FINAL PREBOARD CPAR

1. A, B, and C are partners contributing services, P20,000 and P40,000

respectively. The distribution of the P80,000 net assets shall be:
a. A- P20,000 B-P20,000 C-P40,000
b. A- P5,000
B-P25,000 C-P50,000
c. A-P32,000 B-P16,000 C-P32,000
d. A-P26,667 B-P26,667 C-P26,667
b
2. This is not a characteristic of pledge
a. Bilateral
b. Nominate
c. Consensual
d. Real
3. Statement 1- Shares of stock can be the object of pledge or mortgage
Statement 2- Real estate mortgage is an accessory contract
a. true, true
b. false, false
c. true, false
d. false, true
a
4. One or more but less than all the partners have no authority to perform the
following except:
a. Renounce a partnership claim
b. Submit a partnership claim or liability to arbitration
c. Convey partnership property in the ordinary course of partnership
business
d. Do any act which would make it impossible to carry on the ordinary
business of the partnership
c
5. A limited partnership has A, as general partner, B, as limited partner, and C,
as an industrial partner contributing P50,000; P50,000 and services
respectively. The partnership failed and after disposing all its assets to pay
partnership debts there still remains a note payable in the sum of P30,000.
Against whom can the creditor demand payment?
a. A-P30,000
B-P0
C-P0
b. A-P15,000
B-P15,000 C-P0
c. A-P15,000
B-P0
C-P15,000
d. A-P10,000
B-P10,000 C-P10,000
c
6. Statement 1- Any stipulation authorizing the pledgee to appropriate the thing
pledged is void and without effect.
Statement 2- If after the auction sale, the thing pledged is not sold, the
pledgee can appropriate the thing pledged.
a. true, true
b. false, false
c. true, false
d. false, true
7. A pledged his watch to B for P20,000. A failed to pay his obligation. B sold it
at public auction for P18,000. Can B recover the deficiency?
a. Yes, even without stipulation

b. Yes, if there is stipulation

c. No, even if there is stipulation
d. No, only if there is stipulation
c
8. Using the preceding number, if the sale is for P22,000, can A recover the
excess?
a. Yes, even without stipulation
b. Yes, if there is stipulation
c. No, even if there is stipulation
d. No, only if there is stipulation
b
9. A mortgaged his car to B for P200,000. A failed to pay his obligation. B sold it
at public auction for P180,000. Can B recover the deficiency?
a. Yes, even without stipulation
b. Yes, only if there is a stipulation
c. No, even if there is stipulation
d. No, unless there is stipulation
a
10. Using the preceding number, if the sale is for P220,000, can A recover the
excess?
a. Yes, even without stipulation
b. Yes, only if there is stipulation
c. No, even if there is stipulation
d. No, unless there is stipulation
a
11. A corporation is deemed dissolved
a. Ceased operation for at least five years
b. No commencement of business transactions within 2 years from issuance
of certificate of incorporation
c. A member of the board is convicted of an offense
d. Majority of the members of the board are dead
b
12. Which of the following corporate acts requires the approval of the majority of
the outstanding capital stock or of the members of the private corporation
a. To invest corporate funds in another corporation or business.
b. To amend the articles of incorporation.
c. To adopt by-laws
d. To dissolve the corporation
c
13. Except for one, every corporation whose character expires by its own
limitation, or annulled by forfeiture or otherwise, or whose corporate existence
for other purpose is terminated in any other manner shall nevertheless be
continued as a body corporate for three years after the time when it would
have been dissolved for the purpose of the following. The exception is
a. Prosecuting and defending suits by or against it and enabling it to settle
and close its affairs.

