REPUBLIC OF THE PHILIPPINES

NORTHERN NEGROS STATE COLLEGE OF SCIENCE AND TECHNOLOGY

COLLEGE OF BUSINESS AND MANAGEMENT
OLD SAGAY, SAGAY CITY, NEGROS OCCIDENTAL
(034)722-4169/www.nonescost.edu.ph
ISO 9001:2015
CERTIFIED
Prelim Exam
2nd Semester, AY 2019-2020
INCOME TAXATION - (BACC104)

Name: Total Score:

Year and Section:

Instruction: Read and understand each question carefully. Encircle the letter that corresponds to your
FINAL answer. Strictly no erasure or alteration is allowed.

1. Taxation is the imposition of final charges or other levies upon a taxpayer by a state, such that failure
to pay is punishable by law. The underlined words imply that?
A. The duty to pay taxes is compulsory to the taxpayer.
B. Tax is commonly defined as the lifeblood of the state.
C. Taxes are payable either in the form of cash or property.
D. The failure to pay taxes is subject to criminal and civil charges.

2. Taxation is the imposition of final charges or other levies upon a taxpayer by a state, such that failure
to pay is punishable by law. The underlined words imply that?
A. The duty to pay taxes is compulsory to the taxpayer.
B. Tax is commonly defined as the lifeblood of the state.
C. Taxes are payable either in the form of cash or property.
D. The failure to pay taxes is subject to criminal and civil charges.

3. The power of taxation is one of the inherent powers of the sovereign state. What are the other inherent
powers of the sovereign state?
A. Power of Eminent Domain and Police Power
B. Power of Judicial and Legislative Branches
C. Power to Create and Administer Tax
D. Power to Assess and Collect Taxes

4. The power of taxation is the most pervasive and the strongest of all the powers of the sovereign state.
What is the meaning of this statement?
A. Taxation supplies the fund to be use to improve the lives of the taxpayers only.
B. Taxation supplies the fund for the execution of the other powers of the state.
C. Taxation supplies the fund to empower the officials of the government.
D. Taxation supplies the fund to buy the wants of those who are using it.

5. What is the inherent power of the state that gives the state the power to take private property with just
compensation for private use?
A. Police Power
B. Taxation Power
C. Eminent Domain Power
D. None of the above

6. Which among the following is not an element of the state?

A. People
B. Rituals
C. Territory
D. Sovereignty
7. The Congress is given the powers to enact laws and ordinances and to impose and collect taxes.
Congress belongs to what branch in the government?
A. Judiciary Branch
B. Executive Branch
C. Legislative Branch
D. None of the above

8. Taxes in general are public money, thus, they must be used to finance recognized public needs. Which
among the following choices below is an example of a recognized public need?
A. Purchase of air-conditioning facility to be use by private entities
B. Shopping by a government official of his personal wants
C. Construction and maintenance of government roads
D. Construction of an exclusive and private school

9. The basis of tax situs is the relationship of the state and its people, wherein the state that gives
protection to its people has the right to demand support. What do you call this kind of relationship?
A. Open relationship
B. Intimate relationship
C. One-sided relationship
D. Symbiotic relationship

10. In the Domiciliary theory, an alien is subject to Philippine income tax because of his residence in the
Philippines. Who are considered as aliens in the Philippines?
A. Those individuals who are non-residents of the Philippines
B. Those individuals who are residents of the Philippines
C. Those individuals who are citizens of the Philippines
D. Those individuals who are not Filipino citizens

11. In this system of taxation, as the rate of tax decreases, the tax base or bracket decreases too. What is
this system of taxation called?
A. Progressive system of taxation
B. Regressive system of taxation
C. Schedular system of taxation
D. Global system of taxation

12. What refers to a special duty that is an additional tax imposed on imported goods with lower prices
compared to their fair market values to protect local industries?
A. Making duties
B. Dumping duties
C. Countervailing duties
D. Discriminatory duties

13. What refers to a special duty that is designed to offset any foreign discrimination against our local
commerce?
A. Making duties
B. Dumping duties
C. Countervailing duties
D. Discriminatory duties

