IRS CPA REVIEW

Iloilo City and Leganes, Iloilo

TAXATION

GENERAL PRINCIPLES

MULTIPLE CHOICE QUESTIONS

1. The power of taxation is inherent in sovereignty being essential to the

existence of every government. Hence, even if not mentioned in the
Constitution the state can still exercise the power.
It is essentially a legislative function. Even in the absence of any
constitutional provision, taxation power falls to Congress as part of the
general power of law-making.

a. False, False; c. True, True;

b. False, True; d. True, False;

2. One of the characteristics of a tax is that:

a. It is generally based on contract;

b. It is generally payable in money;
c. It is generally assignable;
d. It is limited in amount.

3. One of the characteristics of our internal revenue laws is that they are:

a. Political in nature;
b. Penal in nature;
c. Generally prospective in operation although the tax statute may
nevertheless operate retrospectively provided it is clearly the
legislative intent;
d. Both political and penal in nature.

4. The proportional contribution by persons and property levied by the law-

making body of the State by virtue of its sovereignty for the support of the
government and all public needs is referred to as:

a. Taxes; c. License Fees;

b. Special Assessment; d. Toll fee

5. Tax of a fixed proportion of the value of the property with respect to which
the tax is assessed and requires the intervention of assessors or
appraisers to estimate the value of such property before the amount due
from each taxpayer can be determined is known as:

a. Specific c. Special or regulatory

b. Ad valorem d. Assessment

6. Which of the following is not an example of excise tax:

a. Transfer tax c. Real property tax

b. Sales tax d. Income tax

7. Value-added tax is an example of:

a. Graduated tax c. Regressive tax

b. Progressive tax d. Proportional tax

8. No person shall be imprisoned for nonpayment of a:

a. Property tax c. Poll tax

b. Excise tax d. Income tax

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 9. Under this basic principle, the government should not incur a deficit:

a. Theoretical Justice c. Fiscal Adequacy

b. Administrative Feasibility d. Economic Efficiency

10. Which of the following are the essential elements of a tax?

A. It is an enforced contribution.
B. It is generally payable in money.
C. It is proportionate in character
D. It is generally assignable

a. A and B only c. A, B, and C only

b. B and C only d. A, B, C, and D

11. Police power as distinguished from Eminent Domain Power:

a. Just compensation is received by owner of the property.

b. Maybe exercised by private individuals
c. Superior to the impairment clause of the constitution
d. Property is taken by the government for public purpose

12. A tax wherein both incidence of or the liability for the payment of the tax
as well as the burden of the tax falls on the same person:

a. Direct tax c. Indirect tax

b. Personal tax d. Property tax

13. A fundamental rule in taxation is that the property of one country may not
be taxed by another country. This is known as:

a. International law c. Reciprocity

b. International comity d. International inhibition

14. The following are kinds of taxes as to graduation. Which one is not

a. Digressive c. Regressive
b. Uniform d. Progressive

15. It is collection for the use of somebody else’s property.

a. Toll c. Tax
b. Debt d. Special assessment

16. Which is not a valid basis of taxation?

a. It is based on necessity
b. The inhabitants of the state receive benefits and protection in
exchange of the tax they pay
c. The government is a necessity in order to have a power of taxation
d. The government cannot exist without means to pay its expenses

17. Which of the following is a major purpose of taxation?

a. To reduce inequalities of wealth

b. To protect local products against imported
c. To encourage the growth to home industries
d. To raise revenue for the support of government

18. Which of the following is not a purpose of taxation?

a. To reduce inequalities of wealth

b. As protective tariff on imported goods to protect local producers
against foreign competitors
c. To encourage the growth of home industries through the proper use
of tax exemptions and tax incentives
d. To expropriate private property for the promotion of general welfare

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19. Which of the following is not a phase of taxation?

a. Levying of the tax c. Collection of the tax

b. Imposition of the tax d. Delegation of the power to tax

20. It is a process of determining the persons or property to be taxed, the sum

or sums to be raised, the rate to be applied and the time and manner of
imposition, receiving and collecting taxes.

a. Levying c. Administering
b. Collecting d. Both b and c

21. It is an aspect of taxation that is legislative in character and is solely

vested on Congress.

a. Levying c. Administering
b. Collecting d. Both a and c

22. Which of the following is not a basic principle of a sound tax system?

a. Fiscal adequacy
b. Equality or Theoretical Justice
c. Administrative Feasibility
d. Financial Feasibility

23. Which of the following is not a basic principle of a sound tax system or an
element of it?

a. The law must be capable of simple, convenient, and just application

b. The tax imposed must be regressive in character
c. The tax should be imposed based on the tax-payers ability to pay
d. Sufficiency of source of revenue to meet the expenditures of
government regardless of the prevailing business conditions.

24. The power by which the government raises revenue to defray the
necessary expenses of government.

a. Power of taxation c. Power of Eminent Domain

b. Police Power d. People Power

25. The power of the state to take private property for public use upon
payment of just compensation.

a. Power of taxation c. Power of Eminent Domain

b. Police Power d. People Power

26. The power of the estate to enact laws to promote public health, public
morals, public safety and the general welfare

a. Power of taxation c. Power of Eminent Domain

b. Police Power d. People Power

27. It refers to the place, or the state or political unit which has jurisdiction to
impose tax its inhabitants.

a. Basis of taxation c. Phases of taxation

b. Situs of taxation d. Theory of taxation

28. Tax as distinguished from license fee:

a. None payment does not necessarily render the business illegal;

b. A regulatory measure;
c. Imposed in the exercise of police power;
d. Limited to cover cost of regulation.

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29. A tax must be imposed for public purpose. Which of the following is not a
public purpose?

a. National defense c. Improvement of the sugar industry

b. Public education d. None of the above

30. In case of conflict between tax laws and Generally Accepted Accounting
Principles (GAAP):

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 courts

31. Statement 1: The power to tax can be delegated to the President of the
Philippines.
Statement 2: The President of the Philippines is empowered to grant tax
exemption on certain class of taxpayers.

a. True; True c. True; False

b. False; False d. False; True

32. Statement 1: Tax laws can never have retroactive effect.

Statement 2: The government cannot tax it agencies and
instrumentalities.

a. True; True c. True; False

b. False; False d. False; True

33. Statement 1: The inherent powers of the state are exercised primarily by
the legislature.
Statement 2: The three inherent powers of the state are methods by
which the state interferes with private right.

a. True; True c. True; False

b. False; False d. False; True

34. Statement 1: Taxation may be used to implement the police power of the
state.
Statement 2: Police power is superior to the non-impairment clause of the
constitution.

a. True; True c. True; False

b. False; False d. False; True

35. Statement 1: The theory of taxation is based on the lifeblood doctrine.

Statement 2: The government cannot survive without taxation.

a. True; True c. True; False

b. False; False d. False; True

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