it from John’s grandfather at a cost of P7,000,000. Within 10 months’ period, they purchased their new principal house at a cost of P11,000,000 located in Intramuros, Manila. How much is the capital gains tax? a. 600,000 b. 660,000

c. 450,000 d. 0

III. CORPORATION 21. A corporation which may be classified as either a Resident Corporation or Non-Resident Corporation is? a. Domestic corporation b. Government owned and controlled corporation c. Foreign corporation d. Non-profit hospital 22. For income taxation purposes, the term “Corporation” excludes one of the following: a. General professional partnership b. Business partnership

c. Ordinary partnership d. An incorporated business organization

23. One of the general principles of income taxation: a. domestic corporation is taxable on income derived from sources within the Phil. only. b. domestic corporation is taxable on income derived from sources without the Phil. only. c. foreign corporation engaged in business in the Phil. is taxable on all income derived from sources within and without the Phil. d. A foreign corporation engaged in business in the Phil. is taxable on all income derived from sources within the Phil. only.

24. The MCIT shall not apply to the following resident foreign corporations, except a. b. c. d. e.

RFC engaged in business as regional operating headquarters RFC engaged in business as int’l carrier subject to 2 ½ 0/0 of their Gross Phil billings RFC engaged in hotel, motel, and resort operations RFC engaged in business as offensive Banking Units on their income from foreign currency transactions with local commercial banks.

25. Which of the following statements is FALSE? a. Non-resident foreign corporations are taxed on gross income from within and outside the Philippines. b. Resident foreign corporations would be taxed on net income from within the Phil only c. MCIT is not applicable to non-resident foreign corporations d. The corporate quarterly return shall be filed within 60 days following the close of each of the first three quarters of the taxable year 26. The following income are subject to final tax, except? a. b. c. d.

Interest income received by resident foreign corporation from a Phil. bank Cash dividends received by a domestic corporation from a domestic corporation. Cash dividends received by a non-resident foreign corporation from a domestic corp Royalty income received by a domestic corporation from a domestic corporation

27. Which is not one of the characteristics of corporate income tax a. Progressive tax b. Direct tax

c. General tax d. National tax

28. Which of the following is not correct? The gross income tax a. Is optional to qualified corporation b. Is available if the ratio of costs of sales to gross sales or receipts from all sources does not exceed 55% c. Is compared with the normal income tax and minimum corporate income tax d. Shall be irrevocable for three consecutive taxable years that the corporation is qualified under the scheme

29. Albatross, a C corporation, had P125,000 net income from operations and a P10,000 shortterm capital loss in 2011. Albatross Corporation’s taxable income is P115,000. a. True b. False 30. EU University, a private educational institution organized in 2000, had the following data for 2020. Tuition fees

P 850,000

Rental income

P 150,000

School related expenses

P 820,000

The income tax due for 2020 is: a. P 9,600 b. P 18,000

c. P 20,000 d. P 57,000

(31-36). The A corporation provided the following data for calendar year ending December 31, 2019 ($ 1= P50).

Gross income Deductions

Philippines

Abroad

P 4, 000, 000

$ 40, 000

2, 500, 000

$ 15, 000

Income Tax Paid

$ 3, 000

31. If it is a resident corporation, its income tax is a. P 450,000 b. P 480,000

c. P 730,000 d. P 1,280,000

32. If it is a non-resident corporation, its income tax is a. P 370,000 b. P 880,000

c. P 1,200,000 d. P 1,280,000

33. If it is a non-profit hospital, its income tax credit is a. P 150,000 b. P 275,000

c. P 730, 000 d. P 832,000

34. If it is a resident international carrier, its income tax is a. P 10,000 b. P 37,000

c. P 100,000 d. P 125,000

35. If it is a non-resident cinematographic film owner/lessor, its income tax is a. P 100,000 b. P 128,000

c. P 300,000 d. P 1,000,000

36. If it is a non-resident lessor of vessels, its income tax is a. P 100,000 b. P 128,000

c. P 180,000 d. P 300,000

37. If it is a non-resident lessor of aircrafts, machineries and equipment, its income tax is a. P100,000 b. P128,000

c. P180,000 d. P300,000

Use the following information for answering questions 38 and 39: A domestic corporation organized in 1998 provided the following information: 2003

2004

2005

Net Sales

P4,000,000

P5,000,000

P6,000,000

P7,000,000

P8,000,000

Cost of sales

P2,000,000

P2,500,000

P2,800,000

P4,000,000

P5,200,000

Business Expenses

P1,900,000

P2,350,000

P2,900,000

P3,100,000

P2,300,000

38. The tax due after-tax credit, if any for 2005 a. P 86,000 b. P 87,500

c. P 95,000 d. P 97,500

2006

2007

39. Using the information above, the tax due after-tax credit, if any for 2007 a. P80,000 b. P115,000

c. P140,000 d. P175,000

IV. PARTNERSHIP

40. For income taxation purposes, the term “corporation” excludes one of the following: a. b. c. d.

Ordinary partnership An incorporated business organization General professional partnership Business partnership

41. If a partner on his own transactions, is on the cash method of accounting while the general professional partnership is on the accrual method of accounting, in the partner’s determination of his taxable income for the year, he a. Must convert his income from the partnership into cash method b. Must convert his own income into accrual method c. Does not report his income from the partnership because the partnership is exempt from income tax d. Can consolidate his share in the net income of the partnership under accrual method with his own income under cash method.

42. Statement 1- A CPA and a Dentist may form a GPP or an ordinary partnership Statement 2- Partnership and Corporations have separate juridical personalities distinct from the owners, as such partners and stockholders are not liable to creditors of business a. True, true b. False, false

c. False, true d. True, false

43. Which of the following statements is correct? a. Partners of a taxable partnership are considered as stockholders and profits distributed to them by the partnership are considered as dividends. b. The share of each partner in net income of a taxable partnership shall be based on their capital contribution. c. The share of an individual partner in the net income of taxable partnership shall be equal to the share of a capitalist partner with the least capital contribution. d. The industrial partner shall contribute money and or property but not services. 44. AB partnership with A and B as partners had a net professional income amounting toP500,000. Its other income included bank interest income of P8,000, net of final withholding tax and it received dividend income from a domestic corporation of P10, 000. Ais single and has compensation income of P200, 000. The net taxable income of A who shares profit and loss equally with B is a. P 364,000 b. P 440,000

c. P 400,000 d. P 444,000

45. Using the preceding number, but it is a business partnership, the taxable income of the partnership is a. P 518,000 b. P 500,000

c. P 510,000 d. P 508,000

46. The net shares received by a partner in a general co-partnership is a. Part of his taxable income b. Exempt from income tax

c. Subject to corporate tax d. Subject to final tax

V. GROSS INCOME: FRINGE BENEFITS, DEDUCTIONS, AND EXEMPTIONS 47. All of the following statements are correct, except one. Which is the exception? a. Rents are considered derived from the country where the property is located b. Income from personal services is considered derived from the country where the services were rendered c. The source of interest income is the country where the debtor resides d. The source of dividend income is the country where the corporation was incorporated

48. The following items are exclusions from gross income, except a. Labor union dues b. IOU’s

c. SSS/GSIS premiums contributions d. Pag-ibig premiums contributions

49. If refunded, this is taxable: a. Fringe benefit tax b. Estate tax

c. Special assessment d. Donor’s tax

50. Gain realized from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness is excluded from gross income if with a maturity of… a. Less than 5 years b. More than 8 years

c. 5 years or more d. More than 10 years

51. The fringe benefit tax is: 1. Imposed on the employer 2. Withheld at source 3. Deductible by the employer a. 1 and 2 only b. 2 and 3 only

c. 1 and 3 only d. All of the Above

52. These are benefits that have a limitation a. Fringe benefits b. De Minimis Benefits

c. Salary Benefits d. Investment Benefits

53. For individuals, premiums paid during the taxable year for health and/or hospitalization insurance taken out by him on himself, including his family shall be allowed as deductions from gross income, provided that the family has a gross income of a. b. c. d.

More than P250,000 Not more than P250,000 More than P500,000 Not more than P200,000

54. A taxpayer engaged in business incurred a partial loss of property as follows: Asset 1 Book value of the asset at the time of loss

P 200,000

Cost to restore the property back to its normal operating condition Insurance recovery

120,000 50,000

Salvage

NONE

Asset 2 P 200,000 300,000 NONE 40,000

The deductible loss for asset 1 is: a. P120,000 b. P70,000

c. P 80,000 d. P 30,000

55. One of the following losses cannot be deducted from gross income a. To construct a bigger warehouse, a corporation demolished an old warehouse which had a construction cost of P2M and a book value of P300,000. b. A corporation ascertained that its B Corp. stocks are worthless because of the total insolvency of B Corp. c. A corporation retired its machinery from the business because of the increase in the cost of production and the failure of the machinery to meet the desired number of units of production. d. Demolition of a building existing on a land purchased where the corporation has no use for the building at the time of purchase and it was its intention to remove the building in order to build its factory. 56. Tobio acquired a machine at a cost of P250,000. Scrap value is P20,000 and the estimated useful life was 25 years. After depreciating the asset for 20 years using the straight-line method, it was determined that the remaining life is not five years. The annual depreciation from the 21st year assuming a remaining life of 10 years without scrap is: a. P 6,600 b. P 10,000

c. P 9,200 d. P 11,500

57. Tsukki took out a life insurance policy of P1,000,000 naming his wife as beneficiary. The policy provides that the insurance company will pay Tsukki the amount of P1,000,000 after the 25th year of the policy and his beneficiary, should he die before this date. The premiums paid on

the policy is P700,000. If Tsukki outlived the policy and received the proceeds of P1,000,000, such proceeds will be: a. Taxable in full b. Exempt from income tax

c. Subject to final tax d. Partly taxable, partly exempt

58. A taxpayer had the following: Year 1 Gross income Allowable Deductions

Year 2

Year 3

Year 4

P450,000

P450,000

P440,000

P420,000

530,000

430,000

410,000

410,000

Year 5 P490,000 410,000

The income to be reported in year 2 is: a. P 0 b. P450,000

c. P20,000 d. P60,000

59. Continuation of question #59: The income to be reported in year 5 is a. P 60,000 b. P 80,000

c. P 20,000 d. P 0

60. As a means of promoting the health, goodwill, and efficiency of his employees, employer Hinata gave rank and file employee Suga the following fringe benefits in 2009: 1. 2. 3. 4. 5. 6.

