TEST BANK-INCOME TAXATION
CHAPTER 1-GENERAL PRINCIPLES AND CONCEPTS OF
TAXATION
A.MULTIPLE CHOICE:
1. THE PROCESS BY WHICH THE SOVEREIGN RAISES INCOME TO
DEFRAY THE EXPENSES OF THE GOVERNMENT IS CALLED- (RPCPA)
A. SUBSIDY
B. TARIFF
C. TAXATION
D. TRIBUTE
2. ONE OF THE CHARACTERISTICS OF INTERNAL REVENUE TAX IS
THAT THEY ARE-(RPCPA)
A) CRIMINAL IN NATURE
B) PENAL IN NATURE
C) POLITICAL IN NATURE
D) GENERALLY PROSPECTIVE IN APPLICATION
3. IN CASE OF CONFLICT BETWEEN THE TAX LAWS AND GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (GAAP)-(RPCPA)
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
4. WHICH OF THE FOLLOWING HAS NO POWER OF TAXATION?(RPCPA)
A) PROVINCES
B) CITIES
C) BARANGAYS
D) BARRIOS
5. “SCHEDULAR SYSTEM OF INCOME TAXATION” MEANS(RPCPA)
A) ALL TYPES OF INCOME ARE ADDED TOGETHER TO ARRIVE AT
GROSS INCOME
B) SEPARATE GRADUATED RATES ARE IMPOSED ON DIFFERENT
TYPES OF INCOME
C) CAPITAL GAINS ARE EXCLUDED IN DETERMINING GROSS
INCOME
, D) COMPENSATION INCOME AND BUSINESS/PROFESSIONAL
INCOME ARE ADDED TOGETHER IN ARRIVING AT GROSS
INCOME
6. ONE OF THE FOLLOWING IS A PRIMARY PURPOSE OF TAXATION
A)PROTECTION OF LOCAL INDUSTRIES AGAINST FOREIGN
COMPETITION THROUGH IMPOSITION OF HIGH CUSTOMS DUTIES ON
IMPORTED GOODS
B)REDUCTION OF INEQUALITIES IN WEALTH AND INCOME BY
IMPOSING PROGRESSIVELY HIGHER TAX RATES
C) TO SECURE REVENUE FOR THE SUPPORT OF THE GOVERNMENT
D) STRENGTHENING OF ANEMIC ENTERPRISES BY GIVING TAX
EXEMPTION
7. WHICH OF THE FOLLOWING IS NOT A SECONDARY PURPOSE OF
TAXATION?
A) TO SERVE AS KEY INSTRUMENT OF SOCIAL CONTROL
B) TO EFFECT A MORE EQUITABLE DISTRIB UTION OF WEALTH
AMONG PEOPLE
C) TO ACHIEVE SOCIAL AND ECONOMIC STABILITY
D) TO RAISE REVENUE TO DEFRAY THE NECESSARY EXPENSE OF
THE GOVERNMENT
8. WHICH IS THE BEST ANSWER? A TAX REFORM AT ANY GIVEN TIME
UNDERSCORES THE FACT THAT-(RPCPA)
A) TAXATION IS AN INHERENT POWER OF THE STATE
B) TAXATION IS ESSENTIALLY A LEGISLATIVE POWER
C) TAXATION IS A POWER THAT IS VERY BROAD
D) THE STATE CAN AND SHOULD ADOPT PROGRESSIVE TAXATION
9. THE LEGISLATIVE BODY CAN IMPOSE A TAX AT ANY
AMOUNT UNDERSCORES THE LEGAL DICTUM THAT TAXATION IS –
(RPCPA)
A) AN INHERENT POWER OF THE TAX
B) A VERY BROAD POWER OF THE STATE
C) ESSENTIALLY A LEGISLATIVE POWER
D) FOR PUBLIC PURPOSE
10. ALL OF THE FOLLOWING, EXCEPT ONE, ARE BASIC
PRINCIPLES OF THE SOUND TAX SYSTEM
A) FISCAL ADEQUACY
, B) THEORETICAL JUSTICE
C) ADMINISTRATIVE FEASIBILITY
D) INHERENT IN SOVEREIGNTY
11. UNDER THIS BASIC PRINCIPLE OF SOUND TAX SYSTEM, THE
GOVERNMENT SHOULD NOT INCUR A DEFICIT-(RPCPA)
A) THEORETICAL JUSTICE
B) ADMINISTRATIVE FEASIBILITY
C) FISCAL ADEQUACY
D) NONE OF THE ABOVE
12. THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF A SOUND
TAX SYSTEM
A) IT SHOULD BE CAPABLE OF BEING EFFECTIVELY ENFORCED
B) IT MUST BE PROGRESSIVE
C) SOURCES OF REVENUE MUST BE SUFFICIENT TO MEET
GOVERNMENT EXPENDITURES AND OTHER PUBLIC NEEDS
D) IT SHOULD BE EXERCISED TO PROMOTE PUBLIC WELFARE
13. WHICH OF THE FOLLOWING IS NOT ONE OF THE CANONS OF A
SOUND TAX SYSTEM?
