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Using the average retail inventory method, Awoo’s cost of sales is At December 31, 2005 what is the estimated cost of missing inventory?
a. P6,390,000 c. P6,080,000 a. P200,000 c. P1,000,000
b. P6,150,000 d. P6,336,000 b. P160,000 d. P 0
8. Mangatarem Company had the following information relating to its accounts receivable for 11. Nakba Company installs replacement siding, windows, and louvered glass doors for
the year 2005: family homes. At December 31, 2005, the balance of raw materials inventory account was
P502,000, and the allowance for inventory writedown was P33,000. The inventory cost and
Accounts receivable – January 1 P12,000,000 market data at December 31, 2005, are as follows:
Credit sales 20,000,000
Collection from customers, excluding the recovery of accounts written off 17,000,000 Cost Replacement Sales Net Normal
Accounts written off as worthless 300,000 Cost Price Realizable Profit
Sales returns 1,000,000 value
Recovery of accounts written off 100,000 Aluminum siding
Estimated future sales returns on December 31 400,000 89,000 86,000 91,500 87,000 5,000
Estimated uncollectible accounts on December 31, per aging 1,000,000 Mahogany siding 94,000 92,000 93,000 85,000 7,000
Louvered glass
Mangatarem should report the December 31, 2005 accounts receivable, before door 125,000 135,000 129,000 111,000 10,000
allowance for sales returns and uncollectible accounts, at Glass windows 194,000 114,000 205,000 197,000 20,000
a. P13,700,000 c. P13,800,000 Total 502,000 427,000 518,500 480,000 32,000
b. P12,300,000 d. P13,130,000
The loss on inventory write down is
9. Urdaneta Company accepted from a customer P5,000,000, 120-day, 12% note dated a. P 8,000 c. P11,000
August 31, 2005. On September 30, 2005, Urdaneta discounted the note at the National b. P25,000 d. P 0
Bank. However, the proceeds were not received until October 1, 2005. In the September 30,
2005 balance sheet, the amount receivable from the bank includes accrued interest revenue 12. Hagorn Company purchased 10,000 shares of Dinky Company P100 par value common
of stock for P1,200,000 to be held as available for sale securities. On March 1, 2005, Hagorn
a. P200,000 c. P44,000 received a 20% stock dividend. On June 1, 2005, Hagorn sold all the stock dividends that
b. P156,000 d. P 0 were received on March 1 at P130 per share. The gain on sale of investment be recorded by
Hagorn is
a. P260,000 c. P200,000 b. P500,000 d. P1,000,000
b. P 20,000 d. P 60,000
TOA
13. The Alcala Company counted its ending inventory on December 31. None of the
following items were included when the total amount of the company’s ending inventory was 1. Directly attributable costs of bringing the asset to working condition for its intended use
computed: include all, except
a. Initial operating losses incurred prior to an asset achieving planned performance
P150,000 in goods located in Alcala’s warehouse that are on consignment from b. Cost of site preparation
another company.
c. Delivery, handling and installation costs
P200,000 in goods that were sold by Alcala and shipped on December 30 and were
in transit on December 31; the goods were received by the customer on January 2. d. Estimated cost of dismantling and removing the asset and restoring the site, to the
Terms were FOB Destination. extent that it is recognized as a provision
P300,000 in goods were purchased by Alcala and shipped on December 30 and were
in transit on December 31; the goods were received by Alcala on January 2. Terms 2. A contingent liability is
were FOB shipping point. a. A liability of uncertain timing or amount.
P400,000 in goods were sold by Alcala and shipped on December 30 and were in b. A possible obligation depending on whether some uncertain future event occurs.
transit on December 31; the goods were received by the customer on January 2. c. A present obligation but payment is not probable or the amount cannot be measured
Terms were FOB shipping point.
reliably.
The company’s reported inventory (before any corrections) was P2,000,000. What is the d. Either b or c.
correct amount of the company’s inventory on December 31?
a. P2,550,000 c. P2,500,000 3. Which statement is incorrect?
b. P1,950,000 d. P2,700,000 a. Provisions should only be used for the purpose for which they were originally
recognized.
b. Enterprises should not recognize contingent liabilities but should disclose them, unless
14. On September 30, 2005, Asingan Company discounted at the bank a customer’s the possibility of an outflow of economic resources is remote.