Monetized unused vacation leave of 15 days Rice subsid Uniform and clothing allowance Award for length of service in the form of tangible personal property Gifts given during Christmas and major anniversary celebrations 13th Month pay

P 9,000 24,000 8,000 15,000 10,000

The amount of taxable fringe benefits is: a. P11,000 b. P 23,000

c. P30,000 d. P25,000

61. Dazai, a dedicated and honest employee of RST Corp. for the past 20 years was advised that he is to be retrenched as the company was losing heavily but that he would be given the separation pay provided by law. To avoid implication of inefficiency Dazai was advised to file

a letter of resignation instead of being retrenched. If Dazai files a letter of resignation and receives the separation pay, such amount is: a. Subject to Final Tax b. Exempt from Income Tax

c. Taxable in Full d. Partially Taxable, Partially Exempt

62. Retirement pay is always taxable; Salary of a minimum wage earner is taxable a. Statement 1 is true b. Statement 2 is true

c. Both statements are true d. Both statements are false

63. The following income are excluded in the computation of gross income except: a. b. c. d.

Income by the Philippine government Income already subjected to final tax and CGT Pension of veteran coming from US veteran’s administration Gain on sale of capital asset

64. Mario received Php 120 000 from his employer as his Christmas bonus for that year, how much is excluded in his gross income? a. 30,000 b. 90,000

c. 100.000 d. 120.000

65. Amy received Php 50 000 as a gift from her employer, how much is excluded in her gross income? a. 20,000 b. 25,000

c. 50,000 d. None of the Above

66. Statement 1: As a rule, retirement benefit is included in the computation of gross income. Statement 2: Interest income from insurance is excluded in the computation of gross income. a. Statement 1 is true b. Statement 2 is true

c. Both statements are true d. Both statements are false

67. Statement #1: Property insurance is included in the gross income; Statement #2: Separation Pay is not mandatory in a business a. Statement 1 is true b. Statement 2 is true

c. Both statements are true d. Both statements are false

68. Kira received a separation pay amounting to Php 20,000 because of her sickness, how much is included in her gross income? a. 0 b. 5,000

c. 10,000 d. 15,000

69. Statement #1: Proceeds from SSS, GSIS, Philhealth & Pag-ibig is included in the gross income. Statement #2: Separation pay is always included in the gross income a. Statement 1 is true b. Statement 2 is true

c. Both statements are true d. Both statements are false

VI. VALUE ADDED TAX 70. In the case of importation of taxable goods, who shall be liable to VAT? a. Importer, whether an individual or corporation and whether or not made in the course of his trade or business. b. Importer if corporation and only when made in the course of trade or business. c. Importer if made in the course of trade or business only. d. None of the choices. 71. A taxpayer is the proprietor/lessor of one commercial building. He leased its spaces at the following monthly rates: Ground floor- P12,000 Second floor- 10,000 Third floor8,000 The taxpayer is liable to pay the a. 12% VAT b. 0% VAT

c. 3% percentage tax d. None of the choices are correct

72. Mr. Mark Yabut is engaged in the following: Trucking business, gross annual receipts Lease of apartment house (monthly rental is P12,800 per unit), gross receipts Practice of accountancy, gross receipts

500,000 2,000,000 900,000

Mr. Mark Yabut is not VAT-registered. Which of the following statements is correct? a. b. c. d.

He is not subject to VAT. He cannot optionally register under the VAT system. He is considered a VAT-registrable taxpayer. He is mandatorily required to register under the VAT system.

73. The taxpayer is a VAT-registered owner of an eatery place. Data on gross receipts follow: Food 3,360 Beverages 420 Service charge 378 City Tax 54.60 What shall the official receipt show? a. 4,617.60 b. 4,666.20

c. 4,658.10 d. 4,711.56

74. A VAT-registered domestic carrier operating air, land and sea transport equipment acquired vehicles for use in its operation to transport goods and cargoes. The domestic carrier: a. b. c. d.

can claim input taxes on the said acquisition. cannot claim input taxes on the said acquisitions. can claim input taxes only on the acquisitions of air and sea transport vehicles. can claim input taxes only on the acquisition of land transport vehicles.

75. Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) exceeds P1,000,000 in a calendar month regardless of the acquisition cost of each capital good, shall be claimed as credit: a. in full in the month acquired, if the estimated life is less than 5 years.. b. in full in the quarter acquired unless the estimated life is less than 5 years, in which case over the actual number of months compromising the estimated life. c. over a period of 60 months regardless of the estimated life. d. over a period of 60 months unless the estimated life is less than 5 years in which case over the actual number of months compromising the estimated life. 76. For VAT purposes in connection with deferred payment sale of real property, the term initial payments shall include: a. Mortgage on the real property sold not exceeding the cost thereof b. Down payment only made at the time of sale. c. Payments made in the year of sale in addition to the down payment

d. Evidence of indebtedness issued by the purchaser to the seller at the time of sale 77. The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT-registered person shall be creditable to which of the following? a. To the purchaser of the domestic goods or properties upon consummation of the sale. b. All of the choices. c. To the importer upon payment of VAT prior to the release of goods from customs custody. d. To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty, or fee. 78. The following events happened in a VAT enterprise: June July August

Performance of service Received invoice in the amount of P112,000 Paid the services

When and how much input VAT can be claimed? a. July, P12,000 b. July, P13,400

c. August, P13,440 d. August, P12,000

79. A VAT-registered trader has the following transactions in the second month of a taxable quarter: Sales of goods to private entities, gross of 2,800,000 VAT Purchases of goods sold to private entities, 800,000 net of VAT Sales to a Government Owned or Controlled 1,120,000 Corporation (GOCC), gross of VAT Purchases of goods sold to GOCC, net of 672,000 VAT How much is the standard input tax on sales to the government? a. 70,000 b. 78,400

c. 56,000 d. 84,000

VII. PERCENTAGE TAX 80. A taxpayer is engaged in VAT-subject transactions but his annual gross sales do not exceed the VAT threshold. Hence, he did not register under VAT system. However, during the current year, his quarterly gross sales follow: First quarter Second quarter Third quarter Fourth quarter How much is the percentage tax due? a. 90,000 b. 480,000

P1,000,000 1,000,000 1,000,000 1,000,000 c. 120,000 d. None of the choices

81. A jeepney operator has the following receipts during a particular month: Jeepney No. 1 (net of P5,000 gasoline expenses)

20,000

Jeepney No. 2 (gross of P4,000 gasoline expenses)

16,000

How much is the common carriers tax due for the month? a. 1,230 b. none of the choices

c. 1,407 d. 1,080

82. Air Asia is an international carrier doing business in the Philippines. It has the following data for the current month: A. Gross receipts from transport of cargo and/or mail, originating from the Philippines in a continuous and uninterrupted flight, passage documents sold outside the Philippines B. Gross receipts from transport of passengers originating from the Philippines in a continuous and uninterrupted flight, passage documents sold in the Philippines C. Gross receipts from transport of cargo and/or mail, originating from outside the Philippines in a continuous and uninterrupted flight, passage documents are sold in the Philippines. You are consulted by its CFO as to which of the above shall be subject to the Philippine common carriers tax. What will your answer be? a. None of the choices are correct b. A only

c. A and C only d. A, B and C

83. Liwanag Company is a holder of franchise. Aside from its receipts from the use of franchise, it also leases its auditorium and theatre. In a particular month, its gross receipts from the use of franchise amount to P2,000,000. The gross receipts from the lease of its auditorium and theater amount to P800,000. Assuming Liwanag Company is a franchise grantee of gas utilities, how much is the franchise tax? a. 56,000 b. 40,000

c. 60,000 d. 84,000

84. A news service, has used communication facilities to send its news to its head office in Paris, France. During the current month, it paid a total of P500,000 for its overseas communications originating from the Philippines. How much is the overseas communications tax due? a. 25,000 b. 60,000

c. None d. 50,000

85. Gross receipts tax is a business tax paid by a: a. franchise holder b. bank

c. insurance company d. hotel operator

86. Philam Life, a domestic insurance company, has the following data for the current month: Premiums collected on life insurance policies Premiums refunded within 6 months after the payment on account of rejection of risk (part of the total premiums collected) Reinsurance premium (tax has already been paid) Premiums collected by a branch doing business outside the Philippines from nonresident policy holders How much is the tax on life insurance premiums?

2,000,000

a. 30,000 b. 40,000

c. 150,000 d. 200,000

500,000

200,000 300,000

87. The Minyong Promotions, Inc. is a sports promoter which leases the Manila Coliseum at a monthly rental of 800,000. It conduct boxing exhibitions and professional basketball games in the coliseum. In a month, it had the following gross receipts from professional basketball games: Gate receipts Sales of food at stands maintained it in the coliseum Sale of television rights Rent expense The percentage tax is: a. 750,000 b. 1,035,000

5,000,000 900,000 1,000,000 2,400,000

c. 936,000 d. None of the above

88. Dimple invested P500,000 in shares of stock in Manila Trading Corp., a publicly-listed company. The corporations shares were listed and were traded in the local stock exchange. Dimple sold her shares in the local stock exchange through Ryan, a direct buyer for P550,000. How much was the percentage tax on the sale? a. P 2,500 b. P 2,750

c. None d. P42,000

89. A closely held corporation has initially offered its shares in the Philippines Stock Exchange. The following data pertain to the initial public offering: Number of shares sold in IPO Total outstanding shares, after the listing the Philippine Stock Exchange Gross value in money of the IPO How much is the percentage tax due? a. 50,000 b. 100,000

c. 400,000 d. 200,000

500,000 shares 2,000,000 shares P 10,000,000

VIII. ESTATE TAX 90. Mr. Rio, a citizen of the Philippines, single, died a resident of the United States, leaving the following properties: Real property in the United States, inherited from the father one and one-half years ago Personal property in the Philippines inherited from the father Family home in the United States and incurred/paid the following expenses: Actual funeral expenses paid in the United States Other obligations contracted within the last two years The taxable gross estate is: a. 1,600,000 b. 3,400,000

2,000,000 1,600,000 1,400,000 100,000 250,000

c. 3,000,000 d. 5,000,000

91. FMV, Date of Death

FMV, Date of Transfer

Consideration received

P5,200,000 1,000,000 200,000 400,000

P4,000,000 1,500,000 500,000 300,000

P3,000,000

1,300,000

1,500,000

Land and building, 1,800,000 general power Additional gross estate (if still any) is:

2,000,000

a. 4,300,000 b. 3,500,000

c. 0 d. 3,000,000

Revocable transfer Land Automobile Shares of stock Bond certificates Transfer under power of appointment Farm land, limited power

400,000 350,000

1,000,000

92. The decedent was married at the time of death. Cash owned before the marriage Real property inherited during the marriage Personal property by the wife received as gift before the marriage Property acquired with cash owned before the marriage Clothes of the decedent purchased with the exclusive money of the wife

P10,000,000 12,000,000 800,000 1,200,000 1,000,000

Jewelry purchased with exclusive cash Property unidentified when and by whom acquired Cash income during the marriage The gross estate under the system of conjugal partnership of gains is: a. 33,400,000 b. 33,400,000

2,000,000 2,400,000 4,000,000

c. 32,600,000 d. 31,600,000

93. For proceeds of life insurance not to constitute part of the gross estate must have a. designated the estate of the decedent as irrevocable beneficiary b. been taken out by the decedent upon his life. c. designated a third person as, the decedents executor or administrator as the irrevocable beneficiary d. designated a third person other than the estate, the decedents executor or administrator as irrevocable beneficiary 94. Fe died with a claim against Titoy. Titoy has properties worth P250,000 and obligations of P350,000. Included in the obligations of Titoy are P50,000 unpaid taxes owed to the Government of the Philippines and P90,000 payable to Ms. Fe. The estate of Fe has a deductible claim against an insolvent debtor amounting to a. 90,000 b. 30,000

c. 60,000 d. None of the choices.

