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Week 3 Quiz

This document contains a 30-item true or false quiz about corporate taxation and accounting concepts. The questions cover topics like non-tax attributes of business entities, tax treatment of various transactions, accounting for organizational costs, and other corporate finance and taxation issues. The student is asked to provide their student number, name, course details, and answers to the multiple choice questions.

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Lyra Escosio
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Download as DOCX, PDF, TXT or read online on Scribd
92 views

Week 3 Quiz

This document contains a 30-item true or false quiz about corporate taxation and accounting concepts. The questions cover topics like non-tax attributes of business entities, tax treatment of various transactions, accounting for organizational costs, and other corporate finance and taxation issues. The student is asked to provide their student number, name, course details, and answers to the multiple choice questions.

Uploaded by

Lyra Escosio
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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STUDENT NUMBER:

LAST NAME:
FIRST NAME:
YEAR COURSE AND SECTION:

QUIZ 3

True or False.

1. Depending on the entrepreneur’s strategic plan, non-tax attributes that differ across entities are: Risk
Management, Managerial Control, Raising Capital and dividends declared and paid.

2. Return such as interest income paid on investment is taxable to investor.

3. Debt holders must be paid interest on a regular scheme.

4. When forming corporation, organization cost is capitalized as intangible asset.

5. Issuance of shares to investor is taxable for income tax purposes.

6. Strategic tax planning is part of strategy formulation and implementation.

7. Non-deductible interest expense is added back to financial income as temporary difference.

8. Debt and equity financing are not subject to documentary stamp tax.

9. Tala Co. incurred P200,00 for legal fees for their incorporation. For tax purposes, the related input VAT
cannot be claimed as allowable deduction.

10. Kilometro Co. issued 10,000 ordinary shares to Regine, an investor. Upon issuance, the said company
incurred and paid cost for printing of share certificates. Entry to record the cost of printing share
certificates includes debit to expense.

11. Deferred tax liability arises when gross income is higher than allowable deductions.

12. Payment of dividends to individual shareholder and parent company is both subject to 10% final
withholding tax.

13. Pre-operating costs includes share issuance costs. However, share issuance costs are directly deducted to
share premium instead of outright expense.

14. Stock transaction tax is ½ of 1% of Gross selling price.

15. Shares issued in local stock exchange is not subject to documentary stamp tax but subject to stock
transaction tax.

16. Place of residence of a corporation shall be its:


a. Place of residence of majority of stockholders
b. Place where principal office is established
c. Place of incorporation
d. None of them
17. A private corporation organized under the corporation law commences to have corporate existence and
juridical personality and is deemed incorporated from:
a. The date the SEC issues a certificate of incorporation under its official seal
b. The date when the articles of incorporation is signed by the incorporators
c. When the articles of incorporation is notarized by a Notary Public
d. When the articles of incorporation and by laws are presented and received by SEC and the filing fee is
paid.

18. The authorized capital stock of a proposed corporation is P100,000 divided into 1,000 shares with par
value of P100 each. The minimum amount of subscription that must be paid up is:
a. P8,750
b. P6,250
c. P5,000
d. P7,500

19. Original signatories in the articles of incorporation are called:


a. Promoters
b. Corporators
c. Incorporators
d. Stockholders

20. A corporation may invest its fund in any other corporation or business or for any purpose other than the
primary purpose for which it was organized, only if:
a. There is a majority vote of the Board of Directors
b. It is reasonable necessary to accomplish its secondary purpose, the approval of the stockholders not
necessary
c. There is majority vote of the outstanding capital stock
d. There is majority vote of the BOD and ratified by the stockholders representing 2/3 of the
outstanding capital stock

21. Which of the following conditions will allow corporate formation and SEC registration? (Authorized,
Subscribed and Paid-up)
a. 50,000; 12,500; 3,125
b. 60,000; 15,000; 6,000
c. 100,000; 20,000; 5,000
d. 100,000; 25,000; 5,000

22. Statement 1 : According to PAS 37, start up cost are expense outright.
Statement 2: Legal fees are considered organizational cost.

a. True, False
b. False, True
c. True, True
d. False, False

23. Statement 1: Stock transaction tax is a business tax


Statement 2: Gain from sale of shares not traded in LSE of Foreign Corp is subject to 5% -10 % CGT

a. Only statement 1 is true


b. Only statement 2 is true
c. Both statements are true
d. Both statements are false
24. Joongki Inc issued shares to Soohyun Inc. Share issue cost related to issuance of shares will be recorded by
Joongki Inc as:
a. Charged to share premium
b. Recorded as share issue cost expense
c. Deductible for income tax purposes
d. Taxable for income tax purposes

25. Itaewon Inc was incorporated in December 1, 2020. The company reported organizational cost in its
statement of comprehensive income amounted to P350,000. For the year ended December 31, 2021,
How much is the DTA on NOLCO to be reported in its Annual ITR and AFS?
a. 105,000
b. 70,000
c. 87,500
d. Cannot be determined

26. 2 Points
Statement 1: DST on original issuance of shares is P2 per P300.
Statement 2: DST on sale of certificate of stocks is P1.50 per P200
Statement 3: Shares traded in local stock exchange is subject to DST
Statement 4: DST are deductible for income tax purposes

a. Only one statement is true


b. Only one statement is false.
c. Two statements are true
d. All statements are false

27. 2 Points
Statement 1: Legal capital for shares issued with no par value includes APIC
Statement 2: Legal capital for shares issued at par value includes APIC
Statement 3: Ordinary shares have no voting right.
Statement 4: Incorporation is the process of acquiring legal personality

a. True, False, False, False


b. True, True, True, False
c. False, True, True, False
d. False, False, True, False

28. 2 Points
Statement 1: MCIT was lowered from 2% to ½% as part of temporary COVID 19 measures in CREATE Law
Statement 2: There is a temporary reduction of percentage tax for non-VAT taxpayers from 3% to 1%
based on TRAIN Law
Statement 3: ROHQ is subject to 10% special income tax rate until December 31, 2021.
Statement 4: ROHQ is subject to regular CIT effective January 1, 2022.

a. All statements are false


b. Statement 3 and 4 are true.
c. Statement 1 and 2 are true.
d. All statements are true.

29. 2 Points
Joan Inc. is a manufacturing corporation that was incorporated 8 years ago. The said company did not
declare any dividends to its shareholder since the start of its corporation. Karen, the accountant most
likely will:
A. Check the possible SEC admin penalty exposure on the excess of share capital over RE
B. Compute for the possible improperly accumulated income tax exposure of the company
C. Immediately instructed the board to approve declaration of dividends
D. Ignore this since no exposure at all.

30. Kim is an accountant of Jer Inc. She is responsible for income tax computation of the company for the year
ended December 31, 2021. Upon checking its books, Kim noted the following in its income and expenses:
1. Interest expense on lease liability
2. Accretion of asset retirement obligation - liability
3. Depreciation of asset retirement obligation -asset
4. Depreciation of right of use assets

The correct treatment for the above is:


A. All expenses are deductible for income tax purposes.
B. All expenses should be added back to its financial income to arrive at taxable income
C. Only depreciation expenses related to ROU and ARO are deductible for income tax purposes
D. Interest and accretion expense are added back to its financial income while depreciation should be
ignored in its income tax reconciliation.

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