1. You examined the Company A’s accounting books.

On one journal entry, particulars

indicated that goods worth $12,000 was shipped (n/30) to Company A on January 15, 2020
from a foreign company and the term of the shipment was FOB destination, freight prepaid.
The foreign company paid freight of $950. What amount should form part of the dutiable
value?

2. Company A is importing its merchandise from Company B. On January 1, 2020, Company A

purchased goods billed for $100,000 (20/10, n/60) evidenced by PO No. PO123456. The
parties agreed that Company B will bill Company A FOB shipping point, freight prepaid, net
of discount. Company A’s accounting records reflected the following journal entries:

Date Particulars Dr. Cr.

1/30/2020 Accounts Payable $100,000
Cash $100,000

Payment for inventory-

PO123456

What amount should form part of the dutiable value?

3. In the event of your audit, you found the following information related to the inventories of
Company A:
 An invoice for $90,000 supported by a contract with terms FOB destination, freight
collect.
 The freight cost was $5,000 paid by Company A.
What amount should form part of the dutiable value?

4. Which of the following statements concerning related party transactions is correct?

A. In the absence of evidence to the contrary, related party transactions should be
assumed to be outside the ordinary course of business.
B. The audit procedures directed toward identifying related party transactions should
include considering whether transactions are occurring but are not being given proper
accounting recognition.
C. An auditor should determine whether a particular transaction would have occurred if the
parties had not been related.
D. An auditor should substantiate that related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions.

5. The most reliable forms of documentary evidence are those documents that are
A. Prenumbered.
B. Internally generated.
C. Issued sequentially.
D. Authorized by a responsible official.
6. In case of conflict between tax laws and generally accepted accounting principles

A. Both tax laws and GAAP shall be enforced

B. GAAP shall prevail over tax laws
C. Tax laws shall prevail over GAAP
D. The issue shall be resolved by the court

7. Which of the following statements concerning audit evidence is correct?

A. Appropriateness is the measure of the quantity of audit evidence.
B. Sufficiency is the measure of the quality of audit evidence, that is, its relevance and
reliability.
C. The quantity of audit evidence needed is affected by its quality and the risk of
misstatement.
D. The sufficiency and appropriateness of audit evidence are not interrelated.

8. The importation of the following goods are VAT exempt, except:

A. Smoked Fish
B. Feeds for Parrot
C. Fuel for international flights
D. Aircrafts

9. The standard states that the auditor may decide to select specific items from a
population based on such factors as the auditor's understanding of the entity, the
assessed risk of material misstatements, and the characteristics of the population
being tested. Specific items that may be selected for testing usually include the
following, except
A. Items that are of high value.
B. Items that are suspicious, unusual, risk-prone, or have a history of error
C. All items whose value do not exceed a certain amount so as to verify only a small
proportion of the total amount of class of transactions or account balance.
D. Items that provide information about matters such as the of transactions, and
internal control about matters such as the nature of the entity

10. Pursuant to the Tax Code, which of the following accounting records is required to
be maintained by an entity subject to VAT?
A. General Journal and General Ledger
B. Cash Receipts and Cash Disbursement Journal
C. Sales and Purchases Journal
D. All of the above
E. A and B only
F. A and C only
G. B and C only
Answer key:

1. $12,000
2. $125,000
3. $90,000
4. B
5. D
6. C
7. C
8. B
9. C
10. D