14. Compensatory purpose of taxation is a way of giving back the expected economic and social benefits
due to the inhabitants. Which is an example of a compensatory purpose?
A. Construction of public roads from the excise taxes imposed on gasoline paid by vehicle owners
B. Payment for the health issues of a smoker admitted in a private hospital
C. Maintenance of private school buildings from the income of the school
D. Purchase of books for learning in an exclusive international school
15. Mr. Jericho Rosales owns a restaurant and he pays his income tax yearly to avoid penalties. In this
case, Mr. Rosales is considered as what object of taxation?
A. He is a person
B. He is a corporation
C. He is a natural person
D. He is a juridical person

16. Ms. Christine Hermosa pays yearly the property tax for the land she owns located in Quezon City.
The land in this case is what kind of a property?
A. Real property
B. Personal property
C. Tangible property
D. Intangible property

17. What is defined as a benefit derived through gratuitous transfer by fact of death or donation?
A. Right
B. Interest
C. Privilege
D. Transaction

18. Taxation is subject to inherent and constitutional restrictions. If a tax law violates the Constitution,
such law shall be declared as?
A. Null and void
B. Valid and executory
C. Binding to the people
D. None of the above

19. Which is not a stage of taxation?

A. Levy
B. Assessment
C. Tax payment
D. Utilization of public funds

20. Mr. Jose Mabini can compute his own taxes by himself. What is the reason why Mr. Mabini can do
the computation of his taxes on his own?
A. This is so because Mr. Mabini is a smart guy
B. This is so because of the fact that taxes are self-assessing
C. This is so because Mr. Mabini is the head of the Bureau of Internal Revenue
D. This is so because Mr. Mabini is an expert in computing his taxes on his own

21. Mrs. Wu Han paid her income tax to the Bureau of Internal Revenue as compliance to here
compulsory duty to the government. This act by Mrs. Wu Han refers to what stage of taxation?
A. Levying of tax
B. Assessment of tax
C. Payment of assessed tax
D. None of the above

22. Which is not a principle of a sound tax system?

A. Fiscal adequacy
B. Police interaction
C. Theoretical justice
D. Administrative feasibility
23. The Principle of Administrative Feasibility states that tax laws must be?
A. Convenient
B. Uniform
C. Just
D. All of the above

24. Which among the following is true regarding the Principle of Prospective Application of Tax Laws?
A. The tax bill must only be applicable and operative before becoming a law.
B. The tax bill must only be applicable, not operative after becoming a law.
C. The tax bill must not be applicable, only operative after becoming a law.
D. The tax bill must only be applicable and operative after becoming a law.

25. Which is not an element of double taxation?

A. Taxing once for the same purpose
B. Taxing twice for the same purpose
C. Taxing the same property twice for the same year
D. Taxing the same person twice for the same purpose for the same year

26. Which among the following cases is considered as double taxation?

A. Taxing corporate income and stockholders’ dividends from the same corporation
B. Tax imposed by the state and the local government upon the same occupation, calling or activity
C. Real estate tax and income tax collected on the same real estate property leased for earning
purposes
D. All of the above

27. What are the two methods of escaping from taxation?

A. Tax evasion and tax avoidance
B. Tax evasion and tax compliance
C. Tax exemption and tax avoidance
D. Tax exemption and tax compliance

28. What is the method to escape from taxation wherein the taxpayer uses unlawful means to evade or
lessen the payment of tax?
A. Tax evasion
B. Tax avoidance
C. Tax exemption
D. Tax compliance

29. Pedro is a Filipino Citizen and an overseas contract worker. What portion of Pedro’s income is
taxable in the Philippines?
A. Those income Pedro earned from the sources abroad
B. Those income Pedro earned from the sources within the Philippines
C. Those income Pedro earned from the sources within and outside the Philippines
D. Pedro is not taxable because he is not working and does not have any taxable income

30. Which is false about tax avoidance?

A. It is also called as tax minimization
B. It is the act of using unlawful means to escape taxes
C. It is reducing o totally escaping payment of taxes through lawful means
D. None of the above

31. Which is true about tax administration?

A. It includes the enforcement of taxes
B. It is a system of collecting taxes in accordance with the country’s tax policies
C. It is the execution of judgment and capacity to act in all tax cases decided by the court in favor of
the Bureau of Internal Revenue
D. All of the above
32. Which among the following government agencies is not supervised and control by the Department of
Finance?
A. Bureau of Customs
B. Bureau of Internal Revenue
C. Department of Trade and Industry
D. None of the above

