1.
The stages of a contract according to the order of their occurrence are
a. Perfection, negotiation and termination
b. Conception, consummation and birth
c. Termination, negotiation and birth
d. Conception, perfection and termination
2. Krizzy owes Anj the amount of P2,500 payable on June 30, 2018. On June 8, 2018, Anj purchased
some grocery items from the store of Krizzy on credit payable on June 30, 2018 amounting to P2,500.
On the maturity date, their respective obligations are extinguished by
a. Dation in payment
b. Compensation
c. Payment
d. Merger of rights
3. Which of these contracts is not subject to ratification
a. Void contract
b. Unenforceable contract
c. Rescissible contract
d. Voidable contract
4. S offers to sell his car to B for 125,000 cash. B accepts the offer but is willing to pay only 120,000
a. The contract was not perfected because the acceptance by B was qualified and it constituted a
counter-offer
b. The contract was perfected at the price of 125,000
c. The contract was perfected at the price of 122,500, the average price of offer and the
acceptance
d. The contract was perfected at the price of 120,000
5. X, Y and Z are joint creditors of A, B, C and D, joint debtors in the amount of P60,000. How much can
X and Y collect from A, B and C
a. X and Y can collect P45,000 from A, B and C
b. X and Y can collect P30,000 from A, B and C
c. X and Y can collect P30,000 from anyone of A, B and C
d. X and Y can collect P40,000 from A, B and C
6. Which of the following is a void stipulation
a. A will give B P10,000, if C will die within the year
b. A agreed to put poison on the food of B’s wife and if A fails, to pay B P10,000 damages
c. A promised to give B P10,000, and if A fails, A will allow B to have sexual intercourse with her
d. A agreed to give B a house and lot or to kill B’s husband
7. Statement 1 – A corporation commences to have a juridical personality upon the execution of the
Articles of Incorporation unless a different date is set by the incorporators.
Statement 2 – A partnership begins from the moment of the execution of the partnership contract
unless a different date is set by the partners
a. Both statements are false
b. Both statements are true
c. Only statement 2 is true
d. Only statement 1 is true
8. After ten years, five out of nine incorporators who organized the corporation and signed the articles of
incorporation died. The corporation is
a. Not dissolved as it still has forty years left in its term
b. Not dissolved as it enjoys the right of succession
c. Dissolved as there will only be four left which is below the minimum of five incorporators
required by law
d. Dissolved as the Revised Corporation Code requires that the incorporators be alive during the
operation of the business
9. Which of the following is incorrect
a. Partnership creditors are preferred as to each partner’s separate assets
b. A partner’s separate creditors may attach a partner’s share in the partnership assets
c. A partner’s separate creditors are preferred as to the partner’s separate assets
d. Partnership creditors are preferred as to partnership assets
10. A person cannot be admitted into the partnership without the consent of
a. Majority of the partners
b. 2/3 of the partners
c. Majority of the partners
d. All the partners
11. May a stock certificate be issued before full payment
Statement 1 – No, in case of stock with par value
Statement 2 – Yes, in case of stack without par value
a. Only statement 1 is true
b. Both statements are true
c. Both statements are false
d. Only statement 2 is true
12. Regarding cash dividend, which of the following is correct
a. Declared by the board by majority vote and ratified by the stockholders by 2/3 vote of the
outstanding capital stock
b. Declared by the board by 2/3 vote and need not be ratified by the stockholders
c. Declared by the board by majority vote and ratified by stockholders by majority vote
d. Declared by the board by majority vote and need not be ratified by the stockholders.