P5,000,000 6-month 10% note receivable dated June 30, 2005. The bank discounted the
c. Contingent assets should not be recognized but should be disclosed where an inflow of
note at 12%. The proceeds from this discounted note amounted to
a. P5,092,500 c. P4,842,000 economic benefits is probable.
b. P5,250,000 d. P5,170,000 d. When the realization of income is virtually certain, then the related asset is not a
contingent asset but its recognition is inappropriate unless received.
15. On January 1, 2004, Agana Company acquired trading securities with the following 4. Which statement is incorrect regarding classification of leases?
market value on December 31, 2004: a. A lease is classified as a finance lease if it transfers substantially all the risks and
rewards incident to ownership.
Cost Market Value
X 4,000,000 3,700,000 b. All other leases that do not transfer substantially all the risks and rewards incident to
Y 2,000,000 1,800,000 ownership are classified as operating leases.
Z 5,000,000 4,500,000 c. Classification is made at the inception of the lease.
Total 11,000,000 10,000,000 d. Whether a lease is a finance lease or an operating lease depends on the form of the
transaction.
Agana sold Security Z Sept 15, 2005 for P4,800,000, while the remaining securities on
December 31, 2005 had market values of P4,200,000 for Security X and P2,300,000 for 5. Which statement is incorrect in classifying a lease of land and buildings?
Security Y. The unrealized gain to be recognized Agana’s income statement on
a. In classifying a lease of land and buildings, land and buildings elements would
December 31, 2005 is
a. P300,000 c. P1,500,000 normally be separately.
b. The minimum lease payments are allocated between the land and buildings elements II. The revaluation model means that property, plant and equipment are carried at
in proportion to their relative fair values. revalued amount, being the fair value at date of revaluation less any accumulated
c. The land element is normally classified as an operating lease unless title passes to the depreciation and subsequent accumulated impairment loss.
lessee at the end of the lease term. a. I, II and III b. I only c. II and III only d.
d. The buildings element is normally classified as a finance lease unless title will not pass II only
to the lessee at the end of the lease term.
10. The cost of an item of property, plant and equipment acquired in exchange for a
6. The following situations would normally lead to a lease being classified as finance lease, nonmonetary asset or a combination of monetary and nonmonetary asset is measured at
except a. Fair value of asset given plus cash payment
a. The lease transfers ownership of the asset to the lessee by the end of the lease term. b. Fair value of asset received plus cash payment
b. The lessee has the option to purchase the asset at a price which is expected to be c. Book value of asset given plus cash payment
equal to the fair value at the date the option becomes exercisable that, at the inception of d. Book value of asset received plus cash payment
the lease, it is reasonably certain that the option will be exercised.
c. The lease term is for the major part of the economic life of the asset, even if title is not 11. Which statement is incorrect regarding initial measurement of PPE?
transferred. a. PPE should be initially recorded at cost, which includes all costs necessary to bring the
d. At the inception of the lease, the present value of the minimum lease payments asset to working condition for its intended use.
amounts to at least substantially all of the fair value of the leased asset. b. If payment for an item of property, plant, and equipment is deferred, interest at a
market rate must be recognized or imputed.
7. The depreciable asset recognized by the lessee under a finance lease should be c. If an asset is acquired in exchange for another asset the cost will be measured at the
depreciated over the fair value.
a. Useful life of the asset d. If an asset acquired in exchange for another asset is not measured at fair value, its
b. Lease term cost is measured at the carrying amount of the asset received.
c. Useful life of the asset if there is reasonable certainty that the lessee will obtain
ownership by the end of the lease term. 12. If the exchange transaction lacks commercial substance, the acquired item of property,
d. Lease term or useful life of the asset, whichever is shorter plant and equipment is measured at
a. Fair value of asset given plus cash payment
8. Examples of costs that are expensed rather than recognized as an element of cost of b. Fair value of asset received plus cash payment
property, plant and equipment include all of the following, except c. Carrying amount of asset given plus cash payment
a. Cost of employee benefits arising directly from the construction on acquisition of an d. Carrying amount of asset received plus cash payment
item of property, plant and equipment.
b. Cost of opening a new facility 13. When payment for an item of property, plant and equipment is deferred beyond normal
c. Cost of introducing a new product or service, including cost of advertising and credit terms, its cost is the
promotion. a. Cash price equivalent c. Invoice price
d. Cost of relocating or reorganizing part or all of an entity’s operations. b. Installment price d. List price
9. Which is correct concerning measurement of property, plant and equipment? 14. If an asset is acquired on credit or by installment, the difference between the total
I. An entity shall choose either the cost model or the revaluation model as its accounting payments and cash price, if any, should be
policy and shall apply that policy to an entire class of property, plant and equipment. a. Considered interest expense of the current year
II. The cost model means that property, plant and equipment are carried at cost less any b. Included as part of the asset cost
accumulated depreciation and any accumulated impairment loss. c. Amortized as interest expense over the life of the asset
d. Amortized as interest expense over the credit period
of the invoice amount). If the effective annual interest rate on this loan is 12%, what will
15. Which is incorrect concerning self-constructed asset? be the net dollar savings over the year by borrowing and then taking the discount on the
a. The cost of self-constructed asset is determined using the same principles as for an materials?