A) QUANTIFIABILITY
B) EQUALITY
C) CERTAINTY
D) CONVENIENCE
14. THE POWER OF TAXATION CAN ONLY BE EXERCISED BY THE
LAWMAKING BODY
A) SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS
B) EQUALITY OR THEORETICAL JUSTICE
C) LEGISLATIVE IN CHARACTER
D) INHERENT IN SOVEREIGNTY
15. THE PRESIDENT OF THE PHILIPPINES AND THE PRIME MINISTER OF
JAPAN ENTERED INTO AN EXECUTIVE AGREEMENTIN RESPECT OF A
LOAN FACILITY TO THE PHILIPPINES FROM JAPAN WHEREBY IT WAS
STIPULATED THAT INTEREST ON LOANS GRANTED BY PRIVATE
JAPANESE FINANCIAL INSTITUTIONS IN THE PHILIPPINES SHALL
NOT BE SUBJECT TO PHILIPPINE INCOME TAXES. WHAT BASIC
CHARACTERISTIC OF TAXATION HAS BEEN VIOLATED BY THIS
AGREEMENT?
, A) INHERENT LIMITATION
B) THEORETICAL JUSTICE
C) LEGISLATIVE IN CHARACTER
D) ADMINISTRATIVE FEASIBILITY
16. WHICH STATEMENT GIVES THE CORRECT ANSWER? THAT A
FEASIBILITY STUDY NEEDS OR NEED TO LOOK INTO THE TAXES OF
DIFFERENT POLITICAL SUBDIVISIONS OF GOVERNMENT WHICH MAY
BE ALTERNATIVE SITES OF BUSINESS BECAUSE-(RPCPA)
