NAME: ______________________________________ COURSE AND YEAR: _________ DATE: ___________

Business and Transfer Taxation

Final Examination

Multiple Choice: Write the correct letter of choice on answer sheet. Support with solutions if necessary. (2 pts)

1. Royal Mining is a VAT-registered domestic mining entity. One of its products is silver being sold to Bangko
Sentral ng Pilipinas. It filed a claim with the BIR for tax refund on ground that under Section 106 of the NIRC,
sales of precious metal to Bangko Sentral ng Pilipinas are considered export sales subject to zero-rated VAT.
Is Royal Mining’s claim for refund meritorious?
a. Yes, sale of precious metal to Bangko Sentral ng Pilipinas are deemed zero-rated transactions.
b. Yes, sale of precious metal to Bangko Sentral ng Pilipinas is deemed and exempt sale.
c. No, sale of gold to Bangko Sentral ng Pilipinas is zero-rated transactions not silver.
d. No, sale of precious metal to Bangko Sentral ng Pilipinas is creditable not refundable

2. Lily’s Fashion, Inc. is a garment manufacturer located and registered as a Subic Bay Freeport Enterprise under
Republic Act No. 7227 and a non- VAT taxpayer. As such, it is exempt from payment from all local and national
internal revenue taxes. During its operations, it purchased various supplies and materials necessary in the
conduct of its manufacturing business. The suppliers of these goods shifted to Lily’s Fashion, Inc. the 12%
VAT on the purchased items amounting to P500,000. What is the proper remedy of Lily’s Fashion Inc.?
a. Lily’s Fashion Inc., may use the P500,000 as tax credit
b. Lily’s Fashion Inc., may ask for a refund of the P500,000
c. Lily’s Fashion Inc., may convert the P500,000 into tax warrants
d. Lily’s Fashion Inc., may charge it to cost or expense

3. The VAT on goods

a. Is a selling expense of the trader
b. Is imposed on goods for domestic consumption
c. It is not based on net sales
d. Maybe due even if there is no actual sale of the goods

4. Which of the following transactions is exempt from value-added-tax?

a. Medical services such as dental and veterinary services rendered by professionals
b. Legal services
c. Services arising from employee-employer relationship
d. Services rendered by domestic air transport companies

5. Which of the following transactions is subject to value-added-tax?

a. Services subject to other percentage tax
b. Educational services duly approved by Department of Education, CHED and TESDA or those operated by
the government
c. Sale of coal and natural gas
d. Lending activities by credit cooperatives

6. Which of the following transactions is subject to zero-rated value-added-tax?

a. Services rendered to persons engaged in international shipping or air transport operations
b. Services rendered by banks, non-bank financial intermediaries
c. Generation, transmission and distribution of electricity
d. Services rendered by professionals such as CPAs, Physicians, and Lawyers.
7. 1st Statement: The input value-added tax on purchase of capital goods valued at P1,000,000 shall be spread
over 60 months if the life of property is equivalent to 5 years or more
2nd Statement: The input value-added tax on purchase of capital goods valued at P1,000,000 shall be spread
over the life of property if the life of property is less than 5 years
a. True, true b. False, true c. True, false d. False, false

8. 1st Statement: Excise taxes imposed and based on weight or volume capacity or any other physical unit of
measurement shall be referred to as ad valorem tax.
2nd Statement: Excise taxes imposed and based on selling prices or other specified value of the god shall be
referred to as specific tax.
a. True, false b. True, true c. False, true d. False, false

9. Mr. C is a manufacturer of fermented liquors. In making sales, all taxes on the products and transactions are
passed on to the buyers. For purposes of the value-added tax, which of the three taxes mentioned here that
pays form part of the gross selling price?
a. Excise tax
b. Value-added tax
c. Percentage tax
d. None of the above

10. One of the following is not a transaction deemed sale

a. Transfer, use or consumption not in the ordinary course of business of goods or properties originally
intended for sale or for use in the course of business
b. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a
vat-registered person or to creditors in payment of debt
c. Retirement from or cessation of business, with respect to inventories of taxable goods on hand as of the
date of such retirement or cessation
d. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned

11. The allowable transitional input tax is

a. The lower between 2% of the value of beginning inventory or actual vat paid on such inventory
b. The higher between 2% of the value of the beginning inventory or actual vat paid on such inventory
c. The actual vat paid on the beginning inventory
d. 2% of the value of beginning inventory

12. Statement 1: A taxpayer whose gross sales or receipts exceeded the amount of P1,919,500 shall pay the VAT
even if he is not vat registered; consequently, he is also entitled to input taxes.
Statement 2: Importers of goods for personal use is not subject to VAT if he is not VAT registered.
a. Both statements are true
b. Both statements are false
c. Only Statement 1 is true
d. Only Statement 2 is true