13. A is the managing partner of ABC Partnership. Partner A and ABC Partnership maintain bank accounts
in Banko Filipino, a bank closed by Bangko Sentral Pilipinas. The following data are given concerning
the bank accounts of Partner A and ABC Partnership in Banko Filipino
- ABC Partnership Savings Deposit – 800,000
- ABC Partnership and Partner A Joint Demand Deposit – 400,000
- Partner A Time Deposit – 100,000
- Partner’s loan payable to Banko Filipino – 200,000
How much is the insured deposit by PDIC insofar as Partner A is concerned
a. 300,000
b. 200,000
c. 500,000
d. 100,000
14. Which of the following is not covered by Republic Act No. 1405
a. All deposits of whatever nature with banks or banking institutions found in the Philippines
b. Investment in bonds issued by the Philippine government, its branches, and institutions
c. Foreign currency deposits
d. Trust accounts
15. Which of the following prohibits the disclosure of bank information
a. Disclosure to Treasurer of the Philippines for dormant deposits for at least 10 years under the
Unclaimed Balances Act
b. When there is a written permission of the depositor
c. Upon order of competent court in cases of bribery or dereliction of duty
d. Upon inquiry of the Commissioner of Internal Revenue as basis for assessment of taxpayers
16. A person violates BP 22 when, having sufficient funds in or credit with the drawee bank when he
makes or draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover
the full amount of the check if presented with a period of how many days from the date appearing
thereon, for which reason it is dishonored by the drawee bank
a. 120 days
b. 60 days
c. 90 days
d. 30 days
17. Mr. X was admitted in a hospital. He is suffering from difficulty in breathing, high fever, and fatigue. His
symptoms are quickly worsening. The doctor asked his wife as to previous admissions, but the wife
had no idea. Instead, the wife informed the doctor that he was previously admitted to BCD Hospital and
they have the health records of Mr. X. The doctor called at BCD Hospital, and BCD Hospital disclosed
the health records to the doctor. Is there any breach of the Data Privacy Act with the disclosure
a. No, because Mr. X’s wife, as his duly authorized representative, gave her consent for the
disclosure
b. Yes, because Mr. X did not give her consent
c. Yes, because health records are considered as sensitive personal information
d. No, because the processing of the personal information is necessary for purposes of medical
treatment
18. A reporter wants to write a true-to-life story about a person who was kidnapped and buried alive for 83
hours. The reporter then extensively interviewed the survivor and spent several months coming up with
a book documenting the plight of the survivor. A Hollywood studio company then made a movie out of
the ordeal of the survivor. The reporter is saying that even though the movie was not based on the
book, the research he has spent documenting the event was copyrightable. Is the contention of the
reporter correct
a. No, facts and research involved in obtaining facts should not be distinguished and are not
copyrightable
b. No, the subject matter is not copyrightable
c. Yes, considering that the research material used served as the foundation for the subsequent
book of the reporter about the survivor
d. Yes, considering that the reporter has exerted substantial time and effort in his research, it is
copyrightable
19. D borrowed from C P240,000.00 payable in 24 equal monthly installments of P10,000.00. The debt is
secured by a mortgage of two lots (Lot I, worth P180,000.00, and Lot II, worth P160,000.00). At the end
of the first year, D was able to pay the first twelve monthly installments. In such a case
a. D may demand the extinguishment of the mortgage on either Lot I or Lot II at his option
b. D cannot demand the extinguishment of the mortgage on either Lot I or Lot II until he has
completed the payment of the 24 installments
c. D may demand the extinguishment of the mortgage of Lot II which has a lower value
d. D may demand the extinguishment of the mortgage of Lot I which has a higher value
20. The Zero-Contact Policy provides that
a. No government officer or employee shall provide their personal contact number to a y
requesting party
b. No government officer or employee shall be able to receive any money or gift from any
requesting party concerning an application or request
c. No government officer or employee shall be contacted by LGU or NGAs if they have been
previously convicted of a violation of Ease of Doing Business Act
d. No government officer or employee shall have any contact, in any manner, unless strictly
necessary, with any requesting party concerning an application or request
21. B purchased from S a laptop computer worth P100,000.00. The terms of sale provide for a down
payment of P20,000.00 with the balance payable in 8 equal monthly installments. To secure the
balance, S required B to execute a chattel mortgage on the thing sold and on B’s lot. B complied with
all the requirements but defaulted in the payment of the third and fourth installments. These remedies
are available to S except one. Which is it?
a. Foreclose the chattel mortgage and thereafter foreclose the real mortgage in case of deficiency
b. Cancel the sale
c. Exact fulfillment of the obligation
d. Foreclose the real mortgage and thereafter recover any deficiency from B
22. D brought his laptop computer to the computer shop of C for repair. After the repair, C charged D the
amount of P10,000.00 for materials and labor. However, D could not pay despite demand from C.