95. Which one of the following is wrong? a. Medical expenses must be paid or incurred within 1 year prior to the decedents death to be deductible. b. Taxes to be deductible must accrue before the decedents death. c. Transfer for public purposes in order to be deductible must be mortis causa and testamentary in character. d. Losses must occur also before the decedents death to be deductible. 96. Fe, married on June 5, 2014 died on April 29, 2016 with the following data: Gross estate conjugal, P3 million; exclusive, P2 million. Said amount includes a land which she received as gift from her father two months before the marriage, valued at P540,000. Her father mortgaged the land for P20,000 which was paid by Fe. Fe mortgaged also the said land for P50,000 but was able pay only P20,000 until his death. ELIT claimed (excluding the unpaid mortgage) amounted to P170,000. The vanishing deduction is a. 399,360 c. 384,000 b. 299,520 d. 288,000

97. Mr. Edwin, a citizen and resident of the Philippines, died on June 1, 2019, survived by his wife. The property relationship in the marriage was the conjugal partnership of gains. He left the following properties and charges thereon: Cost Fair Market Value Residential house, constructed during the P 400,000 P 900,000 marriage Residential lot, TCT # 318, inherited 10 years ago 200,000 450,000 Furniture and appliances in the residential house 600,000 490,000 Receivable from insolvent friend 10,000 Cash, owned before the marriage 150,000 Other properties owned before the marriage 1,000,000 Actual funeral expenses 100,000 Judicial expenses 120,000 Unpaid mortgage 50,000 Unpaid taxes 20,000 Legacy (per will) of P50,000 cash to DSWD 50,000 Loss of household furniture and appliances on 12,000 December 9, 2019 The deduction for family home amounts to: a. 450,000 b. 1,350,000

c. 900,000 d. 1,000,000

98. Mr. Goran, a citizen and resident of the Philippines, died on October 5, 2018. He was married and the property relationship during the marriage was the absolute community of property. He left the following properties, with their market values, and obligations and charges: Agricultural land P100,000 House and lot acquired by inheritance before the marriage and 41/2 500,000 years ago, used as family home (with a fair market value of P420,000 and a mortgage of P120,000 when acquired; P20,000 was paid by Mr. Goran before he died) Jewelry of Mrs. Goran, acquired during the marriage with the exclusive 50,000 money of Mrs. Goran Clothes acquired during the marriage from income earned during 130,000 (P60,000 for use of Mr. Goran, and P70,000 for use of Mrs. Goran) Cash on hand and in banks: income from unidentified sources 300,000 Cash in bank: From sale at a loss of exclusive property 1,500,000 Received as gift six years ago and before the marriage (current account) 40,000 Other properties: Owned before the marriage 90,000

Acquired during the marriage Deductions and other information: Total funeral expenses of P300,000. Paid from the estate Judicial expenses Unpaid mortgage (already on the property at the time acquired): On agricultural land On house and lot Other obligations Legacy to the Government of the Philippines from the current account The net taxable estate is: a. 857,310.34 b. 767,310.34

20,000

58,000 120,000 20,000 100,000 20,000 10,000

c. 0 d. 698,620.70

99. When is the time for filing of the estate tax return? a. Thirty (30) days from the decedent’s deathth b. Two (2) months from the decedent’s death

c. Six (6) months from the decedent’s death d. Two (2) years from the decedent’s death

IX. DONORS TAX 100. Which of the following is/are the purpose of donors tax? I. To supplement and prevent circumvention of estate tax. II. To prevent avoidance of income through a devise of splitting income to numerous donees to escape the effect of progressive rates of income taxation. III. To tax the act of receiving a gift. IV. To subject properties wherever situated to donors tax a. II only b. I and II only

c. I only d. All of the answers are correct

101. On January 15, 2015, Mr. Jose de Leon executed a Deed of Donation covering a piece of land which is part of the common property owned by him and his wife with the latters consent. The donation was made to his niece, Jenilyn. Jenilyn accepted the donation on February 14, 2015. The land had an assessed value of P1 million and zonal value of P800,000 at the time of donation. It was also encumbered with an unpaid mortgage of P300,000 which was assumed by the donee. In addition, the donee agreed to pay the applicable donors tax of P210,000. For donors tax purposes, what value shall be used as gross gift of Mr. Jose de Leon? a. 1,050,000 c. 400,000 b. 500,000 d. None of the choices

102. Every donation or grant of gratuitous advantage, direct and indirect, between the spouses during the marriage shall be void, except: a. All of the choices are correct exceptions. b. Donation propter nuptias which are given before the marriage. c. Moderate gifts which the spouses may give each other on the occasion of any family rejoicing. d. Donation mortis causa. 103. LA Corporation donated P1,000,000 to a government agency which was created to generate profit to the government. The agencys total expenses amounted to P15,000,000, 30% of which were for administrative purposes? How much was the exempt gift? a. none of the choices c. 1,000,000 b. 3,000,000 d. 4,500,000 104. Which of the following is an exemption for donors tax purposes not found in the Tax Code? a. donation to a religious organization b. none of the choices c. donation to Philippine Inventors Commission d. donation to non-profit educational institutions 105. Which of the following will result to a net taxable gift of P300,000? a. The daughter of Al was married to his boyfriend. As a gift, Al donated P320,000 to them. b. A property worth P300,000was donated Peping to City of Tarlac for use as a site of a Barangay Hall c. Rianne requested Bryan to pay the formers liability to Metro Bank in the amount of P100,000. In return, Rianne will donate a property to Bryan worth P400,000. d. Wally donated a property to Jose valued at P360,000. The property is subject to a mortgage indebtedness amounting to P60,000 which was paid by Wally at the time of donation 106. On March 1, 2018, Ms. Samira Aquino donated a piece of land to her best friend, Mar Roxas. She also donated to a non-profit religious organization. The donation to her friend was a piece of land which had an assessed value of P1,000,000 and zonal value of P800,000 at the time of donation. The donations to a non-profit religious organization were cash amounting to P200,000 and an automobile with a purchase of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000 which was not assumed by the donee. In addition, the donee agreed to pay the applicable donors tax of P210,000.

How much was the donors tax due? a. 114,000 b. 45,000

c. 60,000 d. None of the choices

107. Filing of the donors tax for a donation of real property which is subject to the donors tax shall be done within: a. b. c. d.

30 days from the grant of the donation by the donor 30 days from the transfer of title of the real property. 30 days from the acceptance of the donation in writing by the donee 30 days from the notarization of the donation document

108. When a donor with several donations during the year fails to file the donors tax return for each of the dates that donations were made (select the wrong statement): a. None of the answers are correct. b. Each failure is subject to penalties for non-filing of return and nonpayment of the tax on time. c. He can voluntarily file late the donors tax return for each date that donations were made and make payments on the tax due shown on each return, with penalties. d. Such failure shall be cured by filing a donors tax return at the end of the year reflecting all donations made within the year and paying the taxes shown in that one return. 109. On April 1, JJ donated his 1-hectare farm land in Quezon to Apollo with a condition that three years from the date of donation, Apollo will construct a waiting shed for commuters adjacent to the farm land, and that failure to comply with the condition shall be sufficient ground for the cancellation of donation. The applicable donors tax was paid by JJ on April 30 which is within the prescribed period allowed in the tax code. Which of the following is correct? a. The payment of donors tax is appropriate even if the donation may be revoked in the future due to non-fulfillment of the condition. b. Both of the answers are correct c. In case of revocation, the donors tax paid by JJ should be refunded by the BIR if he files for refund within 2 years from revocation. d. Neither of the answers are correct

- END OF TAXATION QUESTIONNAIRE –

ANSWER KEY FOR TAXATION I.

II.

III.

Income Taxation: Individual Tax Payer 1. C. Taxation 2. B. Republic Act no. 10963 3. A. Regular Tax Situs 4. D. Double Taxation 5. C. Tax Evasion 6. B. Tax Exemption 7. A. Tax Avoidance 8. B. Statement 1 is false and statement 2 is true. 9. A. Regressive Tax 10. B. Tax System Individual 11. B. More than 180 days 12. C. Prize 13. A. Net Profit 14. C. 12% 15. A. 6% 16. D. 400,000 17. A. 220,000 18. B. 130,000 19. C. 14,500 20. D. 0 Corporation 21. C. Foreign Corporation 22. A. General professional partnership 23. D. A foreign corporation engaged in business in the Phil. is taxable on all income derived from sources within the Philippines only. 24. C. RFC engaged in hotel, motel, and resort operations 25. A. Non-resident foreign corporations are taxed on gross income from within and outside the Philippines 26. B. Cash dividends received by a domestic corporation from a domestic corporation. 27. A. Progressive Tax 28. C. Is compared with the normal income tax and minimum corporate income tax 29. B. False 30. B. 18,000 31. A. 450,000 32. C. 1,200,000 33. A. 150,000 34. C. 10,000

IV.

V.

35. D. 1,000,000 36. C. 180,000 37. D. 300,000 38. B. 87,500 39. A. 80,000 Partnership 40. C. General professional partnership 41. A. Must convert his income from the partnership into cash method 42. B. False, False 43. A. Partners of a taxable partnership are considered as stockholders and profits distributed to them by the partnership are considered as dividends. 44. C. 400,000 45. B. 500,000 46. D. Subject to Final Tax Gross Income: Fringe Benefits, Deductions, and Inclusions 47. D. The source of dividend income is the country where the corporation was incorporated 48. B. IOUs 49. A. Fringe Benefit Tax 50. C. 5 Years of More 51. D. All of the Above 52. B. De Minimis Benefits 53. B. Not More than P250,000 54. B. 70,000 55. D. Demolition of a building existing on a land purchased where the corporation has no use for the building at the time of purchase and it was its intention to remove the building in order to build its factory. 56. A. P6,600 57. D. Partly taxable. Partly exempt 58. A. P 0 59. B. P80,000 60. A. 11,000 61. C. Taxable in Full 62. D. Both statements are FALSE 63. D. Gain on sale of capital asset 64. B. 90,000 65. C. 50,000 66. A. Statement #1 is TRUE 67. C. BOTH statements are TRUE 68. A. 0 69. D. BOTH statements are FALSE

VI.

Value Added Tax 70. A. Importer, whether an individual or corporation and whether or not made in the course of his trade or business. 71. A. 12% VAT 72. A. He is not subject to VAT. 73. B. 4,666.20 - Solution: Sale of food Sale of beverages VAT at 12% of P3,780 Service charge (part of output tax) City tax Total

P

3,360.00 420.00 3,780.00 453.60 378.00 54.60 4,666.20

P

74. A. can claim input taxes on the said acquisition. 75. D. over a period of 60 months unless the estimated life is less than 5 years in which case over the actual number of months compromising the estimated life. 76. C. Payments made in the year of sale in addition to the down payment. 77. B. All of the choices 78. D. August, P12,000 - Solution: Invoice Amount, gross of VAT Less: Invoive amount, net of VAT (112000/1.12) VAT

112000 (100000) 12000

79. A. 70,000 - Solution: Sales to a Government Owned or Controlled Corporation (GOCC), net of VAT Standard input tax rate Standard input tax VII.

1000000 7% 70000

Percentage Tax 80. A. 90,000 - Solution: Maximum allowable income subject to OPT OPT Tax Rate OPT Tax

3000000 30% 90000

81. C. 1,407 - Solution: Gross receipts - Jeepney no. 1 (P20,000 + P5,000) (actual is higher) Gross receipts - Jeepney no. 2 (minimum is higher) Total Tax rate Common carriers tax 82. B. A only 83. B. 40,000 - Solution: Gross receipts (sale of gas) Tax rate Franchise tax 84. C. None 85. B. bank 86. A. 30,000 - Solution:

2,000,000 2% 40,000

Premiums collected on life insurance Less: Premiums refunded Net Tax rate Tax on life insurance premium 87. B. 1,035,000 - Solution:

2,000,000 (500,000) 1,500,000 2% 30,000

Gate receipts Sales of food at stands Sale of television rights Taxable gross receipts) Amusement tax (6,900,000 x 15%) 88. C. None 89. C. 400,000 - Solution:

5,000,000 900,000 1,000,000 6,900,000 1,035,000

Gross value in money Tax rate Stock transaction tax

P10,000,000 4% P 400,000

25,000 21,900 46,900 3% 1,407

VIII.

Estate Tax 90. D. 5,000,000 - Solution: Real property in the United States, inherited from the father one and one-half years ago Personal property in the Philippines inherited from the father Family home in the United States Gross Estate 91. D. 3,000,000 - Solution:

2,000,000 1,600,000 1,400,000 5,000,000

Insufficient Consideration, Land Transfer under General Power, Land and Building Additional Gross Estate 92. D. 31,600,000 - Solution:

2200000 800000 3000000

Cash owned before the marriage Real property inherited during the marriage Property acquired with cash owned before the marriage Jewelry purchased with exclusive cash Property unidentified when and by whom acquired Cash income during the marriage Gross Estate

P10,000,000 12,000,000 1,200,000 2,000,000 2,400,000 4,000,000 31,600,000

93. D. designated a third person other than the estate, the decedents executor or administrator as irrevocable beneficiary. 94. B. 30,000 - Solution: Properties of Titoy 250,000 Less: Property applied to preferred creditor (Philippine government) (50,000) Properties available to other creditors 200,000 Obligations of Titoy 350,000 Less: Obligations to preferred creditor (50,000) Obligations to other creditors 300,000 Amount of claims of Fe 90,000 Amount that can be collected (2/3 x 90,000) (60,000) Amount that cannot be collected 30,000 95. D. Losses must occur also before the decedents death to be deductible.