b. To dispose and convey its property

c. To distribute its assets
d. Continuing the business for which it was established
d
14. Which of the following is not correct?
a. A partnership begins from the moment of the execution of the contract,
unless it is otherwise stipulated.
b. Persons who are prohibited from giving each other any donation or
advantage cannot enter into universal partnership.
c. A particular partnership has for its objects determinate things, their use or
fruits, or a specific undertaking or the exercise of a profession or vocation.
d. Articles of universal partnership entered into without specification of its
nature, only constitute a universal partnership of all present property.
d
15. Objects of pledge, except:
a. Negotiable instruments
b. Shares of stocks
c. Pieces of jewelry
d. Piece of land
d
16. The following are the rules in case a managing partner collects a demandable
debt from a person who also owes the partnership a demand debt, except
a. The sum collected shall be applied to the partnership credit
b. It shall be applied to the two credits in proportion to their amounts
c. The sum shall be fully applied to the partnership credit, if the receipt given
is for the account of the partnership
d. The debtor has the right to have the payment applied in his debt to the
partner if it should be more onerous to him
a
17. The duty to make disclosure, where otherwise there would be a great and
unfair inequality of bargaining position by the use of inside position as regards
relation of directors to stockholders
a. Special circumstances rule
b. Trust fund theory
c. Doctrine of corporate opportunity
d. Incorporate theory
a
18. Chattel mortgage as distinguished from pacto de retro sale
a. A principal and independent contract
b. The title and possession are transferred to the vendee
c. Cannot appropriate to himself the property mortgaged, nor dispose of it
d. Seller may exercise the right to repurchase
c
19. Mutuum as distinguished from commodatum
a. Essentially gratuitous
b. Loan for consumption

c. Object is generally non-consummable

d. Bailor retains the ownership of the thing loaned
b
20. Not an essential requisite of pledge
a. The thing pledged to be placed in the possession of the debtor or of a third
person by common agreement
b. It is constituted to secure the fulfillment of a principal obligation
c. The pledgor is the absolute owner of the thing pledged
d. The person constituting the pledge has the free disposal of the property
a

21. A, B, C and D are partners. Their contributions are as follows: A-P50,000; BP30,000; C- P20,000; and D-services. The partnership incurred obligations to
third persons, which the firm was unable to pay. After exhausting all the
assets of the partnership, there is still an unpaid balance of P10,000. How
much should each partner pay to the creditors?
a. A-P5,000
B-P3,000
C-P2,000
D-P0
b. A-P2,500
B-P2,500
C-P2,500
D-P2,500
c. A-P4,000
B-P3,000
C-P2,000
D-P1,500
d. A-P4,000
B-P4,000
C-P2,000
D-P0
b

22. A, B and C, co-owners of a particular parcel of land, borrowed P75,000 from

X and Y. The three (3) debtors signed a promissory note on January 10, 2006
promising to pay the creditors on or before April 3, 2006. In addition, the
debtors constituted a mortgage on their property in favor of the creditors. On
maturity date, X demanded payment. How much can X collect from C upon
maturity of the obligations (creditors are solidary)?
a. P50,000 as it represents the actual share of X in the credit.
b. P25,000 as the obligation is presumed to be joint and the amount
represents Cs share in the obligation.
c. P75,000 based on the promissory note
d. P75,000 because the nature of the obligation is solidary
b

23. Using the preceding number, if C paid X his share in the obligations, can he,
as co-owner of the property, seek a partial release of the mortgage
constituted thereon?
a. Yes, because C is answerable only for P25,000
b. Yes, because Cs obligation is already extinguished
c. No, because mortgages are considered indivisible, payment in part shall
not extinguish the obligation
d. No, because the obligation is solidary, payment in part shall not extinguish
the obligation secured by mortgage
c

24. The following are considered elements of the contracts of pledge and
mortgage. Which is the exception?
a. The pledgor or mortgagor must have the free disposal of the thing pledged
or mortgaged