13. Which statement is correct?

a. Zero rated sales is exempt from the VAT
b. A person whose sales or receipts do not exceed P250,000 is exempt from VAT and OPT
c. A person who issues a VAT invoice on a VAT exempt transaction is nevertheless subject to VAT on the
said transaction
d. Entities which are exempt from income tax are also exempt from VAT
14. Which of the following statements is incorrect?
a. A taxpayer whose annual gross receipts/ sales exceed P1,919,500 shall pay VAT even if he is not VAT
registered
b. A taxpayer whose annual gross receipts/ sales do not exceed P1,919,500 but who is VAT-registered shall
pay VAT
c. Percentage tax maybe imposed together with VAT
d. Percentage tax maybe imposed together with excise tax

15. One of the following statements is incorrect

a. The ½ of 1% tax shall be collected by the brokers who made the sale and shall be remitted within 5
banking days from the date of collection
b. The tax paid on sale of shares through local stock exchange and initial public offering and secondary
offering shall not be allowable for income tax purposes
c. The ½ of 1% tax stock transaction tax is a final withholding tax on income
d. The ½ of 1% tax stock transaction tax is collected whether there is an income or loss and is a percentage
tax

16. Which of the following is subject to VAT?

a. Importation of personal or household effects belonging to the residents of the Philippines returning from
abroad and non-resident citizen coming to resettle in the Philippines where such goods were subjected
to customs duties
b. Importation of passenger or cargo vessel and aircrafts, including engine, equipment and spare parts
thereof for domestic or international transport operation
c. Importation of fuel, goods and supplies by persons engaged in international shipping or air transport
operations
d. Sale of real property not primarily held for sale to customers or held for lease in the ordinary course of
business

17. Which of the following is not allowed with presumptive input tax
a. Those engaged in the manufacturing of refined sugar
b. Those engaged in manufacturing packed noodle based instant meals
c. Those engaged in the processing of canned products
d. Those engaged in pasteurizing milk

18. There is no taxable income until such income is recognized. Taxable income is recognized when the
a. Taxpayer fails to include the income in his income tax return
b. Income has been actually received in money or its equivalent
c. Income has been received, either actually or constructively
d. Transaction that is the source of income is consummated

19. The export sale of a VAT registered enterprise is

a. Exempt from the vat
b. Subject to 0% vat
c. Subject to the 12% vat
d. Subject to percentage tax

20. Which of the following transactions is subject to zero-rated value-added tax?

a. Services by regional or area headquarters of multi-national corporations
b. Sale to Philippine Economic Zone Authority
c. Sales by non-agricultural, non-electric, non-credit cooperatives
d. Importation of professional instruments and implements by settlers in the Philippines
21. C, as a manufacturer of cooking oil, had the following selected transactions in a month, taxes not included:
Sales P 880,000
Purchases…
of packaging materials from VAT supplies 88,000
of services from VAT contractors 33,000
of machinery from VAT supplier 220,000
from farmers:
Corn 140,000
Coconut 160,000

The VAT payable is

a. P23,900
b. P52,680
c. P44,500
d. P49,400

22. ERA Corporation has the following sales during the month:
Sale to private entities 224,000
Sale to export-oriented enterprise 100,000
Sale of exempt goods 100,000

The following input taxes were passed on by its VAT suppliers during the month:
Input tax on taxable goods 5,000
Input tax on zero-rated sales 3,000
Input tax on sale of exempt goods 2,000
Input tax on depreciable capital good not attributable 20,000
to any specific activity

The VAT payable for the month

a. P1,000
b. P7,200
c. P9,000
d. P16,000

23. During the month of May, XYZ Corporation had domestic sales amounting to P1,680,000 and export sales
amounting to P1,500,000. During the same month, XYZ’s total purchases directly attributable to domestic
sales amounted to P1,120,000 and total purchases directly attributable to export sales P1,008,000.

For the month of May, XYZ corporation’s VAT payable

a. P(48,000)
b. P54,000
c. P60,000
d. P62,000

24. K imported a car from USA for her personal use. Total landed cost is P250,000, including customs duties of
P50,000. VAT on importation is
a. P0
b. P20,000
c. P36,000
d. P30,000
25. An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods were
subjected to 10% customs duty in the amount of P12,500 and other charges in the amount of P9,500. The
VAT due is
a. P12,500 b. P17,640 c. P13,364 d. P14,700

26. A taxpayer registered under the VAT system on January 1, 2016. His records during the month show:
Value of inventory as of Dec 31, 2015,
purchased from VAT registered persons P50,000
VAT paid on inventory as of Dec 31, 2015 6,000
Value of inventory as of Dec 31, 2015, VAT exempt goods 60,000
Sales, net of VAT 140,000
Sales, gross of VAT 45,000
Purchases, net of VAT 70,000