96. B. 299,520 - Solution: Initial value to take Less: Mortgage indebtedness paid Balance Less: P520,000/P5,000,000 x 200,000 Basis of vanishing deduction Vanishing deduction at 60%

P540,000 20,000 P520,000 20,800 P499,200 P299,520

97. C. 900,000 - Solution: Residential house (900000/2) Residential lot Family home deduction

IX.

P450,000 450,000 900,000

98. C. 0 99. C. Six (6) months from the decedent´s death. Donors Tax 100. B. I and II only. 101. B. 500,000 - Solution:  (1000000/2= 500000) 102. A. All of the choices are correct exceptions. 103. A. none of the choices 104. C. donation to Philippine Inventors Commission 105. C. Rianne requested Bryan to pay the former liability to Metro Bank in the amount of P100,000. In return, Rianne will donate a property to Bryan worth P400,000. 106. B. 45,000 - Solution: Gross gift Less: Exempt gifts Net taxable gift Tax due: 750,000*6%

1,000,000 (250,000) 750,000 45,000

107. C. 30 days from the acceptance of the donation in writing by the donee. 108. D. Such failure shall be cured by filing a donors tax return at the end of the year reflecting all donations made within the year and paying the taxes shown in that one return. 109. C. In case of revocation, the donors tax paid by JJ should be refunded by the BIR if he files for refund within 2 years from revocation.

UNIVERSITY OF THE EAST Caloocan BUSINESS LAWS RECENSEO 2020 COMPREHENSIVE EXAM REVIEWER

SUBJECT COVERAGE:  Obligations  Contracts  Partnership  Corporations  Cooperatives

    

Negotiable Instruments Special Laws Sales Agency Credit Transactions

I. OBLIGATIONS 1. The person who has the duty of giving, doing or not doing a. Obligor b. Creditor

c. Obligee d. Active subject

2. Source of obligation which is a rule of conduct, just and obligatory, promulgated by legitimate authorities for common good, benefit and observance. a. Quasi-delict b. Delict c. Contracts

d. Quasi-contract e. Law

3. Alfred obliged himself to deliver specific car to Arnold on February 1, 2018. However, Alfred failed to deliver the car on February 1, 2018. In this case Alfred is already? a. Ordinary delay b. Mora solvendi ex re

c. Mora solvendi ex persona d. Mora Accipendi

4. A promised to deliver to B 100 sacks of palay from the former summer harvest. A failed to deliver what was promised due to floods which destroyed the crops before the harvest season. Is the obligation extinguished? a. b. c. d.

No, the generic thing is delimited. Yes, the generic thing is delimited No, A can still raise the same from future crops. Yes, the contract is void due to non-existing object at the time of perfection of contract.

5. A owes B sum of money evidenced by a promissory note which has prescribed. X, without the knowledge of A, paid B his debt. Later A reimbursed X for the payment of the latter to B although he has no obligation to do so. a. A cannot recover because he has the civil obligation to reimburse X for the latter paid his debt B. b. A can recover his reimbursement to X to prevent unjust enrichment on Xs part at the expense of A. c. A cannot recover since there was reimbursement by mistake. d. A cannot recover because the payment partakes of natural obligation. 6. One where the whole liability is to be paid or fulfilled proportionately by the different debtors and/or is to be demanded also proportionately by the different creditors. a. Facultative Obligation b. Divisible Obligation

c. Joint Obligation d. Alternative Obligation

7. Which of the following is an obligation with a period for the benefit of both the debtor and the creditor? a. b. c. d.

Payable if I like Payable when you like Payable on or before December 25, 2013 Payable on December 24, 2013

8. In which of the following is the debtor still liable despite the fortuitous event causing the loss of the thing? a. b. c. d.

The nature of the obligation does not require the assumption of risk. The thing lost is a specific thing. When the law or the obligation expressly so provides. The performance of the obligation has become impossible.

9. A, B, and C are solidary debtors sharing 1:2:3 of solidary creditors Wand Y sharing at 1:2. The obligation is P12,000. If B is a minor and C is insolvent and W condones the obligation of A without the consent of Y, how much can W collect from A? a. 8,000 b. 6,000

c. 0 d. 2,000

10. DR promised to give DE, his grandson, a car if the latter will pass the bar examinations. When his grandson passed the said examination, which of the following statements is true? a. Both the obligation and the condition are ineffective because they depend upon the sole will of the donor. b. The obligation is valid although potestative because they depend upon the sole will of the donee. c. DR may refuse to deliver because the condition is purely a potestative one. d. The obligation is valid because the condition depends upon the sole will of the donor. 11. A owes B P20,000 which became due and payable last June 23,2019. On the date, A offered B P10,000, the only money he then had, but B refused to accept the payment. A, thereafter met C, B's 23 year old son, to whom he gave the P10,000 with the request that he turn the money over to B. The money was stolen while C's possession. How much may B still recover from A? a. 10,000 b. 0

c. 20,000 d. 15,000

12. Insolvency of the debtor is required in: a. Application of payment b. Tender of payment and consignation

c. dacion in payment d. Payment by cession

13. Which of the following is not a ground for the extinguishment of an obligation? a. Compensation b. None of the above c. Remission

d. Merger e. Death of creditor

14. On June 1, 2019 Anne was indebted to Charlie for P500,000 for a 30-day period. Anne proposed to Charlie that Sofia will pay Anne’s debt, and that Anne will be free from all liabilities. Charlie and Sofia agreed to the proposal. On July 1,2019, when Charlie tries to collect from Sofia, he finds that Sofia is insolvent. At the time of delegation, Sofia was insolvent but this was not known to Anne. The insolvency is not of public knowledge. So Charlie sue Anne on the ground that it was Anne who made the proposal and that Anne really guaranteed Sofia’s solvency. Decide. a. Anne is liable because she is presumed to have guaranteed Sofia’s solvency b. Anne is not liable because Anne does not know the insolvency of Sofia at the time of delegation and neither was the insolvency of public knowledge c. Anne is liable because Sofia agreed to the proposal to make himself solidarily liable for the obligation d. Anne is liable because she did not exercise due diligence in determining the insolvency of Sofia

15. B, F and T are solidary debtors of A. Twelve (12) years after the obligation became due and demandable, B paid A and later and later on asked for reimbursement of F and T shares. Is B correct? Why? a. b. c. d.

No, because in solidary obligation any one of the solidary debtors can pay the entire debt Yes, because the obligation is solidary Yes, because F and T will be unduly enriched at the expense of B No, because the obligation has already prescribed

II. CONTRACTS 16. The following are solemn contracts, except a. b. c. d.

Construction contract of building Sale of land through an agent (authority must be in writing) Donation of real estate or of movables if the value exceeds P5,000 Stipulation to pay interest in loans

17. Which of the following statement is not correct? a. The validity or compliance of the contract cannot be left to the will of one of the contracting parties. b. The contracting parties are bound by the determination of performance by a third person from the moment a third person decided c. The contracting parties are not bound by the determination of a third person if it is evidently inequitable as when the third person acted bad faith or under mistake. d. The determination of the performance may be left to a third person 18. The point where the parties have performed their respective obligation and the contract is terminated a. Preparation b. Perfection

c. Conception d. Consummation

19. Although validly agreed upon, courts can nullify this contract because of damages to one of the parties or to a third person and its enforcement may cause injustice by reason of some external facts a. Voidable contract b. Void contract

c. Unenforceable contract d. Rescissible contract

20. A sold to B his only car with a fair market value of P500,000 for only P370,000. The status of the contract of sale is: a. Voidable, because mistake or fraud are presumed b. Void ab initio because the price are considered simulated c. Rescissible because the vendor suffers a lession of more than one fourth of the value of the thing sold d. Valid because lesion or inadequacy of cause as a rule does not invalidate contract, unless there is vices of consent. 21. To defraud his creditor, A sold his house to X. When however the creditor wanted to collect his credit, somebody lent A enough money. Is the sale rescissible? a. Yes, because the debtor was in bad faith when he sold the house to X b. Yes, because it was entered into a fraud of creditor. c. No, because the debtor has become in good faith when he was lent enough money to pay his debts d. No, because the creditor can collect the credit due to him 22. A was forced by B to sign a contract. C a creditor of A wants to annul the contract. Is C allowed by law to do so? a. No, because a third person cannot assail a contract. b. Yes, a third person can annul a rescissible contract. c. Yes, because the contract is voidable and C is damaged. d. No, because a third person cannot assail a voidable contract. 23. Paul entered into a written agreement to sell a parcel of land to Steve. At the time the agreement was executed, Paul had consumed alcoholic beverages. Paul’s ability to understand the nature and terms of the contract was not impaired. Steve did not believe that Paul was intoxicated. The consent is: a. Void as a matter of law c. Voidable at Steve’s option b. Legally binding on both parties d. Voidable at Paul’s option 24. A bought 100 box of ballpen at P1,500 per box from B. However, the contract mistakenly showed a total contract price of 210,000 because of arithmetical computation. Which of the following statement is correct? a. A may ask for its correction b. A may ask for the reformation of the instrument c. The contract between between A and B has no binding legal effect d. A may rescind the contract

25. When both parties to the contract are minors, the contract is a. unenforceable b. rescissible

c. void d. voidable

26. Which of the following need not be in writing to be enforceable? a. An agreement for the sale of goods, chattels, or things in action at a price not less than P500 b. An agreement for the leasing for a period longer than one year, or for the sale of real property or of an interest thereon c. A mutual promise to marry d. A representation as to the credit of a third person 27. A and B agreed on June 3, 2012 that B will construct the house of A on March 2014. The contract was orally entered into. B received a down payment from A with the balance payable after completion of the house. The contract is? a. b. c. d.

Void because it is not in writing as required by law. Voidable because it is not in public instrument Unenforceable because it is not in writing and yet performance there is after one year Enforceable even if not in writing, having been ratified

28. In three of the following contract is cleansed of its defect by ratification. Which is not so ratified? a. b. c. d.

Sale of chattels orally entered into for a price not less than five hundred pesos. Lease of real property for more than one year orally entered into. Contract entered into by a person incapable of giving consent. Contract where the creditor was damaged by the act of the debtor who intended to defraud him.

29. Characteristic of void contracts, except a. b. c. d.

Cannot be ratified Defense of illegality cannot be waived The inexistence can be assailed by third person Action for declaration of inexistence does not prescribe

30. S and M agreed in print that S, debtor for P30,000, will work as a servant of M without pay until she could find money with which to pay her debt. S failed to comply with her obligation. Under this premise, which of the following statement is correct? a. The agreement to work as a servant is void because it is immoral b. To act as a servant without pay is unconstitutional because this is equivalent to involuntary servitude c. The contract to work without pay as a servant until the debt is paid is void d. The agreement to work without pay since written is enforceable. III. PARTNERSHIP 31. A and B are co- owners of a parcel of land from which they derive profits in equal sharing being co- heirs in inheritance. Is there a partnership? a. There is partnership they being co- owners and co-possessors. b. There is no partnership since in partnership division of profits is not always necessary among partners. c. There is a partnership because of the equal sharing of profits. d. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits. 32. One of the following is not a characteristic of contract of partnership. a. Onerous, because the parties contribute money, property, industry to the common fund b. Preparatory, because it a means by which other contracts will be entered into c. Real, in that the partners must deliver their contributions in order for the partnership contract to be perfected d. Principal, because it can stand by itself 33. Partner who manages actively the firm’s affairs a. Liquidating b. Managing

c. Dormant d. Silent

34. Partners A,B, and C contributed: A-P1M; B-P2M; and C-service. After exhausting the partnership assets, the creditors still have a claim for P.3M. For how much are the partners liable to the creditors for the partnership liability? a. Only A and B are liable at 1/3 and 2/3 respectively. b. C is not liable an industrial partner who is exempt from losses. c. All of A, B, and C are liable pro rata to the creditors. d. Only A and B are liable equally to the creditors being capitalists.