b. The pledgor or mortgagor must be the absolute owner of the thing pledged
or mortgaged
c. Both are accessory contracts
d. The thing maybe appropriated if the debtor cannot pay
d
25. P appointed A as his agent orally to sell his parcel of land for P20,000. ten
days later, A sold the same property for P300,000 through a public instrument
executed between him and B. What is the effect and status of sale between A
and B?
a. The sale is valid because A was authorized and it was executed in a
public instrument.
b. The sale is unenforceable because the agent went beyond the scope of
his authority for selling the land for a price higher than the price agreed
upon.
c. The sale is void because there was no valid appointment of A as agent of
P.
d. The sale can be ratified although the appointment of A was done orally
because the sale between A and B was in a public instrument.
c
26. Where a director by virtue of his office, acquired for himself opportunity which
belongs to the corporation, thereby obtaining profits to the prejudice of such
corporation, must account to the latter for all such profits by refunding the
same, unless his act is ratified by
a. A vote at a regular or special meeting by stockholders owning or
representing a majority of the outstanding capital stock.
b. A vote of the stockholders owning or representing at lease one-third of the
outstanding capital stock
c. A unanimous vote of all the stockholders of the corporation
d. A vote of the stockholders owning or representing at least two-thirds of
the outstanding capital stock
d
27. When a borrower uses the thing for a purpose different from the intended,
delays its return to the owner, receives the thing under appraisal, lends to
third person or saves his property instead of the thing in cases of emergency,
shall be liable even in cases of fortuitous events, because
a. The nature of the obligation requires an assumption of risk.
b. The parties have expressly stipulated on such liability.
c. The debtor in delay.
d. The law expressly so provides
d
28. A distribution by a corporation of shares of stock held by it in another
corporation is
a. Case of declaration of stock dividend
b. Situation equivalent to a sale of assets
c. Situation equivalent to a merger or consolidation

d. Property dividend or an actual distribution of corporate assets

d
29. A delivered to B 10,000 pieces of Davao fabricated shell craft jewelry for the
purpose of selling them at P1.00 each. Out of the proceeds of the expected
sale, B is to receive a 10% commission. After 3 days, however, B sold all
items at P1.50 each to C, but on 30-day credit. A compelled B to pay. Which
is correct?
a. B must pay P10,000 immediately
b. B cannot be compelled to pay at all
c. B must pay P15,000 immediately
d. B must pay P5,000 immediately and P10,000 after 30 days
a
30. In real estate mortgage, the mortgagor can sell the mortgaged property
a. With the consent of the mortgagee in writing
b. Even without the consent of the mortgagee
c. Only with the consent of the mortgagee in writing or orally
d. Only after paying his obligation to the mortgagee
b
31. P wrote a letter authorizing A to sell his parcel of land situated in Boracay. A
sold the land in writing to X but the agent (A) did not give the money to P. The
sale of the land by A to X is
a. Void, because the authority of A is not in public instrument.
b. Unenforceable, because the authority of A is not in public instrument.
c. Inexistent, because the authority of A is in private writing.
d. Valid and enforceable
d
32. The negotiable character of an instrument is affected by a provision
a. Authorizing the sale of collateral securities in case the instrument is not
paid at maturity.
b. Authorizing a confession of judgment if the instrument is not paid at
maturity.
c. Giving the marker an election to require something to be done in lieu of
payment of money.
d. Waiving the benefit of any law intended for the protection of the obligor.
c
33. This is a negotiable instrument
a. I promise to pay to bearer P10,000 Sgd. A
b. Pay to B or order P10,000 Sgd. A
c. I promise to pay B or order P10,000 in two installments. Sgd. A
d. Pay to B or order P10,000, 30 days after the death of Y. Sgd. A
a
34. This is not a negotiable instrument
a. I promise to pay to the order of bearer P10,000. Sgd. A
b. I promise to pay B or his agent P10,000. Sgd. A
c. I promise to pay B or order US$1,000. Sgd. A
d. I promise to pay to the order of B P10,000. Sgd. A

