INCOME TAXATION C4 QUESTIONS AND
ANSWERS WITH VERIFIED SOLUTIONS
2024
T/F. Both active income and passive income do not require direct participation of the taxpayer in earning
the income. - ANSWER F
T/F. There are three types of gross income for taxation purposes. - ANSWER T
T/F. The three tax schemes are mutually inclusive in coverage. - ANSWER F
T/F. Regular income tax generally covers active income and capital gains. - ANSWER T
T/F. Final tax generally covers passive income. - ANSWER T
T/F. Capital gains arise from the sale, exchange, and other disposition of any assets. - ANSWER F
T/F. There are only two types of assets for purposes of taxation. - ANSWER T
T/F. An ordinary asset is defined to include all other assets other than capital assets. - ANSWER F
T/F. The technique used to measure income is referred to as an accounting method. The length of time
over which income is reported is referred to as an accounting period. - ANSWER T
T/F. Regular accounting periods are calendar and fiscal. - ANSWER T
T/F. Individuals file their income tax returns on or before april 15 of the following calendar year. -
ANSWER T
,T/F. All taxpayers can change their accounting period when there is a change in the nature of their
business, but the BIR must be notified in all cases. - ANSWER F
T/F. The first accounting period of a starting business will more likely be less than 12 months. - ANSWER
T
T/F. The accounting period of a deceased taxpayer shall be terminated on December 31 in the year of
death. - ANSWER F
T/F. Accrual basis and cash basis are the most common accounting method used in practice. - ANSWER T
T/F. Advanced income is an item of gross income for accrual basis taxpayers. - ANSWER T
T/F. Generally, prepayments are non-deductible in the current accounting period. - ANSWER T
T/F. Prepayments are deductible but in the future period they expire or are consumed in the business or
trade of the taxpayer. - ANSWER T
T/F. The use of different methods for different businesses of the same taxpayer is permitted by law. -
ANSWER T
T/F. Initial payment includes downpayment and installments in the year of sale. - ANSWER T
T/F. Contract price is synonymous with selling price. - ANSWER F
T/F. The crop year method is an accounting method. - ANSWER T
T/F. Under the percentage of completion method, gross income is reported based on the cash collections
from the contract price. - ANSWER F
, T/F. The depreciated value of the property upon termination of the lease constitutes income to the
lessee. - ANSWER T
T/F. The withheld taxes on the income payments made by the taxpayers are tax credit against their
income tax due. - ANSWER F
T/F. There are three types of income tax return for each income tax scheme/ - ANSWER F
T/F. All taxpayers, small or large, are encouraged to file their income tax return through the EFPS system
of the BIR. - ANSWER F
T/F. Large taxpayers are under the supervision of the BIR Large Taxpayer Service. - ANSWER T
T/F. Non-filing and/or non-payment of tax is subject to penalties such as surcharges, interest,
compromise, and imprisonment. - ANSWER F
T/F. The interest on unpaid taxes is computed on the basic tax only excluding the surcharge. - ANSWER T
T/F. Only large taxpayer shall file under eFPS. - ANSWER F
T/F. Both manual filing and filing through e-BIR forms makes use of manual payment. - ANSWER T
T/F. e-FPS is fully electronic tax compliance. - ANSWER T
T/F. e-BIR forms makes use o electronic data entry and filing. - ANSWER T
T/F. e-FPS filers may file manually when there is a BIR system downtime. - ANSWER T
Which is not a scheme in taxing income?
A. Ordinary gain taxation
ANSWERS WITH VERIFIED SOLUTIONS
2024
T/F. Both active income and passive income do not require direct participation of the taxpayer in earning
the income. - ANSWER F
T/F. There are three types of gross income for taxation purposes. - ANSWER T
T/F. The three tax schemes are mutually inclusive in coverage. - ANSWER F
T/F. Regular income tax generally covers active income and capital gains. - ANSWER T
T/F. Final tax generally covers passive income. - ANSWER T
T/F. Capital gains arise from the sale, exchange, and other disposition of any assets. - ANSWER F
T/F. There are only two types of assets for purposes of taxation. - ANSWER T
T/F. An ordinary asset is defined to include all other assets other than capital assets. - ANSWER F
T/F. The technique used to measure income is referred to as an accounting method. The length of time
over which income is reported is referred to as an accounting period. - ANSWER T
T/F. Regular accounting periods are calendar and fiscal. - ANSWER T
T/F. Individuals file their income tax returns on or before april 15 of the following calendar year. -
ANSWER T
,T/F. All taxpayers can change their accounting period when there is a change in the nature of their
business, but the BIR must be notified in all cases. - ANSWER F
T/F. The first accounting period of a starting business will more likely be less than 12 months. - ANSWER
T
T/F. The accounting period of a deceased taxpayer shall be terminated on December 31 in the year of
death. - ANSWER F
T/F. Accrual basis and cash basis are the most common accounting method used in practice. - ANSWER T
T/F. Advanced income is an item of gross income for accrual basis taxpayers. - ANSWER T
T/F. Generally, prepayments are non-deductible in the current accounting period. - ANSWER T
T/F. Prepayments are deductible but in the future period they expire or are consumed in the business or
trade of the taxpayer. - ANSWER T
T/F. The use of different methods for different businesses of the same taxpayer is permitted by law. -
ANSWER T
T/F. Initial payment includes downpayment and installments in the year of sale. - ANSWER T
T/F. Contract price is synonymous with selling price. - ANSWER F
T/F. The crop year method is an accounting method. - ANSWER T
T/F. Under the percentage of completion method, gross income is reported based on the cash collections
from the contract price. - ANSWER F
, T/F. The depreciated value of the property upon termination of the lease constitutes income to the
lessee. - ANSWER T
T/F. The withheld taxes on the income payments made by the taxpayers are tax credit against their
income tax due. - ANSWER F
T/F. There are three types of income tax return for each income tax scheme/ - ANSWER F
T/F. All taxpayers, small or large, are encouraged to file their income tax return through the EFPS system
of the BIR. - ANSWER F
T/F. Large taxpayers are under the supervision of the BIR Large Taxpayer Service. - ANSWER T
T/F. Non-filing and/or non-payment of tax is subject to penalties such as surcharges, interest,
compromise, and imprisonment. - ANSWER F
T/F. The interest on unpaid taxes is computed on the basic tax only excluding the surcharge. - ANSWER T
T/F. Only large taxpayer shall file under eFPS. - ANSWER F
T/F. Both manual filing and filing through e-BIR forms makes use of manual payment. - ANSWER T
T/F. e-FPS is fully electronic tax compliance. - ANSWER T
T/F. e-BIR forms makes use o electronic data entry and filing. - ANSWER T
T/F. e-FPS filers may file manually when there is a BIR system downtime. - ANSWER T
Which is not a scheme in taxing income?
A. Ordinary gain taxation