35. A partnership which comprises all the profits that the partners may acquire by their work or industry during the existence of the partnership is called: a. b. c. d.

Universal partnership of all present property Partnership at will Universal partnership of profits Particular partnership

36. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received from D a share of P1,500 ahead of partners B and C, giving D a receipt for his share only. When B and C were collecting from D, the latter was already insolvent. Which of the following is correct? a. B and C can automatically deduct from the capital contribution of A in the partnership, their respective share in the P1,500 b. Partner A can be required to share the P1,500 with B and C c. B and C should automatically exhaust first all remedies to collect from D d. A cannot be required to share the P1,500 with B and C 37. Which of the following is not correct about limited partnership? a. The limited partnership is void if one of the partners contributes an immovable property and there is no inventory of the real property attached to the public instrument. b. To form a limited partnership, there must be a sworn certificate which comply all the requirements set forth by law and filed with SEC. c. If the partnership name of a limited partnership has no Ltd or limited, the partnership is a non-existing partnership. d. Limited partnership consists of at least one general partner and at least one limited partner. 38. Which of the following is not a prohibition on a limited partner? a. b. c. d.

Limited partner may not contribute service. Surname of a limited partner may not appear in the partnership name. Limited partner may not constitute his assignee as substituted limited partner. Limited partner may not take part in the control of the business.

39. A and B orally agreed to form a partnership two years from today, each one to contribute P1,000. If at the arrival of the period, one refuses to go ahead with the agreement, can the other enforce the agreement? a. b. c. d.

No, because the agreement was merely oral and executory Yes, because the partnership contract is not governed by the Statute of Frauds Yes, because the prior agreement was voluntarily made No, since the agreement is to be enforced after one year from the making thereof, the same should be in a public instrument to be enforceable

40. A partners interest in the partnership is his? a. b. c. d.

Answer not given. Right to participate in the management Right to inspect partnership books Right to share in the profit and surplus.

41. A stipulation which excludes one or more partners from any shares in the profits or losses is a. Valid b. Unenforceable

c. Void d. Voidable

42. The partnership will bear the risk of loss of three of the following things, except a. b. c. d.

Things contributed to be sold Fungible things or those that cannot be kept without deteriorating Things brought and appraised in the inventory Non-fungible things contributed so that only their use and fruits will be for the common benefit

43. When the manner of management has not been agreed upon, who shall manage the affairs of the partnership? a. Capitalist-industrial partners b. Capitalist partners

c. Industrial partners d. All of the partners

44. A partnership begins from the moment of a. Distribution of profits b. Consent

c. Issuance of certificate by the SEC d. Delivery of contributions

45. Which of the following is not an obligation of a partner? a. To give his capital contribution. b. To pay partnership for damages suffered by it through his fault. c. To inspect and copy partnership books. d. Not to engage in unfair competition with the partnership. IV. CORPORATION 46. A, B, C, D, E, F, G and H entered into an agreement to form “Malaya Corporation” on December 26, 2010. After fixing all the requirements needed, they prepared their articles of incorporation submit it with Securities and Exchange Commission on March 1, 2011. On April 1, 2011, they received a notice of the issuance of the certificate of incorporation. Then on May 3, 2011, SEC issued their certificate of incorporation. After 6 years, Mr. Yoso, their potential investor, asked when the corporation does acquired its judicial personality. A, B, C, D, E, F, G and H are arguing with one another as to when is the birthday of their corporation. Which is correct on the following statements? a. Corporation Code of the Philippines (Batas Pambansa Blg. 68) took effect on May 1, 1980. Therefore, all corporations acquire their judicial personality on the said date. b. Malaya Corporation acquired its judicial personality on the execution of their agreement to form a corporation which is on December 26, 2010. c. The corporation is created when SEC issue its certificate of incorporation on May 3, 2011. d. The SEC issues a notice of issuance of the certificate of incorporation, in which the corporation obtained its judicial personality. 47. What is the required vote for declaration of stock dividends? a. Approval by at least majority vote of the Board of Directors b. Approval by at least majority vote of the Board of Directors and ratification by stockholders representing at least majority of the outstanding capital stock. c. Approval by stockholders representing at least 2/3 of the outstanding capital stock. d. Approval by at least majority vote of the Board of Directors and ratification by stockholders representing at least 2/3 of the outstanding capital stock. 48. A, B, C, D, E, W, X, Y, and Z are the directors of Teudoong Corporation. If Z abandoned his office, W’s term expired, X died, and Y was removed by 2/3 votes of OCS, who will fill up the vacancies? a. Z – BOD; W – OCS; X – BOD; Y – OCS b. Z – OCS; W – BOD; X – OCS; Y – BOD c. Z – OCS; W – OCS; X – BOD; Y – BOD d. Z – BOD; W – BOD; X – OCS; Y – OCS e. None of the above.

49. Statement 1 – A corporation can be an incorporator. Statement 2 – A partnership can be a corporator. Statement 3 – An existing corporation can be a stockholder of another corporation. a. Statement 1 is false; Statement 2 is true; Statement 3 is false. b. Statement 1 is true; Statement 2 is false; Statement 3 is true. c. All statements are true. d. All statements are false. e. None of the above. 50. In which of the following instances is TRUE regarding having the right to a stock certificate? a. A stockholder is not entitled to have a stock certificate if his/her stocks is considered delinquent stocks. b. If a stockholder fully paid his/her subscription, only then he/she is entitled to a stock certificate. c. Stock certificate is given to a stockholder on the date of his/her subscription even if not yet fully paid. d. None of the above. 51. Director may be given compensation through any of the following ways, except by: a. The vote of the stockholders representing at least a majority of the outstanding capital stock. b. A provision in the by-laws. c. The vote of the board of directors if the compensation is a reasonable per diem. d. The vote of the board of directors if the compensation is other than per diems. 52. X Corp. operates a call center that received orders for pizzas on behalf of Y Corp. which operates a chain of pizza restaurants. The two companies have the same set of corporate officers. After 2 years, X Corp. dismissed its call agents for no apparent reason. The agents filed a collective suit for illegal dismissal against both X Corp. and Y Corp. based on the doctrine of piercing the veil of corporate fiction. The latter set up the defense that the agents are in the employ of X Corp. which is a separate judicial entity. Is this defense appropriate? a. Yes, it is not shown that one company completely dominates the finances, policies, and business practices of the other. b. No, the real employer is Y Corp., the pizza company, with X Corp, serving as an arm for receiving its outside orders for pizzas. c. No, since the doctrine would apply, the two companies having the same set of corporate officers. d. Yes, since the two companies perform two distinct businesses. e. None of the above.

53. A doctrine in corporation wherein the corporation will be estopped from denying the agents authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority and it holds him out to the public as possessing the power to do those acts. a. doctrine of apparent authority b. doctrine of estoppel

c. doctrine of equity d. trust fund doctrine

54. How many shares are needed to elect 3 directors and assure each of them a seat in the board of directors assuming that the articles of incorporation provide for 11 directors and the corporation has 5,000 shares outstanding and entitled to vote? a. 1,251 shares b. 5,000 shares

c. 1,667 shares d. 1,364 shares

55. A group of Malaysians wanted to invest in the Philippines, insurance business. After negotiations, they agreed to organize “FIMA Insurance Corp.” with a group of Filipino businessmen. FIMA would have a PHP 50 Million paid-up capital, PHP 40 Million of which would come from the Filipino group. All corporate officers would be Filipinos and 8 out of its 10-member Board of Directors would be Filipinos. Can FIMA operate an insurance business in the Philippines? a. No, since an insurance company must have at least PHP 75 Million paid-up capital. b. Yes, since there is substantial compliance with our nationalization laws respecting paidup capital and Filipino dominated Board of Directors. c. Yes, since FIMA’S paid-up capital more than meets the country’s nationalization laws. d. No, since an insurance company should be 100% owned by Filipinos. e. None of the above. 56. In three of the following corporate proposals, a dissenting stockholder has the right to surrender his shares of stock to the corporation and demand for the payment of their fair market value. Which is the exception? a. b. c. d.

Entering into management contract with another corporation Investment of corporate funds in another corporation or business Shortening or extending the corporate term Sale, mortgage or disposition of all or substantially all of the corporate assets

57. SD Corp. has a corporate term of 40 years under its Article of Incorporation or from June 1, 1960 to June 1, 2000. On June 1, 1991 it amended its Articles of Incorporation to extend its life by 10 years from June 1, 2000 to June 1, 2010. The extension was made earlier than 5 years prior to its original expiration date, but SEC approved its amendment because it has a justifiable reason. On June 1, 2009, however, SD Corp. decided to extend its term by 2 years or until June 1, 2012. Both 1991 and 2009 amendments were approved by majority vote of its Board of Directors and ratified in a special meeting by its stockholders representing at least 2/3 of its outstanding capital stock. The SEC, However, disapproved the 2009 amendment on the ground that it was made 1 year prior instead of 5 years prior to its expiration. What is the reason SEC’s disapproval? a. Because SD Corp. had already extend its term before and it cannot extend more than once throughout its corporate existence. b. Any amendment affecting corporate term cannot be made later than 5 years prior to the corporation’s expiration date. c. Since a corporation can only have a corporate life of 50 years in any one instance. d. None of the above. 58. Sana, a director of KDY Corporation, issued a stock to Dahyun, her best friend, amounting to PHP 100,000.00. Dahyun paid only PHP 80,000.00 for the share of stocks and told Sana to consider that her shares to be fully paid as they were best friends. Sana, as told by her best friend, considered Dahyun’s shares to be fully paid. But a few months after the transaction, the agreement between the two was detected. In such case, Dahyun is liable for the difference in amount of PHP 20,000.00. But Dahyun insisted that Sana should also be liable. Is Dahyun correct with her statement? a. Yes, because any director or officer of a corporation consenting to the issuance of wanted stocks shall be solidarily liable with the stockholder. b. No, because Sana did not pay the amount according to the fair value and that she should be the only one liable. c. No, only Sana should be liable because she consented the issuance of stock for a consideration less than its par value and considered it as fully paid. d. None of the above. 59. The articles of incorporation of SaiDa Corporation provide for an authorized capital stock of PHP 1,000,000.00 divided into 10,000 share each having a par value of PHP 100.00. At the time of incorporation, 25% of the authorized capital stock was subscribed of which 25% was paid. In its first year of operation the corporation obtained a loan of PHP 400,000.00 which it used to buy equipment of the same amount. During the same period, the corporation posted a net profit of PHP 100,000.00. How much is the Legal Capital of the corporation? a. PHP 100,000 c. PHP 350,000 b. PHP 400,000 d. PHP 250,000

60. Statement 1 – A “De jure” corporation is also called the legitimate corporation. Statement 2 – The Corporate President is the repository of the corporate powers. a. Statement 1 is false; Statement 2 is true. b. Statement 1 is true; Statement 2 is false. c. Both statements are true. d. Both statements are false. V. COOPERATIVES 61. Which of the following does not necessarily characterize a cooperative? a. Voluntary involvement c. Autonomy b. A common bond of interest d. Absence of capital 62. A cooperative organized by minors shall be considered a ________ cooperative. a. Youth c. Laboratory b. Minor d. Young 63. Duly registered cooperatives shall have what extent of liability? a. Limited c. None at all b. Unlimited d. To the extent fixed by its by-laws 64. A single-purpose cooperative may transform into a multi-purpose cooperative only after at least how many years of operations? a. 5 c. 4 b. 3 d. 2 65. Which of the following is not a qualification for membership to a primary cooperative? a. Natural born resident citizen b. Residing or working in the intended area of operation c. A common bond of interest d. Of legal age 66. What is the maximum limit on the share ownership of a member in a cooperative? a. 25% of the share capital of the cooperative b. 5% of the share capital of the cooperative c. 10% of the share capital of the cooperative d. 20% of the share capital of the cooperative