A. $3,624 B. $1,176 C. $4,800 D. $1,224
acquired asset.
b. Any internal profits from construction are eliminated in arriving at the cost of self- 6. Sarah Company is planning to purchase a new machine for P600,000. Depreciation for tax
constructed asset. purposes will be P100,000 annually for six years. The new machine is expected to
c. The cost of abnormal amounts of wasted material, labor or other resources incurred in produce cash flow from operations, net of income taxes, of P150,000 a year in each of
the production of a self- constructed asset is included in the cost of asset. the next six years. The accounting (book value) rate of return on the initial investment is
d. The cost of normal amounts of wasted material, labor or other resources incurred in expected to be
the production of a self-constructed asset is included in the cost of the asset. A. 8.3% C. 16.7%
B. 12.0% D. 25.0%
MAS
7. It is the policy of Franz Corp. that the current ratio cannot fall below 1.5 to 1.0. Its current
liabilities are P400,000 and the present current ratio is 2 to 1. How much is the maximum
1. The following characterize management advisory services except
level of new short-term loans it can secure without violating the policy?
A. involve decision for the future
a. P400,000 b. P300,000 c. P266,667 d. P800,000
B. broader in scope and varied in nature
C. utilize more junior staff than senior members of the firm
8. If a firm had been extending trade credit on a 2/10, net/30 basis, what change would be
D. relate to specific problems where expert help is required
expected on the balance sheet of its customer if the firm went to a net cash 30 policy?
a. Increased payables and increased bank loan.
2. Total production costs for Carera, Inc. are budgeted at P230,000 for 50,000 units of
b. Increased receivables.
budgeted output and P280,000 for 60,000 units of budgeted output. Because of the need
c. Decreased receivables.
for additional facilities, budgeted fixed costs for 60,000 units are 25% more than
d. Decrease in cash.
budgeted fixed costs for P50,000 units. How much is Carera’s budgeted variable cost
per unit of output?
9. The sales director of Lloyd Company suggested that certain credit terms be modified. He
A. P1.60 C. P3.00
estimates the following effects:
B. P1.67 D. P5.00
Sales will increase by at least 20%
Accounts receivable turnover will be reduced to 8 times from the present turnover of
3. ABC Company finances all of its seasonal inventory needs from the local bank at an
10 times
effective interest cost of 9%. The firm’s supplier promises to extend trade credit on terms
Bad debts, now at 1% of sales will increase to 1.5%
that will match the 9% bank credit rate. What terms would the supplier have to offer
Sales before the proposed changes is at P900,000. Variable cost ratio is 55% and the
(approximately)?
desired rate of return is 20%. Fixed expenses amount to P150,000.
a. 2/10, n/60. b. 2/10, n/100. c. 2/10, n/90. d. 3/10,
Should the company allow revision of its credit terms?
n/60.
A. Yes, because income will increase by P64,800
B. Yes, because losses will be reduced by P73,800
4. A company has accounts payable of $5 million with terms of 2% discount within 15 days,
C. No, because income will be reduced by P13,000
net 30 days (2/15 net 30). It can borrow funds from a bank at an annual rate of 12%, or it
D. No, because losses will be increased by P28,000
can wait until the 30th day when it will receive revenues to cover the payment. If it
borrows funds on the last day of the discount period in order to obtain the discount, its
10. Which of the following actions would not be consistent with good management?
total cost will be
a. Increased synchronization of cash flows.
A. $51,000 less. B. $75,500 less. C. $100,000 less. D. $24,500
b. Minimize the use of float.
more.
c. Maintaining an average cash balance equal to that required as a compensating
balance or that which minimizes total cost.