A) PROVINCES, CITIES AND MUNICIPALITIES MUST HAVE UNIFORM
TAXES BETWEEN AND AMONG THEMSELVES
B) THE LOCAL TAXES OF A POLITICAL SUBDIVISION NEED NOT BE
UNIFORM WITH THE LOCAL TAXES OF ANOTHER POLITICAL
SUBDIVISION
C) BUSINESSES THAT ARE SUBJECT TO NATIONAL TAXES ARE
EXEMPTED FROM LOCAL BUSINESS TAXES
D) LOCAL BUSINESS TAXES MAY BE CREDITED AGAINST NATIONAL
BUSINESS TAXES
17. STATE,MENT 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.
STATEMENT 2: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
LAWMAKING.-(RPCPA)
A) FALSE, FALSE
B) FALSE, TRUE
C) TRUE, TRUE
D) TRUE, FALSE
18. THOSE RESTRICTIONS ON THE EXERCISE OF THE POWER OF
TAXATION THAT AREW FOUND IN THE CONSTITUTION OR IMPLIED
FROM ITS PROVISIONS
A) THEORETICAL JUSTICE
B) LEGISLATIVE IN CHARACTER
C) INHERENT LIMITATIONS
D) CONSTITUTIONAL LIMITATIONS
CHAPTER 1-GENERAL PRINCIPLES AND CONCEPTS OF
TAXATION
A.MULTIPLE CHOICE:
1. THE PROCESS BY WHICH THE SOVEREIGN RAISES INCOME TO
DEFRAY THE EXPENSES OF THE GOVERNMENT IS CALLED- (RPCPA)
A. SUBSIDY
B. TARIFF
C. TAXATION
D. TRIBUTE
2. ONE OF THE CHARACTERISTICS OF INTERNAL REVENUE TAX IS
THAT THEY ARE-(RPCPA)
A) CRIMINAL IN NATURE
B) PENAL IN NATURE
C) POLITICAL IN NATURE
D) GENERALLY PROSPECTIVE IN APPLICATION
3. IN CASE OF CONFLICT BETWEEN THE TAX LAWS AND GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (GAAP)-(RPCPA)
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
4. WHICH OF THE FOLLOWING HAS NO POWER OF TAXATION?(RPCPA)
A) PROVINCES
B) CITIES
C) BARANGAYS
D) BARRIOS
5. “SCHEDULAR SYSTEM OF INCOME TAXATION” MEANS(RPCPA)
A) ALL TYPES OF INCOME ARE ADDED TOGETHER TO ARRIVE AT
GROSS INCOME
B) SEPARATE GRADUATED RATES ARE IMPOSED ON DIFFERENT
TYPES OF INCOME
C) CAPITAL GAINS ARE EXCLUDED IN DETERMINING GROSS
INCOME
, D) COMPENSATION INCOME AND BUSINESS/PROFESSIONAL
INCOME ARE ADDED TOGETHER IN ARRIVING AT GROSS
INCOME
6. ONE OF THE FOLLOWING IS A PRIMARY PURPOSE OF TAXATION
A)PROTECTION OF LOCAL INDUSTRIES AGAINST FOREIGN
COMPETITION THROUGH IMPOSITION OF HIGH CUSTOMS DUTIES ON
IMPORTED GOODS
B)REDUCTION OF INEQUALITIES IN WEALTH AND INCOME BY
IMPOSING PROGRESSIVELY HIGHER TAX RATES
C) TO SECURE REVENUE FOR THE SUPPORT OF THE GOVERNMENT
D) STRENGTHENING OF ANEMIC ENTERPRISES BY GIVING TAX
EXEMPTION
7. WHICH OF THE FOLLOWING IS NOT A SECONDARY PURPOSE OF
TAXATION?
A) TO SERVE AS KEY INSTRUMENT OF SOCIAL CONTROL
B) TO EFFECT A MORE EQUITABLE DISTRIB UTION OF WEALTH
AMONG PEOPLE
C) TO ACHIEVE SOCIAL AND ECONOMIC STABILITY
D) TO RAISE REVENUE TO DEFRAY THE NECESSARY EXPENSE OF
THE GOVERNMENT
8. WHICH IS THE BEST ANSWER? A TAX REFORM AT ANY GIVEN TIME
UNDERSCORES THE FACT THAT-(RPCPA)
A) TAXATION IS AN INHERENT POWER OF THE STATE
B) TAXATION IS ESSENTIALLY A LEGISLATIVE POWER
C) TAXATION IS A POWER THAT IS VERY BROAD
D) THE STATE CAN AND SHOULD ADOPT PROGRESSIVE TAXATION
9. THE LEGISLATIVE BODY CAN IMPOSE A TAX AT ANY
AMOUNT UNDERSCORES THE LEGAL DICTUM THAT TAXATION IS –
(RPCPA)
A) AN INHERENT POWER OF THE TAX
B) A VERY BROAD POWER OF THE STATE
C) ESSENTIALLY A LEGISLATIVE POWER
D) FOR PUBLIC PURPOSE
10. ALL OF THE FOLLOWING, EXCEPT ONE, ARE BASIC
PRINCIPLES OF THE SOUND TAX SYSTEM
A) FISCAL ADEQUACY
, B) THEORETICAL JUSTICE
C) ADMINISTRATIVE FEASIBILITY
D) INHERENT IN SOVEREIGNTY
11. UNDER THIS BASIC PRINCIPLE OF SOUND TAX SYSTEM, THE
GOVERNMENT SHOULD NOT INCUR A DEFICIT-(RPCPA)
A) THEORETICAL JUSTICE
B) ADMINISTRATIVE FEASIBILITY
C) FISCAL ADEQUACY
D) NONE OF THE ABOVE
12. THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF A SOUND
TAX SYSTEM
A) IT SHOULD BE CAPABLE OF BEING EFFECTIVELY ENFORCED
B) IT MUST BE PROGRESSIVE
C) SOURCES OF REVENUE MUST BE SUFFICIENT TO MEET
GOVERNMENT EXPENDITURES AND OTHER PUBLIC NEEDS
D) IT SHOULD BE EXERCISED TO PROMOTE PUBLIC WELFARE
13. WHICH OF THE FOLLOWING IS NOT ONE OF THE CANONS OF A
SOUND TAX SYSTEM?