67. What is the required vote for termination of membership of a member of a cooperative? a. At least vote of all cooperative members with voting rights b. At least the majority vote of all members of the board of directors and ratification by at least 3/4 of cooperative members with voting rights c. At least the majority vote of all members of the board of directors d. At least majority vote of all members of the board of directors and ratification by at least 2/3 of cooperative members with voting rights 68. Any merger or consolidation of cooperatives shall be effective upon: a. The date indicated in the articles of merger and consolidation b. The issuance of the certificate of merger and consolidation by the CDA c. The election of the directors of the merged and consolidated cooperatives d. The filling of the articles of merger and consolidation with the CDA 69. What is the required vote for the amendment of the provisions of Articles of Cooperation of a Cooperative? a. At least of all members with voting rights b. At least 2/3 of all members with voting rights c. At least a majority of all members with voting rights d. At least 2/3 of all regular members and associate members 70. Cooperatives with accumulated reserves and undivided net savings of not more than shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature a. P1 million c. P10 million b. P3 million d. P5 million 71. It is a cooperative the members of which are secondary cooperatives a. Tertiary c. Federation b. Union d. Primary 72. It is where the direction and management of the affairs of the cooperative shall be vested a. Office of the President c. General assembly b. Executive committee d. Board of directors 73. A cooperative is intended to be established with authorized capital stock P100,000 and actual subscribed capital stock of P40,000. What is the minimum paid up capital of this proposed cooperative? a. 10,000 c. 25,000 b. 15,000 d. 5,000

74. Which of the following is an objective of a cooperative? a. To teach members of inefficient ways of doing things in a cooperative manner b. To provide minimal social and economic benefits to its members c. To provide goods and services to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing, and risk-sharing d. To allow the higher income and more privileged groups to increase their ownership in the wealth of the nation 75. Where no creditors are affected, the cooperative may be voluntarily dissolved by a ___ vote of the board of directors and by a resolution duly adopted by the affirmative vote of at least ___ of all the members with voting rights, present and constituting a quorum at a meeting to be held upon call of the directors. a. 2/3; 3/4 c. Majority; 2/3 b. Majority; 3/4 d. 3/4; 3/4

VI. NEGOTIABLE INSTRUMENTS 76. The following is not a requisite of a negotiable instrument a. It must be in writing signed by the maker or drawer b. Must be payable to order or bearer c. Must be payable on demand or at a fixed future time d. Must contain an unconditional promise or order to pay a sum certain money 77. A check differs from a bill of exchange because a check; a. Is required to be presented for acceptance in certain cases b. Is always payable on demand c. May be drawn against a person other than a bank d. Does not require the drawer to have funds with the drawee 78. Which of the following is a valid address to a drawee so as to make the instrument negotiable? a. “To Jasmine Walter and another drawee named Warren.” b. “To Jasmine Walter or Warren Mars.” c. “To Jasmine Walter, or in his absence, Warren Mars.” d. “To Jasmine Walter and Warren Mars.”

79. The following constitute material alterations, except for one: a. Alteration of the medium of currency in which payment is to be made b. Alteration on the serial number of a check c. Alteration of the date d. Alteration of the sum payable either principal 80. Who of the following is party with primary liability? a. drawer b. endorser

c. person negotiating by mere delivery d. Maker

81. A promissory note which does not have the words “or order” or “or bearer” will render the promissory note non-negotiable, and therefore? a. The holder can become holder in due course b. The note can still be assigned and the maker made liable c. It will render the maker liable d. The promissory note can just be delivered and made the maker will still be liable 82. A promissory note which is undated to be a. dated as of the date of issue b. promissory note is invalid because there is no date c. dated as of the date of the first indorsement d. dated on due date. 83. In a negotiable instrument, when the sum is expressed both in numbers and in words and there is discrepancy between the words and the numbers a. This will render the instrument invalid b. The instrument becomes void because of the discrepancy c. The sum expressed in words will prevail over the one expressed in numbers d. The sum expressed in numbers will prevail over the one expressed in words 84. Which of the following is a real defense? a. Illegality of contract expressly expressly so declared in a statute b. Illegality of the contract because it was issued for unlawful consideration c. Renunciation before maturity d. Fraud in inducement. 85. Which of the following is a common liability of the drawer maker and acceptor? a. The engagement on the payment of the instrument according to its tenor b. The admission that instrument covered with sufficient funds c. The admission of the existence of the payee and his capacity of the payee to indorse d. The admission of the genuineness of the signature of any indorser

86. A draws a bill payable to B or order with X, as the drawee. The bill was successively endorse to C, D, E, and F, holder. X does not pay and F has duly protested non-payment. Y pays for the honor of C. Which of the following statement is wrong? a. D is discharged c. C is discharged b. E is discharged d. Y can ask reimbursement from A 87. A makes a promissory note payable to the order of B. B indorses the note specially to C, C indorses the note in blank and delivers the same to D. D specially indorses the note to E, E specially indorses the note to F, F indorses the note in blank and delivers it to G, G specially indorses the note to H, holder. Whose indorsement may H strike out? a. The special indorsement of G to H c. The special indorsement of B to C b. The blank indorsement made by C d. The blank indorsement made by F 88. Presentment for acceptance is required when a. the bill requires it b. the bill is payable after sight c. all of them d. the bill is drawn payable elsewhere than the residence of the drawee 89. Protest is required when this bill is dishonored: a. domestic/local b. foreign

c. all of the above d. trade acceptance

90. The words are equivalent to bearer except for one. a. Assignee or holder b. To X or his collector or to bearer B c. Possessor or on return of the certificate properly endorsed d. Order of the bearer VII. SPECIAL LAWS 91. The following are powers of the PDIC, except for: a. Power to secure corrective actions from the Monetary Board b. Power to underwrite and advance costs of litigation c. Power of examination of banks d. Power to exercise taxation and eminent domain 92. Which of the following companies is exempted by AMLA from reporting reportable and suspicious transactions to Anti-Money Laundering Council? a. Auditing firm rendering assurance engagement b. Casino c. Remittance companies d. Holding companies

93. Statement No. 1:Any person who makes or draws and issues any check knowing at the time of issue that he does not have sufficient funds with the drawee bank, or having sufficient funds but fails to keep sufficient funds to cover full payment of the check presented, shall be punished by imprisonment or by fine or both such fine and imprisonment at the discretion of the court Statement No. 2:Where the check is drawn by a corporation, company or entity, the company manager, secretary, and treasurer shall be deemed liable under B.P. 22 a. b. c. d.

Both are false Both are true Second is true, first is false First is true, second is false

94. Violations of the bank secrecy law subject the offender, upon conviction, to which of the following? a. Imprisonment of not more than two years or fine of not more than P40,000 or both b. Imprisonment of not more than five years or fine of not more than P40,000 or both c. Imprisonment of not more than five years or fine of not more than P20,000 or both d. Imprisonment of not more than two years or fine of not more than P20,000 or both 95. Banks that are given all such power necessary to engage in commercial banking in addition to general corporate powers accommodations and guarantees that may be extended by a bank to any person, partnership, association corporation or other entity shall at no time exceed ____ of the net worth of such bank a. 30% c. 35% b. 25% d. 20% 96. Mark manufactured rubber shoes under the brand name of Koby. He did not register it, but it became popular. Years later, Nelson manufactured rubber shoes using the same design and color as Koby but named it as Shak. Mark filed a case against Nelson. Nelson contended that the name Koby is not protected. Rule. a. Nelson is not liable since the name is not registered b. Nelson is not liable because he gave it a different name c. Nelson is liable since the name is already popular d. Nelson is liable but not for infringement

97. Under Republic Act 6426, Foreign Currency Deposit Act, what is the only exception provided by such law from the absolute confidentiality of foreign currency deposit? a. Upon written permission or consent in writing by the depositor. b. In cases of impeachment of the President, Vice President, members of the Supreme Court and Ombudsman for culpable violation of the Constitution, treason, bribery or betrayal of public trust. c. In cases where the money deposited or invested is the subject matter of the litigation. d. Upon order of a competent court in cases of bribery. 98. What is a well-known mark? a. a mark that is popular and known all over the world b. a mark which is declared as such by a judge based on a certain given criteria c. a mark that is so declared by a competent and authoritative business based on its profitability d. none of the above 99. The prescribed ceilings for SBL shall include: a. The direct liability of the maker or acceptor of paper discounted with or sold to such bank and the liability of a general indorser, drawer or guarantor who obtains a loan or other credit accommodation from or discounts paper with or sells papers to such bank b. In the case of a corporation, all liabilities to such bank of all subsidiaries in which such corporation owns or controls a majority interest c. In the case of an individual who owns or controls a majority interest in a corporation, partnership, association or any other entity, the liabilities of said entities to such bank d. All of the answers are correct 100. This occurs whenever a deposit account with an outstanding balance of more than the statutory maximum amount of insured deposit maintained under the name of persons is broken down and transferred to two or more accounts in the name of persons or entities who have no beneficial ownership on transferred deposits in their names within 120 days immediately preceding or during a bank-declared bank holiday, or immediately preceding a closure order issued by the Monetary Board to await of the maximum deposit insurance coverage a. Inter-branch deposits b. Insured deposit c. Transfer deposit d. Splitting of deposit

101. DOSRI should be in the regular course of business, and the dealings should be upon which terms? a. Double those offered to others b. Not less favorable to the bank than those offered to others c. Not more favorable to the bank than those offered to others d. Exactly similar to those offered to others 102. __________ Include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan associations, and trust corporations, as after this defined, in favor of any person known to be dead or who has not made further deposits or withdrawals during the preceding ten years or more a. Peso deposits c. Unclaimed balances b. Deposits insurance d. Foreign currency deposits 103. This means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or is obliged to give credit to a commercial, checking, savings, time or thrift account a. Trust fund c. Deposit b. Transfer deposit d. Insured deposit 104. Any visible sign capable of distinguishing goods or services of an enterprise and shall include a stamped or marked container of goods would be a: a. logo c. geographical indications b. trademark d. lay-out design 105. Entities engaged in the lending of funds obtained in the form of deposits from the public a. Investment company c. Banks b. Pawnshop d. Lending institution VIII. SALES 106. A clause providing that the mortgage will automatically own the property mortgaged if the debt is not paid at maturity is a. Upset price c. Payment by cession b. Pactum commissorium d. Dacion en pago

107. A sold to B his cow for P 5,000. No date is fixed by the parties for the performance of their respective obligations. The obligations of A is a. b. c. d.

To deliver the cow within the reasonable time from the perfection of the contract To rescind the contract as there is not time fixed for the delivery and payment To deliver the cow upon the payment by B of P 5,000 To deliver the cow immediately as there is a perfected contract

108. If A sells to B a fountain pen, the giving by A to B of the fountain pen is a. Actual tradition b. Symbolical tradition

c. Constructive delivery d. Tradition longa-manu

109. In a contract of sale executed by S and B, appears S sold his motor vehicle to B for P50,000. It turned out however, S has three motor vehicles. Gallant valued P80,000, Hi-ace Van valued P70,000. and a jeep valued at P60,000. Which of the following is correct? a. b. c. d.

The parties can ask for interpretation because the word motor vehicle is ambiguous. The contract shall be reformed because there was mistake. There is no contract. The parties can ask for annulment of the contract.