b
35. Rules on construction where instrument is ambiguous, except
a. If not dated, the date is considered to be the date of issuance.
b. Where the signature is placed and is not clear in what capacity the person
intended to sign, he is deemed an accommodation party
c. Between printed and written provision, the written provisions prevail
d. Instruments containing the words I promise to pay signed by two or more
persons, such persons are deemed jointly and severally liable
b
36. Which of the following is not negotiable?
a. Pay to B or order P10,000. Sgd. A to C
Accepted: For P5,000 only Sgd. C
b. Pay to Jose P10,000. Sgd. Juan to Pedro
Accepted: For P10,000 Sgd. Pedro
c. Pay to Maria or bearer P10,000. Sgd. Jose to Juan and Pedro
Accepted: If Maria passes the CPA Board Examination. Sgd. Juan
d. Pay to the order of B P10,000 at 123 CM Recto Avenue, Manila. Sgd. A to
C, J.P Rizal St. Makati
Accepted: Payable at 123, JP Rizal St., Makati City. Sgd. C
b
37. Where an indorsement is conditional, may the marker make payment
although the condition has not been fulfilled?
a. Yes, he may disregard the condition without incurring any liability.
b. Yes, he may disregard the condition but he becomes liable if the endorsee
fails to fulfill the condition
c. No, the qualified indorsement becomes part of the contract
d. No, the person who received payment will hold the proceeds subject to the
right of the conditional indorser
a
38. M issues a promissory note payable to P or bearer. Which of the following is
not correct?
a. If indorsed by P to A and A also indorsed it to B, B may negotiates the
note to C by mere delivery
b. If indorsed by P to A and A also indorses it to B, P is liable to A and B
c. If indorsed by P to A and A also indorses it to B and B negotiates the note
to C by delivery. A is liable to B and C
d. If P negotiates the note to A by delivery and A indorses it to B, B may
negotiate the note to C by delivery.
c
39. What indorsements are not necessary to the holders title?
Answer 1- Any indorsements thereon, where the instrument is originally
payable to bearer
Answer 2- All indorsements subsequent to a qualified indorsement, where the
instrument is originally payable to order
a. true, true
b. false, false
c. true, false
d. false, true
c

40. Which of the following is not correct?

a. Where the instrument is negotiated back to a prior party, all intervening
indorsements are not necessary to the holders title
b. Where the instrument is originally payable to order, the holder may not
strike out the payees indorsement
c. The indorser whose indorsement is struck out and all indorsers are
thereby relieved from liability on the instrument
d. The holder may at anytime strike out an indorsement which is not
necessary to his title
c
41. Which of the following is not summary remedy of the Government to enforce
tax collection?
a. Distraint
c. Levy
b. Civil Action
d. Tax Lien
b
42. Which of the following cases may not be compromise by the Bureau of
Internal Revenue Commissioner?
a. Delinquents accounts
b. Cases under administrative protest
c. Fraud cases
d. Cases covered by pre-assessment notice
c
43. A fifty (50%) percent surcharge shall be impose on:
a. Failure to file any return and pay the tax due thereon.
b. Failure of return with an internal officer other than those designated by
law.
c. Willful neglect to file a tax return as prescribed by law.
d. Failure to pay deficiency tax within the prescribed period required by law.
c
44. The legal interest rate for tax delinquency is?
a. Six (6% percent.
b. Eight (8%) percent.
c. Twelve (12%) percent.
d. Twenty (20%) percent.
d
45. Which of the following is not a requisite of tax regulations (BIR revenue
regulations):
a. It must be reasonable and germane to the purpose of the law.
b. It must be within the authority conferred or under the color of valid title.
c. It must be given retroactive application.
d. It must be published.
c
46. It is said that taxes are what we pay for civilized society. Without taxes, the
government would be paralyzed for lack of the motive power to motivate
active and operate.
a. Lifeblood theory
c. Benefit-protection theory

b. Necessity theory

d. Reciprocal theory

a
47. The power to tax is exclusively lodged with the legislature, however, there are
exceptions provided by the Constitution, which of the following is not:
a. Authority of the President to fix tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties and imposts
b. Power of local government units to levy taxes, fees and charges.
c. Delegation to administrative agencies for implementation and collection of
taxes.
d. Designation to private entities the enforcement and collection of taxes.
d
48. Which of the following is the least Constitutional limitations?
a. Due process clause
c. Non-impairment clause
b. Equal protection
d. Progressivism clause
49. The following taxes, fees and charges are deemed to be national revenue
taxes, except:
a. Documentary stamp taxes
b. Community taxes
c. Excise taxes
d. Income taxes
b
50. Which of the following is not an authority of the Bureau of Internal Revenue
Commissioner?
a. Authority to administer oaths and to take testimony
b. Authority to make arrests and seizures
c. Authority to deputized members of the Armed Forces of the Philippines
and members of the Philippine National Police to enforce tax laws
d. Authority to assign or reassign internal revenue officers and employees of
the BIR to other special duties connected with the enforcement or
administration of the tax laws
c
51. Which of the following is correct?
a. A protest should be filed by the taxpayer, otherwise the assessment
becomes final and no longer be questioned in court
b. A protest may be filed by the taxpayer anytime before the BIR collects the
tax
c. The assessment should be made by the BIR collects the tax
d. The assessment shall include only tax proper
a
52. Which of the following statements is correct?
a. A pre-assessment notice shall be required before an assessment may be
made.