5. Every 15 days a company receives $10,000 worth of raw materials from its suppliers. The
d. Use of checks and drafts in disbursing funds.
credit terms for these purchases are 2/10, net 30, and payment is made on the 30th day
after each delivery. Thus, the company is considering a 1-year bank loan for $9,800 (98%
11. Clara Building Corporation uses the critical path method to monitor construction jobs. The 1. Vibe Company purchased the net assets of Atlantic Company in a business combination
company is currently 2 weeks behind schedule on Job 181, which is subject to a accounted for as a purchase. As a result, goodwill was recorded. For tax purposes, this
P10,500-per-week completion penalty. Path A-B-C-F-G-H-I has normal completion time combination was considered to be a tax-free merger. Included in the assets is a building with
of 20 weeks, and critical path A-D-E-F-G-H-I has a normal completion time of 22 weeks.
an appraised value of 210,000 on the date of the business combination. This asset had a net
The following activities can be crashed:
book value of 70,000, based on the use of accelerated depreciation for accounting purposes.
Activities Cost to Crash 1 Week Cost to Crash 2 Weeks
The building had an adjusted tax basis to Atlantic (and to Vibe as a result of the merger) of
BC P 8,000 P15,000
DE 10,000 19,600 120,000. Assuming a 36% income tax rate, at what amount should Vibe record this building
EF 8,800 19,500 on its books after the purchase?
Clara desires to reduce the normal completion time of Job 181 and, at the same time,
report the highest possible income for the year. Clara should crash a. 120,000
A. BC 1 week and EF 1 week C. EF 2 weeks b. 134,400
B. BC 2 weeks D. DE 1 week and EF 1week c. 140,000
d. 210,000
12. A company obtaining short-term financing with trade credit will pay a higher percentage
financing cost, everything else being equal, when 2. Goodwill represents the excess cost of an acquisition over the
A. The discount percentage is lower.
B. The items purchased have a higher price. a. sum of the fair values assigned to intangible assets less liabilities assumed.
C. The items purchased have a lower price. b. sum of the fair values assigned to tangible and identifiable intangible assets
D. The supplier offers a longer discount period. acquired less liabilities assumed.
c. sum of the fair values assigned to intangibles acquired less liabilities assumed.
13. It is held that the level of accounts receivable that the firm has or holds reflects both the d. book value of an acquired company.
volume of a firm’s sales on account and a firm’s credit policies. Which one of the
following items is not considered as part of the firm’s credit policies? 3. Cozzi Company is being purchased and has the following balance sheet as of the
a. The minimum risk group to which credit should be extended. purchase date:
b. The extent (in terms of money) to which a firm will go to collect an account.
c. The length of time for which credit is extended. Current assets 200,000 Liabilities 90,000
d. The size of the discount that will be offered. Fixed assets 180,000 Equity 290,000
Total 380,000 Total 380,000
14. A major advantage of obtaining a package of applications programs from a software
vendor is
The price paid for Cozzi's net assets is 500,000. The fixed assets have a fair value of
A. the likelihood of reducing the time span from planning to implementation
B. the ability to more easily satisfy the unique needs of users 220,000, and the liabilities have a fair value of 110,000. The amount of goodwill to be
C. greater operating efficiency from the computer recorded in the purchase is ____.
D. the assurance the programs will be written in a high-level language
a. 0
15. A change in credit policy has caused an increase in sales, an increase in discounts taken, b. 150,000
a reduction of the investment in accounts receivable, and a reduction in the number of c. 170,000
doubtful accounts. Based on this information, we know that: d. 190,000
a. Net profit has increased.
b. The average collection period has decreased. 4. Separately identified intangible assets are accounted for by amortizing:
c. Gross profit has declined.
d. The size of the discount offered has decreased. a. exclusively by using impairment testing.
b. based upon a pattern that reflects the benefits conveyed by the asset.
c. over the useful economic life less residual value using only the straight-line method.
P2 d. over a period not to exceed a maximum of 40 years.
7. Polk issues common stock to acquire all the assets of the Sam Company on January
5. Balter Inc. acquired Jersey Company on January 1, 20X5. When the purchase 1, 20X5. There is a contingent share agreement, which states that if the income of the Sam
occurred Jersey Company had the following information related to fixed assets: Division exceeds a certain level during 20X5 and 20X6, additional shares will be issued on
January 1, 20X7. The impact of issuing the additional shares is to
Land $ 80,000
Building 200,000
Accumulated Depreciation (100,000)
Equipment 100,000 a. increase the price assigned to fixed assets.
Accumulated Depreciation (50,000) b. have no effect on asset values, but to reassign the amounts assigned to equity
accounts.