33. Which government agency is responsible for raising the bulk of the country’s total government
revenues?
A. Bureau of Customs
B. Tariff Commission
C. Bureau of Internal Revenue
D. The Land Transportation Office

34. Which government agency is responsible to collect registration fees and motor vehicle tax?
A. Bureau of Customs
B. Tariff Commission
C. Bureau of Internal Revenue
D. The Land Transportation Office

35. Juan acquired his cedula from the Barangay Treasurer’s Office. Barangay Treasurer’s Office is a?
A. Local office in charge to enforce local taxation
B. National office in charge to enforce local taxation
C. Local office in charge to enforce national taxation
D. National office in charge to enforce national taxation

36. Anna submitted a formal report prepared by her showing an enumeration of taxable amounts and
description of taxable transactions, allowable deductions, amount of tax and tax payable to the
government to the Bureau of Internal revenue. What is this formal report that Anna submitted called?
A. Tax Return
B. Tax Assessment
C. Tax Collection Report
D. None of the above

37. Which among the following is true about surcharge?

A. It is a civil penalty imposed by law
B. It is an addition to the main tax required to be paid
C. It is imposed due to delinquency and misrepresentation
D. All of the above

38. What tax is of fixed amount upon the residents or persons of a certain class without regard to their
property or business?
A. Poll tax
B. Real property tax
C. Inheritance or estate tax
D. None of the above

39. Corporation ABCDEFG bought a piece of land from owner HIJKLMNO. The piece of land bought by
ABCDEFG Corporation is called?
A. Real property
B. Personal property
C. Intangible property
D. None of the above
40. What is the kind of income tax that allows deduction, personal as well as additional exemptions?
A. Net Income Tax
B. Final Income Tax
C. Gross Income Tax
D. Optional Corporate Income Tax

41. Which is considered as an income from sources within the Philippines?

A. Interest income from sources within the Philippines
B. Sale of a real property in Vietnam by a Filipino
C. Service income from service rendered in Malaysia
D. Dividends paid by foreign corporations whose income is 40% derived from sources within the
Philippines

42. Which is true about the interest income from sources within the Philippines?
A. It includes interest earned from domestic bank deposits
B. It includes interest on bonds of residents in the Philippines
C. The determining factor if the residence of the obligor whether individual or corporation
D. All of the above

43. Which among the following cases is a sale of Real Property?

A. Selling of a land located in the Philippines
B. Selling a brand-new car to Robert Mondragon in the Philippines
C. Selling of a gold jewelry to Romina Mondragon in Quezon City, Philippines
D. None of the above

44. Who is considered as a resident citizen of the Philippines?

A. Citizen of the Philippines residing therein
B. Citizen residing outside the Philippines without the intention of residing thereat permanently
C. Citizen who did not manifest to the total satisfaction of the Commissioner the fact of his physical
presence abroad with a definite intention to reside therein permanently
D. All of the above

45. Jake is an American citizen residing in the Philippines for a period of 11-months during the taxable
year, 2018. Jake is earning an income from his reselling business in the Philippines. Which of the
following statement is true about Jake?
A. Jake is a resident citizen in the Philippines
B. Jake cannot become a citizen of the Philippines
C. Jake’s income is not taxable in the Philippines because he is an American
D. In the Philippines, Jake is taxable on his income derived from his reselling business

46. Which among the following is a natural person?

A. A corporation
B. An individual
C. A domestic company
D. A foreign corporation

47. Whose income derived from within and outside the Philippines is taxable in the Philippines?
A. A resident alien
B. A resident citizen
C. A non-resident alien
D. A non-resident citizen
48. Which is not a classification of corporations?
A. Domestic Corporation
B. Resident Foreign Corporation
C. Non-Resident Foreign Corporation
D. None of the above

49. Which among the following is the legitimate purpose of taxation?

A. Construction of government hospitals
B. Road widening of public roads
C. Corruption by public officials
D. A and B only

50. What is the reason why the power of taxation is important?

A. Taxes are the lifeblood of the country, without which, the government cannot continue its
existence
B. Taxes are redistributed from those who have more to those who have less, it helps eradicate
poverty and improve people’s lives in the community
C. Tax is the revenue of the government which the government uses to fund their legitimate purpose
for the welfare of the public
D. All of the above