110. A and B executed a contract on January 12, 2013 where A agreed to sell and B agreed to buy A’s only fighting cock. The agreement provides that the delivery of the cock is to be made on June 24, 2013 at which time B would pay the agreed price of P2,000. On June 9, 2013, A sold the same fighting cock to C. B asks for your advice, assuming there is no delivery yet of the cock to C 1st Advice: B may sue for damages, on June 9, 2013 without the need of demanding delivery because it is useless, the object was sold to a third person acting in good faith 2nd Advice: B may sue for damages after the arrival of the stipulated period, that is June 24, 2013 because the right of B to sue will only accrue on June 24, 2013 a. b. c. d.

First is wrong, second is correct Both advice are wrong Both advice are correct First is correct, second is wrong

111. In a true pacto de retro sale, the title and ownership of the property sold are immediately vested in the vendee a retro subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated period. This is known as a. equitable mortgage b. equity of redemption

c. legal redemption d. conventional redemption

112. When things are delivered to the buyer on approval, trial, or satisfaction, the ownership passes to the buyer: a. Upon the return of the things to the seller. b. Upon conception of the sale

c. Upon delivery of the things d. Upon meetings of minds

113. Dacion en pago as distinguished from sale: a. b. c. d.

There is no pre-existing obligation. The object is always existing and specific. The cause is the price. There is greater freedom in fixing the price.

114. A, B and C are co-owners of A parcel of land pro-indiviso. A sold his share to B in an absolute deed of sale. Which is correct? a. b. c. d.

C may exercise his right of redemption on the interest of A sold to B. C may redeem only 1/2 of the share sold by A to B. C cannot exercise the right of redemption since the sale was made to a co-owner. The deed of sale between A and B is void since it was not made in favor of a third person

115. In June 2015, A obtained a loan from B and executed with C as solidary co-maker a promissory note in favor of B for the sum loaned which shall be payable ten equal monthly payments with interest. To secure the payment of the loan, A put up as security a chattel mortgage on his car. Because of the failure of A and C to pay the loan, the mortgage was extrajudicially foreclosed. B acquired the car as the highest bidder at P1 million although the loan was P1.5 million is now demanding payment from C. Is C liable for said deficiency? a. b. c. d.

C is not liable because of the provision on Recto Law C is liable for the deficiency he being a solidary debtor. C is liable only after A has failed to pay the deficiency. C is liable but only one half of the deficiency as co-maker.

116. Analyn advertised in the newspaper her parcel of land wanting to sell the same for P1M. Banny personally went to the former with cash in hand to buy the subject parcel of land. In this case, a. Analyn cannot evade her obligation as seller to Banny b. Analyn can still reject Banny as an offered in the purchase of land c. Analyn cannot anymore reject Banny as buyer of her land d. Analyn can reject the offer of Banny unless she properly consigns with the court her payment for the land 117. Which phrase most accurately completed the statement-if at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost: a. The buyer bears the risk of loss. b. The buyer may withdraw from the contract, c. The contract shall be without any effect. d. The seller bears the risk of loss. 118. If the price is simulated, the sale is void, but the act maybe shown to have been in reality a donation, or some other act of contract. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no period for the payment has been fixed in the contract. a. b.

True, true False, True

c. d.

True, false False, false

119. The right of the creditor to exercise all the rights of his debtor to satisfy his claim, except rights which are inherent and personal on the part of the debtor a. action redhibitoria c. action subrogatoria b. accion pauliana d. accion qunti minoris 120. Atoy sold to Bitoy a residential lot to be containing an area of 1,000 square meters at P1,000 per square meter. In this connection, which of the following statements is correct? a. If the lot should contain 950 sq. meters only, B can ask for a proportionate reduction of the price and rescission. b. If the lot should contain 900 sq. meter, B can choose between proportionate reduction of the price but not rescission of the sale. c. If the lot should contain 1,200 sq. meters, B cannot reject the excess and must pay additional price at P1,000 per square meter d. If the lot should contain 900 sq. meters, B can choose between proportionate reduction of the price or rescission of the contract

IX. AGENCY 121. An agent acting in the name of the principal shall not be liable to third person with whom he contracts: a. When he exceeds the limit of his authority without giving the third person sufficient notice of his powers. b. When the third person knew of the agent’s lack of authority but the agent did not undertake to get the principal’s ratification. c. When the third person knew of the agent’s lack of authority and the agent undertook to get the principal’s ratification but failed to get the same. d. When he expressly binds himself. 122. Consider the following statements: I. An agency may be constituted in the common interest of the principal and the agent. II. An agency may be constituted in the interest of the third person who has accepted the stipulation in his favor. The death of the principal extinguishes the agency, as a note. However, the death of the principal does not extinguish and agency if the reason why the agency was created is: a. Reason II only b. Reason I only

c. Either Reason I or Reason II d. Neither Reason I or Reason II

123. P, 25 years old, appointed A, 17 years old, as his agent to sell certain goods for P20,000.00. Thereafter, A sold the goods to B for the said amount. P, however, learned that the price of the goods had increased to P22,000.00 so he sought to disaffirm the sale made by A to B, and brought an action to recover the goods from B on the ground that A’s act was voidable, A being a minor, and hence, could not be an agent. Decide, a. The sale is valid because the principal is capable. b. The sale is voidable, because A is a minor. c. The sale is void, because A is a minor and therefore, cannot be an agent. d. The sale is unenforceable, because A exceeded his authority. 124. An agency couched in general terms comprises: a. Both acts of administration and ownership b. Acts of ownership c. Acts of management d. Acts of strict dominion

125. P and M appointed A to sell the land they own in common with the stipulation that A will advance the necessary funds to execute the agency. Who is liable to A for reimbursement of all the funds? a. P and M will share equally and therefore A may demand one-half only from either. b. P and M shall not be liable because the expenses were incurred as a consequence of the performance of the agent’s obligation. c. Neither shall be liable since it was stipulated that A shall advance the funds to execute the agency. d. Either or both shall be liable for the entire amount. 126. A, a duly authorized agent of P, wrote a letter to X on March 1, 2013 offering to sell P’s car for P200,000.00 cash. On March 3, 2013, X wrote a letter to A stating that he accepted all the terms of the offer, which letter was received by A on March 5, 2013. Before A could relay such acceptance to P. P died in a vehicular accident on March 6, 2013. a. The contract was not perfected because P, the real party to the sale, died before the acceptance came to his knowledge. b. The contract was perfected on March 5, 2013. c. The contract was perfected on March 3, 2013. d. The contract was perfected on March 1, 2013. 127. If both principal and agent sold the land of the principal to two buyers, which of the latter shall be the owner? a. First possessor in good faith b. First registrant in good faith c. Prior date contract d. Oldest title in good faith 128. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in a public instrument, otherwise the sale shall be void Agency is presumed to be without compensation unless there is proof to the contrary.

a. Both are true b. Both are false

c. Only the first statement is true d. Only the second statement is true

129.

When two or more principals appoint an agent for a common transaction, neither may revoke the power without the consent of the other. If the principal fails to pay the agent his commission, the latter may retain pledge the things belonging to the principal. a. First is false, second is true b. First is true, second is false

c. Both are true d. Both are false

130. A contract whereby a person binds himself to render some service or to do something in representation or in behalf of another, with the consent and authority of the latter is known: a. Contract of agency c. Contract for lease of service b. Contract for a piece of work d. Contract of agency to sell 131. Not a mode of extinguishing an agency a. Death of the principal, and the agency is for the interest of either the principal or agent b. Dissolution of the firm or corporation which entrusted or accepted the agency c. Insanity of the principal or agent d. Accomplishment of agency 132. X, Y and Z, co-owners of a house and lot, appointed A to sell the house and lot at a price of not less P1,500,000 cash with A being entitled to a commission of 10% of the selling price. A was able to sell the house for P1,800,000 cash. How much commission may A collect from X? a. 60,000 c. 50,000 b. 150,000 d. 180,000 133. Miguel appointed Michael as commission agent to sell Miguel’s goods for P10,000.00 cash. Michael, however, sold the goods on credit for P11,000.00 without Miguel’s consent. Based on the foregoing facts, which of the following options are available to Miguel? I. Miguel may demand immediate payment in P11,000 cash. II. Miguel may demand immediate payment in P10,000 cash. However, Michael shall be entitled to keep the excess of P1,000 when he collects the price of P11,000 III. Miguel may ratify the sale on credit for P11,000 and wait for the amount to be collected. a. Either I or II b. Either II or III

c. I only d. Either I or III

134. P authorized A in a special power of attorney to sell his parcel of land. A sold the land to C without having knowledge that prior to sale to C, P had already been dead for a week. C also was not aware of the extinguishment of the agency by the principal’s death. Decide: a. The sale is void because the agent had no more authority to sell the land due to the principal’s death. b. The sale is valid but annullable by the heirs of the principal because the death of the principal has extinguished the agency. c. The sale is valid although the principal has died before the contract was entered into by the agent in the name of the principal. d. The sale is valid but unenforceable because of the agent acting without authority from his principal who has died. 135. P, a singer, authorized A, also a singer, to look for a nightclub where P could sing. A presented herself, not P, as a singer to the X club which engaged her services to sing nightly for two months. Based on the foregoing information, which of the following statements is correct? a. X Club has a right of action against P. b. P has a right of action against X Club. c. The contract between A and X Club is void because P was not a party thereto. d. The contract is between A and X Club and is valid. X. CREDIT TRANSACTIONS 136. Commodatum as distinguished from mutuum a. Ownership is transferred to the borrower b. Maybe gratuitous or onerous c. Object or thing loaned must be returned by the borrower d. Object is money or consumable or fungible thing 137. Amador obtained a loan of P300,000 from Basilio payable on March 25, 2016. As security for the payment of his loan, Amador constituted a mortgage on his residential house and lot in Basilios favor. Cacho, a good friend of Amador, guaranteed and obligated himself to pay Basilio, in case Amador fails to pay his loan at maturity.If Amador fails to pay Basilio his loan on March 25, 2016, can Basilio compel Cacho to pay? a. Yes, Basilio can compel Cacho to pay because the nature of Cachos undertaking indicates that he has bound himself solidarily with Amador. b. No, Basilio cannot compel Cacho to pay because as guarantor, Cacho can invoke the principle of excussion, all the assets of Basilio must first be exhausted. c. No, Basilio cannot compel Cacho to pay because Basilio has not exhausted the available remedies against Amador. d. Yes, Basilio can compel Cacho who bound himself to unconditionally pay in case Amador fails to pay; thus the benefit of excussion will not apply.

138. Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to Homer for delivery within a month, although the period for delivery was not guaranteed. Despite Garrys efforts to deliver on time, transportation problems and government red tape hindered his efforts and he could only deliver after 30 days. Homer refused to accept the late delivery and to pay on the ground that the agreed term had not been complied with. As lending investor, Gary granted a P1,000,000 loan to Isaac to be paid within two years from execution of the contract. As security for the loan, Isaac promised to deliver to Gary his Toyota Innova within 7 days, but Isaac failed to do so. Gary was thus compelled to demand payment for the loan before the end of the agreed two-year term. Can Gary compel Isaac to pay his loan even before the end of the two-year period? a. No. Gary cannot compel Isaac to immediately pay the loan. The delivery of the car as security for the loan is an accessory contract; the principal contract is still in the P1 million loan. Thus, Isaac can still make use of the period. b. No, Gary cannot compel Isaac to immediately pay the loan. Equity dictates that Gary should have granted a reasonable extension of time for Isaac to deliver his Toyota Innova. It would be unfair and burdensome for Isaac to pay the P1 million simply because the promised security was not delivered. c. Yes, Gary can compel Isaac to immediately pay the loan. Non-compliance with the promised guaranty or security renders the obligation immediately demandable. Isaac lost his right to make use of the period. d. Yes, Gary can compel Isaac to immediately pay the loan. The delivery of the Toyota Innova is a condition for the loan. Isaacs failure to deliver the car violated the condition upon which the loan was granted. It is but fair for Gary to demand immediate payment. 139. In real estate mortgage, the mortgagor can sell the mortgaged property a. b. c. d.

