BUSINESS TAXATION (PRELIM EXAM) – SET B

Multiple Choice:
Identify the choice that best completes the statement or answers the question.

______ 1. Which of the following is not an example of excise tax?

a. transfer tax c. real property tax
b. value-added tax d. income tax

______ 2. A tax on business is:

a. direct tax c. property tax
b. indirect tax d. poll tax

______3. One of the following is not a major business internal revenue tax in the Tax Code.
a. VAT c. Income Tax
b. Excise Tax d. Percentage Tax

______4. Monthly VAT declaration is filed on or before the

a. 10th day from the end of each month.
b. 20th day from the end of each month.
c. 25th day from the end of each month.
d. 30th day from the end of each month.

_______5. Quarterly VAT return shall be filed on or before the

a. 10th day from the end of each quarter.
b. 20th day from the end of each quarter.
c. 25th day from the end of each quarter.
d. 30th day from the end of each quarter.

_______6. Which of the following importation is subject to VAT?

a. Importation of frozen meat
b. Importation of bamboo poles
c. Importation of apples for personal consumption
d. Importation of grapes for sale

_______7. The Value Added Tax is a/an

a. Indirect tax c. Local Tax
b. Direct tax d. Personal Tax

(Items 8 - 9) A is engaged in two (2) lines of businesses, one with VAT and the other is Non-VAT. His records show the
following (VAT not included):

Sales:
From VAT business 4,000,000
From Non-VAT business 6,000,000
Purchases of goods from VAT suppliers:
For VAT business 2,000,000
For Non-VAT business 3,000,000
Purchases from VAT supplier of supplies used for both
VAT and Non-VAT businesses 20,000
Operating Expenses 1,800,000
______ 8. The VAT payable is
a. 237,600 b. 239,600 c. 239,040 d. 600,000

______ 9. The net income is

a. 180,000 b. 192,000 c. 2,818,560 d. 3,180,000

______ 10. A taxpayer registered under the VAT System on January 1, 2016. His records during the month showed the
following:

Value of inventory as of December 31, 2015,

purchased from VAT registered persons 50,000
VAT paid on inventory as of December 31, 2015 6,000
Value of inventory as of December 31, 2015, VAT 60,000
Sales, net of VAT 140,000
Sales, gross of VAT 45,000
Purchases, net of VAT 70,000

The VAT payable is

a. 3,100 b. 7,221 c. 11,100 d. 18,100

______ 11. A, is a VAT-registered dealer of appliances. The following data are for the last quarter of 2016.

Sales, net of output tax 6,800,000

Purchases, net of input tax 5,500,000
Sales return 200,000
Purchase return 300,000
Deferred input tax (carried over from the 3rd quarter of 2012) 9,500

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

a. 70,500 b.80,000 c. 120,500 d. 158,500
______ 12. Prices/costs of a VAT taxpayer with purchases from VAT suppliers, VAT not included:

Gross sales 700,000

Sales returns and allowances 30,000
Sales discounts 40,000
Purchases 210,000
Purchase returns and allowances 20,000
Purchase discounts 10,000

How much is the value-added tax payable?

a. 76,600 b. 54,000 c. 25,200 d. Some other amount.

_______ 13. Taxpayer is a VAT taxpayer:

Sales, VAT not included 800,000

VAT included:
Purchases of goods sold
From VAT taxpayers 224,000
From non-VAT taxpayers 20,000
Purchases of services from VAT taxpayers 56,000
Payment for utilities (water subject to percentage tax) 19,000
Salaries of employees 80,000
 Operating expenses (no VAT component) 100,000

How much is the VAT payable?

a. 96,000 b. 72,000 c. 66,000 d. Some other amount.

______ 14. Which statement is correct? The value-added tax on goods or properties sold:
a. Is based on gross sales and not on net sales.
b. May be due even if the goods or properties were not actually sold.
c. Is not imposed on goods exported.
d. Is a selling expense of the trader.