Consequently, C caused the public sale of the laptop.
I. If the proceeds of the sale of the laptop amounted to P8,000.00, C can recover the deficiency
from D.
II. If the proceeds of the sale of the laptop amounted to P11,000.00, D gets the excess of
P1,000.00
Which of the two statements is/are correct
a. Both I and II
b. I only
c. II only
d. Neither I nor II
23. An electronic contract of sale of services was entered into between Patrick and Bob. Patrick is a
resident of Marikina with principal place of business in Quezon City while Bob is a resident of Pasig
with principal place of business in Mandaluyong. While Patrick was on vacation at Cebu City, Bob sent
a contract of sale to Patrick. Patrick, through his mobile phone, opened the document at Cebu City.
Where is the electronic contract of sale received
a. Cebu City
b. Marikina
c. Pasig
d. Quezon City
24. S orally sold his antique jar to B for P485.00. The parties agreed that the delivery of the jar and the
payment of the price would be made the following day. The following day, B tendered payment to S but
S refused to accept it because he learned that the actual value of the jar was about P2,000.00. S said
that, at any rate, the sale is unenforceable not being in writing. Is S correct?
a. Yes, the sale is unenforceable because the actual value of the jar is at least P500.00 and thus,
should have been in writing
b. No, the sale of movable property, regardless of the price, is enforceable although not in writing
c. No, the sale is enforceable even if it was not in writing because the price agreed upon is less
than P500.00
d. Yes, the sale is unenforceable because it should be in writing regardless of the price
25. Export-Import Corporation paid the amount of P13,000.00 to Hernando’s Hideaway Resort Corporation
for the vacation expenses of Mr. Leandro Lopez, its warehouse manager, in April 2020. The journal
entry to record the fringe benefit expense and fringe benefit tax expense is
a. Debits: Fringe benefit expense, P13,000.00; Fringe benefit tax expense, P7,000.00.
Credit: Cash, P20,000.00
b. Debits: Fringe benefit expense, P13,000.00; Fringe benefit tax expense, P7,000.00.
Credits: Fringe benefit expense payable, P13,000.00; Fringe benefit tax payable, P7,000.00
c. Debits: Fringe benefit expense, P13,000.00; Fringe benefit tax expense, P7,000.00.
Credits: Cash, P13,000.00; Fringe benefit tax payable, P7,000.00
d. Debits: Fringe benefit expense, P20,000.00; Fringe benefit tax expense, P7,000.00.
Credits: Cash, P20,000.00; Fringe benefit tax payable, P7,000.00
26. Under the system of absolute community of property, property acquired by a spouse by gratuitous title
during the marriage is
a. Exclusive property, unless provided by the donor, grantor or testator that it shall form part of
the community property
b. Exclusive property only
c. Either exclusive property or community property unless the donor, grantor or testator provided
otherwise
d. Community property, unless provided by the donor, grantor or testator that it shall be exclusive
property of the transferee-spouse
27. Which of the following statements is incorrect
a. Proceeds of insurance taken by the decedent on his own life shall form part of his gross estate
if the beneficiary designated is his estate, executor or administrator, whether the designation
was revocable or irrevocable
b. A donation made in contemplation of death partakes of the nature of a testamentary
disposition; hence, the property donated shall be included in the gross estate upon the death of
the donor
c. A transfer for public purpose which takes effect upon the death of the donor can only be made
if the decedent executed a last will and testament
d. A donation of property which was made in contemplation of death shall be subject to estate tax
while the donor is still alive
28. The Roman Catholic Church of Santa Barbara owns three lots. Lot A is occupied by the church
building, parish office and the priest’s residence; Lot B is leased to Mack’s Restaurant; while Lot C is
vacant.