The building has a 10-year remaining useful life and the equipment has a 5-year remaining c. reduce retained earnings.
useful life. The fair value of the assets on that date were: d. record additional goodwill.
Land 100,000 8. Which of the following income factors should not be factored into an estimation of
Building 130,000 goodwill?
Equipment 75,000
a. sales for the period
What is the 20X5 depreciation expense Balter will record related to purchasing Jersey b. income tax expense
Company? c. extraordinary items
d. cost of goods sold
a. 8,000
b. 15,000 9. Acquisition costs such as the fees of accountants and lawyers that were necessary to
c. 28,000 negotiate and consummate the purchase are
d. 30,000
a. recorded as a deferred asset and amortized over a period not to exceed 15 years
6. In performing impairment test for goodwill, the company had the following 20X6 and b. expensed if immaterial but capitalized and amortized if over 2% of the acquisition price
20X7 information available. c. expensed in the period of the purchase
d. included as part of the price paid for the company purchased
20X6 20X7
Fair value of the reporting unit 350,000 400,000 10.
Net book value (including $50,000 goodwill) 360,000 380,000
Account Investor Investee
Assume that the carry value of the identifiable assets are a reasonable approximation of their Sales 500,000 300,000
fair values. Based upon this information what are the 20X6 and 20X7 adjustment to goodwill, Cost of Goods Sold 230,000 170,000
Gross Profit 270,000 130,000
if any?
Selling & Admin. Expenses 120,000 100,000
Net Income 150,000 30,000
20X620X7
Dividends paid 50,000 10,000
a. no adjustment 20,000 decrease
b. 10,000 increase 20,000 decrease
c. 10,000 decrease 20,000 decrease Assuming Investor owns 70% of Investee. What is the amount that will be recorded as Net
d. 10,000 decrease no adjustment Income for the Controlling Interest?
a. 164,000
b. 171,000
c. 178,000 Total 17,000,000 2,100,000
d. 180,000
Immediately after the purchase, the consolidated balance sheet should report paid-in capital
11. Consolidated financial statements are designed to provide: in excess of par of
QUESTIONS: Based on the other working papers submitted by your audit staff, the following additional
information was forwarded:
Based on the above and the result of your audit, determine the following as of December
31, 2005: From the Articles of Incorporation of Fortitude Company:
1. Common stock •
a. P1,165,950 b. P1,250,775 c. P1,275,075 d. P1,273,050 Authorized capital stock – 150,000 shares
2. Total additional paid-in capital •
a. P12,629,175 b. P11,283,300 c. P12,329,475 d. P12,604,200 Par value per share – P100
3. Retained earnings From the board of directors’ minutes of meetings, the following resolutions were extracted:
a. P870,750 b. P1,095,750 c. P1,287,000 d. P981,225
4. Total stockholders’ equity •
a. P13,545,000 b. P15,000,000 c. P14,676,000 d. P14,973,000 01/02/05 – authorized the issuance of 50,000 shares at P120 per share.
•
PROBLEM NO. 2 08/30/05 – authorized the acquisition of 5,000 shares at P110 per share.
•
With your representation, as Managing Partner of the Sy Pee Ey & Co., your firm was 12/01/05 – authorized the re-issuance of 2,500 treasury shares at P115 per share.
engaged in the audit of the Fortitude Company at the close of the company’s first year of
operations on December 31, 2005. The company closed its books prior to the time you •
began your year-end fieldwork. 12/29/05 – Declared a 10% stock dividend, payable January 31, 2006, to
stockholders on record as of January 15, 2006. The market value of the stock on
Your audit and review showed the following stockholders’ equity accounts in the general December 29, 2005 was P130 per share.
ledger:
REQUIRED:
Common Stock
Determine the adjusted balances of
08/30/05 CD P550,000 01/02/05 CR P6,000,000 the following as of December 31, 2005.
12/29/05 J 545,000
A B C D
5. Capital stock 14. Only one of the following four statements, which compare confirmation of accounts
5,995,000 5,545,000 5,000,000 5,475,000 payable with suppliers and confirmation of accounts receivable with debtors is false. The
false statement is that
6. APIC a. Confirmation of accounts receivable with debtors is a more widely accepted auditing
1,012,500 1,000,000 1,155,000 965,000 procedures than is confirmation of accounts payable with suppliers.
b. Statistical sampling techniques are more widely accepted in the confirmation of
7. Total retained earnings accounts payable than in the confirmation of accounts receivable.
3,525,000 3,572,500 3,382,500 3,512,500 c. As compared with the confirmation of accounts receivable, the confirmation of
accounts payable will tend to emphasize accounts with zero balances at the
8. Treasury stock balance sheet date.
250,000 550,000 275,000 d. It is less likely that the confirmation request sent to the supplier will show the
amount owed than that request sent to the debtor will show the amount due.