_______15. Which of the following statements is wrong: the value-added tax is:
a. Not an expense
b. A tax credit
c. Not a part of the gross selling price
d. On purchases, is a part of the cost of inventory.

_______16. Statement 1: The Output value-added tax is computed by multiplying the gross selling price
12%, or multiplying the total amount indicated in the invoice by 12/112.
Statement 2: The Output value-added tax is computed by multiplying the total amount indicated in the invoice
by 12%.
a. True, true b. False, false c. True, false d. False, true

_______ 17. All amounts given are VAT not included:

A, Non-VAT taxpayer, sells to B, VAT taxpayer 60,000
B, VAT taxpayer, sells to C, VAT taxpayer 90,000
C, VAT taxpayer, sells to D, VAT taxpayer, an exporter 150,000
D, VAT taxpayer, exports

The value-added tax of B:

a. Payable of 10,000 c. Payable of 10,800
b. Payable of 9,200 d. Payable of 7,200

______ 18. Which of the following is not a sale and therefore is not subject to the value-added tax?
a. Transfer, use or consumption not in the ordinary course of business of goods or properties ordinarily
intended for sale or use in the course of business;
b. Distribution or transfer to shareholders or investors of share in the profits of a VAT-registered person;
c. Distribution or transfer to creditors in payment of debt;
d. Consignment sales.

______ 19. Under the value-added tax law, which of the following sales may not be zero-rated?
a. Export sales;
b. Foreign currency denominated sales;
c. Sale of goods to the Asian Development Bank;
d. Sale of goods to an export-oriented enterprise.

______ 20. Three of the following are exempt from the value-added tax. Which of the exception?
a. Sales or importation of medical, dental and veterinary medicines.
b. Services rendered by persons subject to percentage tax.
c. Receipts from leasing or real properties.
d. Export sales by persons who are not value-added tax registered.
______ 21. Mr. B is a dealer of liquors. On his sales in the Philippines, his tax is:
a. Excise tax
b. Value-added tax
c. Percentage tax
d. None of the above.

______22. One of the following statements is incorrect?

a. Imported goods which are subject to excise tax are no longer subject to VAT
b. VAT on importation is paid to the Bureau of Customs before the imported goods are released from its
custody
c. Expenses incurred after the goods are released from Customs custody are disregarded in computing
the VAT on importation
d. When a person who enjoys a tax-exemption on his importation subsequently sells in the Philippines
such imported articles to a non-exempt person, the purchaser-non-exempt person shall pay the VAT
on such importation

______23. Which of the following input taxes can be refunded, converted into tax credit certificates or carried over to the
next quarter at the option of the vat registered taxpayer.
a. Input tax on purchase of raw materials c. Input tax on zero-rated sales of goods or services
b. Input tax on importation of supplies d. Input tax on purchase of services

______24. Value Added Tax as a/an

a. Indirect tax c. Local tax
b. Direct tax d. Personal tax

______25. Statement 1: A taxpayer whose gross sales or receipts exceeded the amount of 1,919,500 shall pay the VAT
even if he is not vat registered; consequently, he is also entitled to input taxes.
Statement 2: Importer of goods for personal use is not subject to VAT if he is not VAT registered.

_____26. Which statement is correct?

a. Zero-rated sales is exempt from the VAT
b. A person whose sales or receipts do not exceed 250,000 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

_____27. Which of the following is subject to vat?

a. Sale of smoked fish c. Sale of shells and coral products by a dealer
b. Sale of lechon d. Sale of newspaper

_____28. The value-added tax due on the sale of taxable goods, property and services by any person whether or not he has
taken the necessary steps to be registered
a. Input tax c. Excise tax
b. Output tax d. Sales tax

_____29. 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
______30. One of the following is not correct?
a. Sale in retail of goods by a dealer c. Sublease of real property in the course of business
b. Sale of bamboo poles by a dealer d. Importation of ordinary feeds for poultry chicken