a. Lot A and Lot C are exempt from real property tax; Lot B is subject to real property tax; while
the rent income on the lease of Lot B is subject to income tax
b. Lot A is exempt from real property tax; Lot B and Lot C are subject to real property tax; while
the rent income on the lease of Lot B is subject to income tax
c. All the lots are exempt from real property tax, while the rent income on the lease of Lot B is
exempt from income tax
d. Lot A and Lot C are exempt from real property tax; Lot B is subject to real property tax, while
the rent income from the lease of Lot B is exempt from income tax
29. One of the following is not a transaction deemed sale and is therefore not subject to VAT. Which is it?
a. Distribution or transfer to creditors of goods or properties of a VAT-registered person in
payment of debt
b. Consignment of goods if actual sale is not made within 30 days following the date such goods
were consigned
c. Distribution or transfer to stockholders or investors of goods or properties as share in the
profits of a VAT-registered person
d. Transfer, use or consumption not in the ordinary course of business of goods or properties
originally intended for sale or for use in the course of business
30. The Government issued bonds to finance its infrastructure projects. The terms of the bond issue
provide that interest income of 6% per annum on the bonds shall be tax-exempt if the bonds were to be
held up to the end of five years. Induced by the tax exemption, Mr. Suave purchased bonds worth
P10,000,000.00. Subsequently and before the maturity date (end of five years) of the bonds, Congress
passed a law revoking the tax exemption on the interest income on the bonds. The law passed by
Congress is invalid because it violates the
a. Due process clause
b. Equal protection clause
c. Uniformity clause
d. Non-impairment clause
31. Atlanta Corporation, a domestic corporation, had the following data for the years 2018 and 2019:
2018 2019
Sales 10,000,000 15,000,000
Cost of sales 4,000,000 6,000,000
Deductible expenses 6,100,000 7,000,000
Capital gains 50,000 100,000
Interest income on trade notes receivable 10,000 30,000
Rent income 430,000 600,000
How much is the income tax payable in 2019?
a. 806,200
b. 194,600
c. 819,000
d. 819,000
32. The records of Zosimo Nevado, sole-proprietor of ZONE Dry Goods Store, show the following data:
Gross sales, P2,800,000;
Cost of sales, P800,000;
Operating expenses, P1,300,000;
Non-operating income, P100,000.
How much is the income tax due if Mr. Nevado avails himself of the 8% income tax rate?
a. 232,000
b. 212,000
c. 64,000
d. 224,000
33. Mr. Honesto Perez is a Filipino residing in Muntinlupa City. Aside from being employed as an
accounting supervisor at a private bank where he earns an annual salary of P600,000, he is also the
sole proprietor of HOPE Enterprises whose records during the taxable year show the following data:
Gross sales, P4,000,000;
Cost of sales, P1,200,000;
Operating expenses consisting of
Salaries and wages, P240,000;
Utilities, P50,000;
Rent, P60,000;
Depreciation, P160,000; and
Miscellaneous, P40,000; and
Net capital gain of P10,000.
How much is the taxable income of Mr. Perez during the taxable year assuming that he availed himself
of the Optional Standard Deduction?
a. 2,770,000
b. 3,010,000
c. 2,766,000
d. 3,006,000
34. Mr. Suave, single, had the following income for taxable year 2019
Gross income form business, Philippines 3,000,000
Expenses on business, Philippines 900,000
Gross income from business, USA 3,000,000
Expenses on business, USA 1,100,000
If Mr. Suave is an Australian residing in the Philippines, his taxable income amounts to
a. 4,000,000
b. 6,000,000
c. 3,000,000
d. 2,100,000
35. May Yaman is engaged in a VAT-business and a non-VAT business. Her records show the following
data, no tax included, for the taxable year
Sales
From VAT business 6,000,000
From non-VAT business 4,000,000
Purchases
For VAT business from VAT suppliers 3,000,000
For non-VAT business 2,000,000
Purchases from VAT suppliers of supplies
used for VAT and non-VAT business 30,000
Expenses incurred for both VAT and non-
VAT business (70% of these expenses
were paid to VAT-registered enterprises) 100,000
The VAT Payable is?