With the consent of the mortgagee in writing Even without the consent of the mortgagee Only with the consent of the mortgagee in writing or orally Only after paying his obligation to the mortgagee

140. The following are considered elements of the contracts of pledge and mortgage. Which is the exception? a. b. c. d.

Both are accessory contracts The thing maybe appropriated if the debtor cannot pay The pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged The pledgor or mortgagor must have the free disposal of the thing pledged or mortgaged

141. Lyra maintains a savings deposit in the amount of P2,000,000 with PNB Bank. Lyra also has obtained a loan from PNB Bank in the amount of P2,000,000. In the case of default, a. Deposit accounts are usually earmarked for specific purpose hence off setting is not legally possible. b. Set-off is not possible because legal compensation is not allowed in banking transaction. c. PNB Bank can set-off the loan from the savings account being maintained by Lyra with PNB Bank d. Offsetting is not possible because the obligation of Lyra is a simple loan. 142. A pledged his watch to B for P20,000. A failed to pay his obligation. B sold it at public auction for P18,000. Can B recover the deficiency? a. Yes, if there is stipulation c. Yes, even without stipulation b. No, even if there is stipulation d. No, only if there is stipulation 143. Which of the following cannot be the object of mortgage? a. land owned by the mortgagor b. apartment to be acquired by the mortgagor c. car owned by the mortgagor d. building owned by the mortgagor but under lease contract 144. In 2012, D borrowed P.4M from C, collateralized by a pledge of shares of stock of X corporation worth P.8M. In 2013, because of the economic crisis, the value of the shares pledged fell to only P.1M. Can C demand that D surrender the other shares worth P.7M? a. Yes, because the collateral as security for the loan was worth P.8M and therefore the other shares of P.7M must be delivered. b. No, because the right of C is to demand payment of the loan. c. No, because the right of C is to demand another thing worth P.8M. d. No, because the only right of C is to sell the shares at the public auction and keep the proceeds as security for the loan. 145. S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughters tuition fee, borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B failed to pay C resulting into the auction sale of the bracelet in favor of D for P10,000 only. Which of the following statements is correct? a. If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet from S, ownership will not pass to him (D). b. C can no longer recover the deficiency of P5,000 from B. the pledge, together with the sale is valid. The voidable title of B is valid because it is not yet annulled. c. The deficiency of P5,000 may still be recovered by C from B if there is a stipulation to this effect. d. The title of B over the bracelet is not valid, hence the pledge, as well as the sale of said bracelet is likewise defective. The pledgor must be the owner of the thing pledged.

146. D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid even if the mortgagor is not the debtor? a. Yes, provided it is in writing and registered. b. No, unless the mortgagor is a co-debtor. c. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the property mortgaged or pledged. d. No, the mortgagor/plegdor must be the debtor himself. 147. D is indebted to C in the amount of P200,000 and delivers to C his diamond ring by way of pledge. If D sells the same diamond ring to T, when will T acquire ownership of the same? a. From the time T pays the price to D b. From the time the sale is perfected between D and T c. From the time T obtains actual possession of the diamond ring d. From the time C consents to the sale between D and T 148. Objects of pledge, except: a. Negotiable instruments b. Piece of land

c. Shares of stocks d. Pieces of jewelry

149. Which phrase best completes the statement, A chattel mortgage can be constituted to secure a. obligations existing at the time the mortgage is constituted b. obligations both past and future c. past obligations only d. future obligations only 150. D borrowed P100,000 from C and entered into a chattel mortgage involving his land to secure the payment of his loan. D failed to pay the loan at maturity date. Which of the following statements is correct? a. C may still foreclose the chattel mortgage on the land on the basis of doctrine of estoppel. b. Third person directly affected by the contract of chattel mortgage is not allowed to file an action for declaration of nullity because of relativity of contract. c. C cannot foreclose the chattel mortgage over the land because the subject matter must be a movable property. d. The contract of chattel mortgage is null and void in so far as the contracting parties are concerned because the subject matter is a land.

- END OF BUSINESS LAW QUESTIONNAIRE -

ANSWER KEY OF BUSINESS LAWS

I.

II.

Obligations 1. A. Obligor 2. E. Law 3. A. Ordinary delay 4. B. Yes, the generic thing is delimited 5. D. A cannot recover because the payment partakes of natural obligation. 6. C. Joint Obligation 7. D. Payable on December 24, 2013 8. C. When the law or the obligation expressly so provides. 9. B. 6,000 10. B. The obligation is valid although potestative because they depend upon the sole will of the donee. 11. C. 20,000 12. D. Payment by cession 13. E. Death of creditor 14. B. Anne is not liable because Anne does not know the insolvency of Sofia at the time of delegation and neither was the insolvency of public knowledge 15. D. No, because the obligation has already prescribed Contracts 16. A. Construction contract of building 17. B. The contracting parties are bound by the determination of performance by a third person from the moment a third person decided 18. D. Consummation 19. D. Rescissible contract 20. D. Valid because lesion or inadequacy of cause as a rule does not invalidate contract, unless there is vices of consent. 21. D. No, because the creditor can collect the credit due to him 22. D. No, because a third person cannot assail a voidable contract. 23. B. Legally binding on both parties 24. A. A may ask for its correction 25. A. Unenforceable 26. C. A mutual promise to marry 27. D. Enforceable even if not in writing, having been ratified 28. D. Contract where the creditor was damaged by the act of the debtor who intended to defraud him. 29. C. The inexistence can be assailed by third person 30. C. The contract to work without pay as a servant until the debt is paid is void

III.

IV.

Partnership 31. D. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits. 32. C. Real, in that the partners must deliver their contributions in order for the partnership contract to be perfected 33. B. Managing 34. C. All of A, B, and C are liable pro rata to the creditors. 35. C. Universal partnership of profits 36. B. Partner A can be required to share the P1,500 with B and C 37. C. If the partnership name of a limited partnership has no Ltd or limited, the partnership is a non-existing partnership. 38. C. Limited partner may not constitute his assignee as substituted limited partner. 39. A. No, because the agreement was merely oral and executory 40. D. Right to share in the profit and surplus. 41. C. Void 42. D. Non-fungible things contributed so that only their use and fruits will be for the common benefit 43. D. All of the partners 44. B. Consent 45. C. To inspect and copy partnership books. Corporations 46. C. The corporation is created when SEC issue its certificate of incorporation on May 3, 2011. 47. D. Approval by at least majority vote of the Board of Directors and ratification by stockholders representing at least 2/3 of the outstanding capital stock. 48. A. Z – BOD; W – OCS; X – BOD; Y – OCS 49. E. None of the above 50. B. If a stockholder fully paid his/her subscription, only then he/she is entitled to a stock certificate. 51. D. The vote of the board of directors if the compensation is other than per diems. 52. C. No, since the doctrine would apply, the two companies having the same set of corporate officers. 53. A. Doctrine of apparent authority 54. A. 1,251 shares 55. A. No, since an insurance company must have at least PHP 75 Million paid-up capital. 56. A. Entering into management contract with another corporation 57. C. Since a corporation can only have a corporate life of 50 years in any one instance. 58. A. Yes, because any director or officer of a corporation consenting to the issuance of wanted stocks shall be solidarily liable with the stockholder. 59. D. PHP 250,000 60. B. Statement 1 is true; Statement 2 is false.

V.

VI.

VII.

Cooperatives 61. D. Absence of capital 62. C. Laboratory 63. A. Limited 64. D. 2 65. A. Natural born resident citizen 66. C. 10% of the share capital of the cooperative 67. C. At least the majority vote of all members of the board of directors 68. B. The issuance of the certificate of merger and consolidation by the CDA 69. B. At least 2/3 of all members with voting rights 70. C. P 10 million 71. A. Tertiary 72. D. Board of Directors 73. B. 15,000 74. C. To provide goods and services to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, costsharing, and risk-sharing. 75. B. Majority; ¾ Negotiable Instruments 76. C. Must be payable on demand or at a fixed future time 77. B. Is always payable on demand 78. D. “To Jasmine Walter and Warren Mars.” 79. B. Alteration on the serial number of a check 80. D. Maker 81. B. The note can still be assigned and the maker made liable 82. A. dated as of the date of issue 83. C. The sum expressed in words will prevail over the one expressed in numbers 84. B. Illegality of the contract because it was issued for unlawful consideration 85. C. The admission of the existence of the payee and his capacity of the payee to indorse 86. C. C is discharged 87. A. The special indorsement of G to H 88. C. All of them 89. B. Foreign 90. B. To X or his collector or to bearer B Special Laws 91. D. Power to exercise taxation and eminent domain 92. A. Auditing firm rendering assurance engagement 93. D. First is true, second is false 94. C. Imprisonment of not more than five years or fine of not more than P20,000 or both 95. C. 35% 96. D. Nelson is liable but not for infringement

VIII.

IX.

97. A. Upon written permission or consent in writing by the depositor. 98. B. a mark which is declared as such by a judge based on a certain given criteria 99. D. All of the answers are correct. 100. D. Splitting of deposit 101. B. Not less favorable to the bank than those offered to others 102. C. Unclaimed balances 103. C. Deposit 104. B. Trademark 105. C. Banks Sales 106. B. Pactum commissorium 107. C. To deliver the cow upon the payment by B of P 5,000 108. A. Actual tradition 109. C. There is no contract. 110. A. First is wrong, second is correct 111. D. conventional redemption 112. D. Upon meeting of minds 113. B. The object is always existing and specific. 114. C. C cannot exercise the right of redemption since the sale was made to a co-owner. 115. B. C is liable for the deficiency he being a solidary debtor. 116. B. Analyn can still reject Banny as an offered in the purchase of land 117. C. The contract shall be without any effect. 118. A. True, true 119. C. Action subrogatoria 120. D. If the lot should contain 900 sq. meters, B can choose between proportionate reduction of the price or rescission of the contract Agency 121. B. When the third person knew of the agent’s lack of authority but the agent did not undertake to get the principal’s ratification. 122. C. Either Reason I or Reason II 123. A. The sale is valid because the principal is capable. 124. C. Acts of management 125. D. Either or both shall be liable for the entire amount. 126. B. The contract was perfected on March 5, 2013. 127. B. First registrant in good faith 128. B. Both are false 129. D. Both are false 130. A. Contract of agency 131. A. Death of the principal, and the agency is for the interest of either the principal or agent 132. D. 180,000 133. B. Either II or III

X.

134. C. The sale is valid although the principal has died before the contract was entered into by the agent in the name of the principal. 135. D. The contract is between A and X Club and is valid. Credit Transactions 136. C. Object or thing loaned must be returned by the borrower. 137. C. No, Basilio cannot compel Cacho to pay because Basilio has not exhausted the available remedies against Amador. 138. C. Yes, Gary can compel Isaac to immediately pay the loan. Non-compliance with the promised guaranty or security renders the obligation immediately demandable. Isaac lost his right to make use of the period. 139. B. Even without the consent of the mortgagee 140. B. The thing maybe appropriated if the debtor cannot pay. 141. C. PNB Bank can set-off the loan from the savings account being maintained by Lyra with PNB Bank 142. B. No, even if there is stipulation. 143. B. apartment to be acquired by the mortgagor. 144. D. No, because the only right of C is to sell the shares at the public auction and keep the proceeds as security for the loan. 145. B. C can no longer recover the deficiency of P5,000 from B. the pledge, together with the sale is valid. The voidable title of B is valid because it is not yet annulled. 146. C. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the property mortgaged or pledged. 147. D. From the time C consents to the sale between D and T 148. B. Piece of land 149. A. obligations existing at the time the mortgage is constituted. 150. A. C may still foreclose the chattel mortgage on the land on the basis of doctrine of estoppel.

- END OF RECENSEO 2020 COMPREHENSIVE EXAMINATION REVIEWER -

More Documents from "Camille Castro"