b. The taxpayer shall be informed of the law and the facts on which the
assessment is made, otherwise the assessment shall be void.
c. The Commissioner may refund a tax even without a claim refund from the
taxpayer where on the face of the return upon which the payment was
made, such a payment clearly appears to have been erroneously made.
d. A suit may be brought even after the lapse of two years from the date of
payment, if any supervening cause arises after payment.
a
53. The authorities of the BIR commissioner include the following, except:
a. Compromise the payment of any internal revenue tax.
b. Abate a tax liability
c. Credit or refund tax that had been erroneously received
d. Inquire into bank deposit
d
54. The following are grounds to cancel a tax liability by the BIR commissioner,
except
a. The tax unjustly or excessively assessed
b. The administration and collection costs involved do not justify the
collection of the amount of tax
c. A reasonable doubt as to the validity of the claim against the taxpayer
d. Illegal collection of tax
d
55. Which of the following not a requisite to toll the collection of taxes to be made
by the Bureau of Internal Revenue, upon proof of the following to the Court of
Tax Appeals:
a. It will jeopardize the interest of the taxpayer;
b. It will jeopardize the interest of the Government;
c. Filing of a bond double the amount of tax assessed;
d. The case is not dilatory.
c
56. Transitional Input Tax Rate is:
a. 1.5%
b. 8%
c. 10%
d. 2%
d
57. One of the following is not an ordinary deduction for purposes of Net Taxable
Estate.
a. Funeral expense b. Medical expense
c.
Judicial d. Taxes
expense
b
58. The following persons signature must appear in the corporations income tax
return, except:
a. President
c. Treasurer
b. Vice President
d. External Auditor
d
59. Deduction for funeral expenses shall be allowed, except:
a. Only if paid out of the estate

10

b. For a non-resident alien limited to amount that was actually incurred in the
Philippines
c. Shall in no case to exceed 5% of the gross estate
d. Shall in no case to exceed P200,000
b
60. Which of the following is deductible from the gross estate?
a. Income tax paid on income received after death
b. Property taxes not accrued prior to death
c. Estate tax paid to a foreign country
d. Donors tax accrued prior to death
d
61. Which one is incorrect? Losses are deductible if:
a. Arising from natural calamity or fortuitous event
b. Not compensated by insurance
c. A property included in the Philippine gross estate
d. Incurred during the settlement of the estate
c
62. Deductions from gross estates for transfers for public purposes, except
a. Means legacy in a last will and testament to the government
b. Means device in the last will to the government
c. Include any kind of transfer in favor of the government
d. Do not include legacies to charitable institutions
c
63. Which of the following is not an attribute of characteristic of taxes?
a. A tax is a forced charge
b. It is payable in money
c. It is progressive
d. It is levied for public purposes
c
64. Importance of taxes is:
a. It is the lifeblood of the Government
b. It is personal to the taxpayer
c. It is a revenue measure
d. It is for public purpose
a
65. Which of the following is not a nature of taxing power?
a. It is an attribute of the sovereignty.
b. It is inherent in the state.
c. It is exclusively exercised by legislature.
d. It is plenary, comprehensive and unlimited.
c
66. Taxes proceed upon the theory that the existence of the government is a
necessity; it cannot continue without the means to pay its expenses; and for
those means, it has the right to compel all citizens and property within its
limits to contribute
a. Benefit- Protection Theory
c. Lifeblood Theory

