JUAN DE LA CRUZ
BSBA-II HR
True or False. If the statement is TRUE, write T on the space provided. Write F if the statement
is FALSE.
1. Both active income and passive income do not require direct
participation of the taxpayer in earning the income.
Explanation:
2. Final tax generally covers passive income.
3. Capital gains arise from the sale, exchange, and other disposition of any
assets.
4. The technique used to measure income is referred to as an accounting
method. The length of time over which income is reported is referred to
as an accounting period.
5. Regular accounting period are calendar and fiscal.
6. The first accounting period of a starting business will more likely be less
than 12 months.
7. Accrual basis and cash basis are the most common accounting methods
used in practice.
8. Advanced income is an item of gross income for accrual basis taxpayers.
9. Initial payment includes downpayment and installments in the year of
sale.
10. eFPS filers may file manually when there is a BIR system downtime.
Compute the following problems. Underline your answer and show the necessary solutions.
1. Effective March 1, 2017, Jonah, Inc. changed its calendar year to fiscal year ending every
June 30. An adjustment return shall be filed covering the period.
a. March 1 to June 30, 2017
b. January 1 to June 30, 2017
c. January 1 to March 1, 2017
d. January 1 to December 31, 2017
2. During 2017, Klein Corporation changed its accounting period to the calendar year. The
adjustment return shall be filed on or before.
a. April 15, 2017
b. July 15, 2017
c. April 15, 2018
d. July 15, 2018
3. Effective July 2, 2016, Rofelson Company changed its fiscal year ending every March 31
to another fiscal year ending every August 31. An adjustment return shall be filed
covering the period.
a. April 1 to July 2, 2016
b. April 1 to July 1, 2016
c. April 1 to August 31, 2016
d. July 3 to August 31, 2016
4. In 2019, Bright Inc. sold its parking lot for P2,400,000 payable on installment. The lot
was previously acquired for P1,500,00. The buyer has an outstanding unpaid balance of
P1,800,000 as of December 31, 2019, Bright’s year end.
Compute Bright’s Gross income on 2019 using the installment method.
a. P900,000
b. P675,000
c. P225,000
d. P112,500
Solution:
5. Exquisite Corporation sold its old warehouse with carrying amount (tax basis) of
P600,000 for P1,000,000. A downpayment of 15% was collected on July 1, 2019.
Additional P150,000 installment payments were received as of December 31, 2019.
Compute the gross profit to be reported for the year 2019.
a. P60,000
b. P120,000
c. P400,000
d. P450,000
Solution:
6. Lancelot is a dealer of household appliances. He reported the following in 2019 and
2020:
2019 2020
Installment Sales 500,000 800,000
Cost of Installment Sales 250,000 440,000
Collections 300,000 600,000
Lance’s 2020 collection is inclusive of P100,000 accounts from 2019.
Using the installment method, compute Lancelot’s gross income subject to income tax in
2020.
a. P360,000
b. P320,000
c. P275,000
d. P250,000
Solution:
7. The total contact price of the of the project is P1,200,000. This was constructed as
follows:
Year Cost for the year Completion as of year end
2017 P432,000 60%
2018 P184,250 85%
2019 P103,750 100%
The income to be reported in year 2019 under percent of completion method would be
a. P480,000
b. P403,750
c. P136,250
d. P76,250
Solution
8. A taxpayer files his income tax return on October 28, 2018. The deadline for the return
was April 15, 2018. If he has P40,000 net tax due, compute the penalties in the form of
interest.
a. P2,578
b. P2,611
c. P2,867
d. P4,296
Solution
9. Mani Pakyaw failed to pay file his income tax return for the year 2019 which should have
been filed on or before April 15, 2020. The BIR sent him a notice to file his return and
pay his tax on or before July 18, 2020. Mani Pakyaw filed a return showing a basic tax
due of P1,000,000. Compute the total interest penalty.
a. P35,836
b. P37,644
c. P38,555
d. P39,863
Solution
10. Mr. Pakyaw must pay a surcharge of
a. P0
b. P250,000
c. P500,000
d. P1,000,000
Solution