VAT payable is
a. P11,100
b. P7,221
c. P3,100
d. P18,100

27. A, is a VAT-registered dealer of appliances. The following data are for the last quarter of 2016.
Sales, net of output tax P6,800,000
Purchases, net of input tax 5,500,000
Sales return 200,000
Purchase return 300,000
Deferred input tax (carried over from
the third quarter of 2016) 9,500

The VAT payable for the last quarter of 2016 by A is

a. P120,500
b. P70,500
c. P80,000
d. P158,500

28. A VAT registered person is engaged in the sale of VAT taxable goods and at the same time is also engaged in
non-VAT business, in the same business establishment. During the year, total sales of the VAT business
amounted to P336,000. The sales of the non-VAT business amounted to P200,000 with a separate percentage
tax of P6000 for a total of P206,000. During the same quarter, repairs on the building amounted to P50,000
plus value added tax of P6,000. Supplies purchased for common use amounted to P10,000 plus P1,200 VAT.

The creditable input tax is

a. P6,000
b. P7,200
c. P1,000
d. P4,320
29. Refer to No. 28, the VAT payable is?
a. P24,000
b. P25,000
c. P31,680
d. P26,400
 30. A VAT taxpayer billed his customer:
Selling Price P500,000
Value Added Tax 70,000
Total P570,000

The output tax is?

a. P70,000
b. P60,000
c. P61,071
d. P68,400

31. A is a radio-tv broadcasting franchise grantee. During the preceding year, its gross receipts did not exceed
P10,000,000. During the first quarter of the current year, it has the following data:
Gross receipts, sale of airtime P 2,000,000
Gross receipts, use of radio station’s
communication facilities 500,000
Business expenses 700,000

The franchise tax due for the first quarter is

a. P60,000
b. P40,000
c. P75,000
d. P39,000

32. A vat taxpayer has the following data for a particular quarter during the current year:
Sale of shares of stock:
Held as inventory P 1,000,000
Held as investment 500,000
Cost of shares sold:
Held as inventory 300,000
Held as investment (thru local stock exchange) 600,000

The stock transaction tax is

a. 0
b. P1,500
c. P2,500
d. P7,500

Use the following scenario for items 33-35

A, a vat taxpayer, made the following purchase of capital goods from vat registered sellers for use in his
business (amounts are net of vat) for the 3rd quarter

Year 2011 Estimated Life Cost

July 10- Machine 1 2 years P 200,000
16- Machine 2 6 years 900,000
Aug 8- Machine 3 2 years 400,000
20- Machine 4 6 years 500,000
Sept 14- Machine 5 7 years 2,000,000

Machine 1 was retired on September 30, 2011.

33. The input tax in July is
a. P2,800
b. P108,000
c. P132,000
d. P2,200
34. The input tax in August is
a. P108,000
b. P3,000
c. P5,800
d. P110,800
35. The input tax for September is
a. P4,000
b. P6,800
c. P26,000
d. P27,800

36. A domestic sea carrier had the following receipts and attributable input VAT for the month
Receipts from passengers P 2,400,000
Receipts from cargos 600,000
Total input VAT for the month 240,000

What is the VAT payable?

a. P120,000
b. P48,000
c. P24,000
d. 0

37. A VAT registered television company with annual receipts of P 8M reported P 1M total revenue for the month
of June 2015. It collected P 1,200,000 from various clients including advances and paid P 800,000 of expenses,
P 560,000 of which was paid to VAT suppliers. The collections and payments are inclusive of VAT.

What is the VAT payable?

a. 0
b. P52,800
c. P68,571
d. P76,800

38. A bookstore had the following summary of transactions during the month:

Sale of books inventory P 300,000

Sale of school supplies, exclusive of VAT 700,000
Rental expense, inclusive of VAT 56,000
Salaries expense 100,000
Utilities expense, exclusive of VAT 20,000

What is the VAT payable?

a. P 120,000
b. P 84,000
c. P 78,120
d. P 77,000
 39. Onion General Hospital had the following receipts and input VAT:

Receipts from hospital operations: P 20,000,000

Sales of medicines 4,000,000
Input VAT traceable to hospital operations 2,100,000
Input VAT on hospital drugstore 120,000

Compute the VAT payable

a. P660,000
b. P360,000
c. P300,000
d. P260,000

40. A lessor of commercial spaces had the following receipts and input VAT data for the month:

Spaces with P 5,000 monthly rental P 500,000

Spaces with P 10,000 monthly rental 800,000
Spaces with P 15,000 monthly rental 700,000
Spaces with P 20,000 monthly rental 1,000,000
Total P 3,000,000

Total input VAT during the month P 90,000

Compute the VAT payable

a. P 360,000
b. P 270,000
c. P 204,000
d. P 153,000

-END-
Godbless!

“The only time success comes before work is in the dictionary.”

-Harvey Specter, Suits

Prepared by: Checked and verified by:

________________________ ________________________
KEVIN ELREY E. ARCE Dr. ELMER M. DELA CRUZ
Instructor Dean