11

b. Necessity Theory

d. Territoriality Theory

b
67. Which of the following will not interrupt the running of the prescriptive period
for assessment and collection of taxes:
a. When the Commissioner is prohibited from making the assessment or
beginning distrait and levy or a proceeding in court and for thirty (30) days
thereafter.
b. When the taxpayer requests for the reinvestigation which is granted by the
Commissioner.
c. When the taxpayer is out of the Philippines.
d. When the taxpayer cannot be located in the address given by him in the
return.
a
68. Which of the following are not deputized agents for the collection of national
internal revenue taxes?
a. The Commissioner of Customs and his subordinates with respect to the
collection of national internal revenue taxes on imported articles.
b. The head of the appropriate government office and his subordinates with
respect to the collection of energy tax.
c. Banks duly accredited by the Commissioner with respect to receipt of
payments of internal revenue taxes authorized to be made through banks.
d. Any officer or employee of an authorized agent bank assigned to transmit
tax returns.
d
69. Occupying the forefront of tax law enforcement is the:
a. Department of Finance
c. Legislative Department
b. Bureau of Internal Revenue
d. Executive Department
b
70. The powers and duties of the Bureau of Internal Revenue comprehend the
following, except?
a. Assessment and collection of all national and local revenue taxes.
b. Enforcement of all forfeitures, penalties and fines in connection connected
with the collection of national internal revenue taxes.
c. Execution of judgment in all cases decided in its favor by the Court of
Appeals, and the ordinary courts.
d. Effecting and administering the supervisory and police powers conferred
to it by the Tax Code or other laws.
a
71. The power to interpret the provisions of the Tax Code and other tax laws shall
be under the exclusive and original jurisdiction of the:
a. The Commissioner of the BIR
b. The Secretary of Finance
c. The Court of Tax Appeals
d. The Regular Courts

12

a
72. The power to decide disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties imposed in relation thereto, or other
matters arising under the Tax Code or other laws administered by the Bureau
of Internal Revenue is vested with:
a. The Commissioner of the BIR
b. The Secretary of Finance
c. The Court of Tax Appeals
d. The Regular Courts
a
73. It is the official action of an administrative officer in determining the amount of
tax due from a taxpayer, or it may be a notice to the effect that the amount
stated therein is due from the taxpayer with a demand fro payment of the tax
or deficiency stated therein.
a. Tax investigation
b. Tax audit
c. Tax assessments
d. Tax mapping
c
74. To escape a liability for a deficiency estate tax, after paying the estate tax,
must secure a written discharge of personal liability from:
a. The heirs
b. The commissioner
c. The probate court
d. The court where the estate is being settled
b
75. When an estate is settled extra-judicially, the estate tax return may be filed
and paid:
a. By any of the heirs, with the right of reimbursement from the other heirs
b. Only by the heir with written authority from the other heirs
c. By each of the heirs, the payment being for his distributive share in the
estate tax
d. None of the above
76. For a finding a fraudulent return by the BIR to prosper:
Statement No. 1: Fraud must be intentional, consisting of deception willfully
and deliberately done or resorted to in order to avoid payment of the tax.
Statement No. 2: Fraud cannot be presumed but must be proved. Fraudulent
intent can not be deducted from mistakes however frequent they may be,
especially if, such mistakes emanate from erroneous classification of items in
accounting methods utilized for determination of tax liabilities.
a. True; False
b. True; True
c. False; True

13

d. False; False
b
77. Net capital loss carryover will not be claimed by, except:
a. Individual taxpayers
b. Estate taxpayers
c. Trust taxpayers
d. Corporate taxpayers
d
78. Decedent who is married with a surviving spouse and one legitimate child and
two illegitimate children. Left the following properties.
Real properties
P3,000,000
Family home
1,000,000
Other real property (exclusive)
2,000,000
Family lot (exclusive)
400,000
Funeral expenses
300,000
Taxes and losses
1,300,000
Medical expenses
1,000,000
What is the total net taxable estate?
a. P1,250,000
b. P2,250,000
c. P1,150,000
d. P2,450,000
a
79. The following are the reasons which necessitates the filing of an
administrative claim for refund with the BIR, except:
a.
To afford the Commissioner an opportunity to consider the claim.
b.
To give the Commissioner a chance to correct the errors of
subordinate officers.
c.
To notify the Government that such taxes have been questioned
and the notice should be borne in mind in estimating the revenue available
for expenditures.
d.
To give ample time to the Commissioner in preparing the cash to
be disbursed for the taxpayers refund.
d
80. 1st Statement: A resident corporation is allowed to deduct depreciation
expense regardless of the propertys location.
2nd Statement: A private educational institution may at its option elect either
to deduct capital expenditures during the taxable year or to deduct allowable
for depreciation thereof.
a.
True; False
b.
True; True
c.
False; True
d.
False; False
c

14

end

15