a. 348,000
b. 584,000
c. 352,800
d. 272,000
36. The Hercules Construction Corporation, a VAT-registered taxpayer, had the following data on its
construction projects, VAT not yet included, for the last quarter of 2019
Hallmark Building – 100% complete
Contract price 20,000,000
Collections in October and November 2019 10,000,000
Partial collection of retention receivable in December 2019 2,000,000
Summit Business Center – to be started in January 2020
Contract price 15,000,000
Cash advances received for mobilization 300,000
Deposits received in 2019 for materials 2,000,000
Purchase of materials from VAT suppliers (of which 70% was paid) 6,000,000
Subcontracting services to VAT service providers during the
quarter (of which 80% was paid) 2,250,000
How much is the VAT Payable at the end of the quarter?
a. 2,644,000
b. 1,032,000
c. 600,000
d. 780,000
37. What would be the amount to be deducted in the gross estate of a decedent whose collectible sum
from a debtor is P100,000 and the same debtor subsequently declared by the court as insolvent for
having total liabilities of P400,000 and total properties of P80,000
a. 64,000
b. 60,000
c. 100,000
d. 80,000
38. Mr. Juan Sanchangco, a Filipino residing in Manila, single, died on June 1, 2020. He left the following
properties:
House and lot in Shanghai, China 4,000,000
Bank deposit in Shanghai, China 2,000,000
Bank deposit in Manila 500,000
Commercial lot and building in Manila 6,000,000
Shares of stock of a domestic corporation 800,000
Promissory note from Ah Kong, a resident of Manila, who could
only pay 40% of the note because he is insolvent 200,000
Honda Civic car in Manila 1,200,000
Franchise exercised in China 3,000,000
Shares of stock of Tokwa Corporation, a corporation registered in
China, 80% of the business of which is located in the Philippines 400,000
How much is the gross estate of Mr. Sanchangco?
a. 9,400,000
b. 18,100,000
c. 17,980,000
d. 8,700,000
39. JD Company has found that its total electricity cost has both a fixed component and a variable
component within the relevant range. The variable component seems to vary directly with the number
of units produced. Which one of the following statements concerning JD’s electricity cost is incorrect
a. The variable electricity cost per unit of production will remain constant as production volume
increases
b. The fixed electricity cost per unit of production will decline as production volume increases
c. The total electricity cost per unit of production will increase as production volume increases
d. The total electricity cost will increase as production volume increases
40. The most probable reason a company would experience a favorable labor rate variance and an
unfavorable labor efficiency variance is that?
a. the mix of workers assigned to the particular job was heavily weighted toward the use of higher
paid, experienced individuals
b. defective materials caused more labor to be used in order to produce a standard unit
c. the mix of workers assigned to the particular job was heavily weighted toward the use of new,
relatively low-paid, unskilled workers
d. because of the production schedule, workers from other production areas were assigned to
assist in this particular process
41. In a process costing system, how is the unit cost affected in a production cost report when materials
are added in a department subsequent to the first department and the added materials result in
additional units?
a. The first department's unit cost is decreased, but it does not necessitate an adjustment of the
transferred-in unit cost
b. The first department's unit cost is decreased, which necessitates an adjustment of the
transferred-in unit cost
c. The first department's unit cost is increased, but it does not necessitate an adjustment of the
transferred-in unit cost
d. The first department's unit cost is increased, which necessitates an adjustment of the
transferred-in unit cost
42. In a job-order costing system, the cost of a completed but unsold job is?
a. closed to Cost of Goods Sold
b. part of the Work in Process inventory balance
c. part of the Finished Goods inventory balance
d. adjusted to exclude any applied overhead
43. The following items are used in tracing costs in an ABC system.
1. Cost object
2. Cost driver
3. Activity driver
4. Cost pool
In which order are they used?