9. Total stockholders’ equity
10,012,500 9,215,000 9,737,500 9,262,500
15. When title to merchandise in transit has passed to the audit client the auditor engaged in
10. During an audit of an entity’s shareholders’ equity accounts, the auditor determines the performance of a purchase cut-off will encounter the greatest difficulty in gaining
whether there are restrictions on retained earnings resulting from loans, agreements, assurance with respect to the
or law. This audit procedure most likely is intended to verify management’s assertion a. Quantity b. Quality c. Price d. Terms
of
a. Existence c. Valuation
b. Completeness d. Presentation and disclosure
11. If the auditee has a material amount of treasury stock on hand at year-end, the BLT
auditor should
a. Count the certificates at the same time other securities are counted. 1. A. For the purpose of donor’s tax, second degree cousins are strangers to each
b. Count the certificates only if the company had treasury stock transactions during other.
the year. B. Encumbrance of the property donated, if assumed by the donor is deductible for
c. No count the certificates if treasury stock is a deduction from shareholders’ equity. the donors tax purposes.
d. Count the certificates only if the company classifies treasury stock with other
assets. a. True, True
b. True, False
12. In performing tests concerning the granting of stock options, an auditor should c. False, True
a. Confirm the transaction with the Securities and Exchange Commission. d. False, False
b. Verify the existence
of option holders in the entity’s payroll records or stock 2. A. As a rule, donation between husband and wife during marriage is void
ledgers. B. Donation can be made to conceived or unborn children
c. Determine that sufficient treasury stock is available to cover any new stock issued.
d. Trace the authorization for the transaction to a vote of the board of directors. a. True, True
b. True, False
13. The auditor would not expect the client to debit retained earnings for which of the c. False, True
following transactions? d. False, False
a. A 4-for 1 stock split.
b. "Loss" resulting from disposition of treasury shares. 3. A donation which takes upon the death of the donor
c. A 1-for 10 stock dividend.
d. Correction of error affecting prior year's earnings. a. Donation mortis causa
b. Partakes of the nature of a testamentary disposition
c. Shall be governed by the law on succession 10. In which of the following acts may a person not appoint an agent?
d. A, B and C a. To represent the principal in a wedding ceremony where the principal is a
principal sponsor
4. A donation which is intended by the donor to take effect during his lifetime b. To vote for the principal during the meetings of stockholders where the principal
is a stockholder
a. Shall be subject to donor’s tax using the tax table for donation c. To represent the principal in a baptismal ceremony where the principal is the
b. Shall be in writing if the value exceeds P 5,000 father of the child to be baptized
c. Donation inter vivos d. To attend a meeting of the board of directors of a corporation where the principal
d. A, B and C is a director
5. A. gift is perfected from the moment the donor effects the delivery either actual or 11. Which escape from taxation does not result in loss of revenue to the
constructively of the property donated. government?
B. Donors tax is a property tax imposed on the property transferred by way of gift
inter-vivos
a. Tax evasion
a. True, True b. True, False c. False, True d. False, False b. Tax avoidance
c. Tax exemption
6. This requires a special power of attorney except d. Shifting
a. To accept or repudiate an inheritance
b. To effect novation
c. To enter into compromise 12. The following fringe benefits are not taxable, except:
d. To lease real property for one year
9. Which of the following is the correct? a. 20% based on the gross selling price or current fair market value
a. A contract of agency must be in writing to be a valid agreement whichever is higher.
b. A sale of personal property made by an agent without authority from the owner is b. 7.5% based on the gross profit.
void c. 6% based on the gross selling price or zonal value, whichever is higher.
c. A sale of a piece of land made by an agent with oral authority from the owner is d. 6% of the purchase price or the assessed value whichever is higher.
void
d. An unemancipated minor cannot be appointed as an agent
14. Sale, barter, exchange or other disposition of shares of stocks which
are traded in the local stock exchange is subject to:
a. True
b. False, if Domeng is engaged in the real estate business.
c. False, it is subject to VAT if the sale is in the regular course of trade or
business.
d. b and c are correct.