A) QUANTIFIABILITY
B) EQUALITY
C) CERTAINTY
D) CONVENIENCE
14. THE POWER OF TAXATION CAN ONLY BE EXERCISED BY THE
LAWMAKING BODY
A) SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS
B) EQUALITY OR THEORETICAL JUSTICE
C) LEGISLATIVE IN CHARACTER
D) INHERENT IN SOVEREIGNTY
15. THE PRESIDENT OF THE PHILIPPINES AND THE PRIME MINISTER OF
JAPAN ENTERED INTO AN EXECUTIVE AGREEMENTIN RESPECT OF A
LOAN FACILITY TO THE PHILIPPINES FROM JAPAN WHEREBY IT WAS
STIPULATED THAT INTEREST ON LOANS GRANTED BY PRIVATE
JAPANESE FINANCIAL INSTITUTIONS IN THE PHILIPPINES SHALL
NOT BE SUBJECT TO PHILIPPINE INCOME TAXES. WHAT BASIC
CHARACTERISTIC OF TAXATION HAS BEEN VIOLATED BY THIS
AGREEMENT?
, A) INHERENT LIMITATION
B) THEORETICAL JUSTICE
C) LEGISLATIVE IN CHARACTER
D) ADMINISTRATIVE FEASIBILITY
16. WHICH STATEMENT GIVES THE CORRECT ANSWER? THAT A
FEASIBILITY STUDY NEEDS OR NEED TO LOOK INTO THE TAXES OF
DIFFERENT POLITICAL SUBDIVISIONS OF GOVERNMENT WHICH MAY
BE ALTERNATIVE SITES OF BUSINESS BECAUSE-(RPCPA)
A) PROVINCES, CITIES AND MUNICIPALITIES MUST HAVE UNIFORM
TAXES BETWEEN AND AMONG THEMSELVES
B) THE LOCAL TAXES OF A POLITICAL SUBDIVISION NEED NOT BE
UNIFORM WITH THE LOCAL TAXES OF ANOTHER POLITICAL
SUBDIVISION
C) BUSINESSES THAT ARE SUBJECT TO NATIONAL TAXES ARE
EXEMPTED FROM LOCAL BUSINESS TAXES
D) LOCAL BUSINESS TAXES MAY BE CREDITED AGAINST NATIONAL
BUSINESS TAXES
17. STATE,MENT 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.
STATEMENT 2: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
LAWMAKING.-(RPCPA)
A) FALSE, FALSE
B) FALSE, TRUE
C) TRUE, TRUE
D) TRUE, FALSE
18. THOSE RESTRICTIONS ON THE EXERCISE OF THE POWER OF
TAXATION THAT AREW FOUND IN THE CONSTITUTION OR IMPLIED
FROM ITS PROVISIONS
A) THEORETICAL JUSTICE
B) LEGISLATIVE IN CHARACTER
C) INHERENT LIMITATIONS
D) CONSTITUTIONAL LIMITATIONS