a. 4,3,1,2
b. 2,4,3,1
c. 1,2,3,4
d. 2,3,4,1
44. Agus, Inc. uses standard costing for the accounting for its product. The budget officer provided the
following standard data imposed by the top-level management concerning direct materials:
Standard direct material is 3 per unit of the product
Standard price is P5.00 per unit of direct material
During the year, the company acquired on account 1,000 units of direct material at a total cost of
P4,000. It also manufactured 150 products costing 750 direct materials.
The journal entry to record the material usage variance will include a?
a. Debit to Work in Process at P1,800
b. Credit to Material Usage Variance at P1,200
c. Debit to Material Usage Variance at P1,500
d. Credit to Raw Materials at P3,000
45. Santos Enterprises manufactures different types of aluminum products for different industries. Standard
cost accounting system is used. The following data are available:
Actual total overhead 40,000
Budgeted total fixed costs 10,200
Total overhead rate per standard direct labor hour 2.50
Actual hours used 13,980
Normal activity in hours 12,000
Standard hours allowed 15,000
The company uses a two-way analysis of overhead variances
The controllable variance of Santos Enterprises is:
a. 2,500 unfavorable
b. 2,500 favorable
c. 5,050 unfavorable
d. 5,050 favorable
46. Cali, Inc., a manufacturing company, has provided the following data for the month of June.
The balance in the Work in Process inventory account was P22,000 at the beginning of the month and
P17,000 at the end of the month.
During the month, the company incurred direct materials cost of P55,000 and direct labor cost of
P28,000. The actual manufacturing overhead cost incurred was P53,000.
The manufacturing overhead cost applied to Work in Process was P51,000.
The cost of goods manufactured for June was?
a. 141,000
b. 139,000
c. 136,000
d. 134,000
47. Clerical costs in the billing department of Asuero Company are a mixture of variable and fixed
components. Records indicate that average unit processing costs are P0.50 per account processed at
an activity level of 32,000 accounts. When only 22,000 accounts are processed, the total cost of
processing is P12,500. Assuming that this activity is within the relevant range, at a budgeted level of
25,000 accounts
a. fixed processing costs are expected to be P10,400
b. processing costs are expected to total P8,750
c. the variable processing costs are expected to be P0.35 per account processed
d. processing costs are expected to total P14,975
48. Lolengkun Company has a process costing system in which it uses the weighted-average method. The
equivalent units for conversion costs for the month were 47,500 units. The beginning work in process
inventory consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work
in process inventory consisted of 10,000 units, 75% complete with respect to conversion costs. The
number of units started during the month was?
a. 35,000 units
b. 40,000 units
c. 25,000 units
d. 34,000 units
49. Agao Chemical Company manufactures three chemicals (NY29, TX38, and CA55) from a joint process.
The three chemicals are in industrial grade form at the split-off point. They can either be sold at that
point or processed further into premium grade. Costs related to each batch of this chemical process is
as follows
NY29 TX38 CA55
Sales value at split-off point 5,000 16,000 12,000
Allocated joint costs 6,000 6,000 6,000
Sales value after further processing 9,000 20,000 18,000
Cost of further processing 2,000 5,000 3,000
For which product(s) above would it be more profitable for Agao to sell at the split-off point rather than
process further?
a. TX38 only
b. NY29 and TX38 only
c. NY29 only
d. NY29 and CA55 only
50. Florida Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturing
overhead to jobs. For the month of October, Florida's estimated manufacturing overhead cost was
P300,000 based on an estimated activity level of 100,000 direct labor-hours. Actual overhead
amounted to P325,000 with actual direct labor-hours totaling 110,000 for the month. How much was
the overapplied or underapplied overhead?
a. 25,000 underapplied
b. 5,000 underapplied
c. 25,000 overapplied
d. 5,000 overapplied