______31. ABC Restaurant recorded the following sales during the month (based on menu prices)
To regular customers 560,000
To senior citizens 224,000
To persons with disability 112,000
The Output VAT is
a. 60,000 b. 72,000 c. 69,600 d. 79,200

(Items 32 – 35)
The taxpayer is a VAT registered real estate dealer:
Selling Price (net of vat) 6,000,000
Zonal Value 6,300,000
FMV, in the assessment rolls 5,800,000
Payments made by the buyer
March 15, 2016 750,000
October 15, 2016 750,000
March 15, 2017 2,250,000
October 15, 2017 2,250,000
______32. The output tax on March 15, 2016 collection is
a. 90,000 b. 756,000 c. 283,500 d. 94,500

______33. The output tax on March 15, 2017 collection is

a. 94,500 b. 270,000 c. 756,000 d. 283,500

Using the preceding number, but the FMV in the assessment rolls is 6,500,000
______34. The output tax on October 15, 2016 collection is
a. 780,000 b. 90,000 c. 97,500 d. 270,000

______35. The output tax on October 15, 2017 collection is

a. 780,000 b. 135,000 c. 270,000 d. 292,500

______36. A is engaged in two (2) lines of businesses, one with VAT and the other is Non-VAT. His records show the following
(VAT not included):

Sales:
From VAT business 4,000,000
From Non-VAT business 6,000,000
Purchases of goods from VAT suppliers:
For VAT business 2,000,000
For Non-VAT business 3,000,000
Purchases from VAT supplier of supplies used for
both VAT and Non-VAT businesses 20,000
Operating expenses 1,800,000

The VAT payable is

a. 600,000 b. 240,000 c. 237,600 d. 239,040
______37. The net income is
a. 3,180,000 b. 2,840,000 c. 2,818,560 d. 2,820,000
______38. D imported an article from USA. The invoice value of the imported article was $ 7,000 ($1 – 50). The following
were incurred in relation with the importation
Insurance 15,000
Freight 10,000
Postage 5,000
Wharfage 7,000
Arrastre charges 8,000
Brokerage fee 25,000
Facilitation fee 3,000

The imported article is subject to 50,000 customs duty and 30,000 excise tax. D spent 5,600 (inclusive of
VAT) for trucking from the customs warehouse to its warehouse in Quezon City. The VAT on importation
is:
a. 60,600 b. 35,000 c. 50,500 d. 60,000

_______39. Assuming that the imported article above was sold for 600,000, VAT exclusive. The VAT payable is
a. 11,400 b. 12,000 c. 9,500 d. 9,200

_______40. The A Bakers sells cakes and pastry to well-known hotels in Metro Manila area. The hotels are allowed credit
based on the track record of the hotels. The sale by the store in April 2014 was 224,000, including the VAT.
75% of the sales are normally on account. How much is the output tax for the month of April 2014?
a. 22,000 b. 20,000 c. 16,500 d. 24,000

_______41. The account title to best reflect the value-added tax on purchase:
a. Sales tax payable c. Input tax
b. Value-added tax payable d. Output tax

_______42. Which statement is wrong? Transactions considered “in the course of trade or business”, and therefore subject
to the business taxes include:
a. Regular conduct or pursuit of a commercial or an economic activity by a stock private organization.
b. Regular conduct or pursuit of a commercial or an economic activity by a non-stock, non-profit private
organization.
c. Isolated services in the Philippines by non-resident foreign persons;
d. Isolated sale of goods or services for a gross selling price or receipts of 800,000.

______43. Mr. B. imported cigarettes from the United States for sale. At a later date, he sold the cigarettes in the
Philippines. He is subject to the value-added tax. He is also subject to the business tax of:
a. Excise tax c. Percentage tax
b. Income tax d. None of the above

______44. Mr. X 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
what he pays forms part of the gross selling price?
a. Excise tax c. Percentage tax;
b. Value-added tax; d. None of the above

______45. Which statement is considered correct?

a. An excise tax which imposes a tax based on weight or volume capacity or aby other physical unit of
measurement is called specific tax;
b. An excise tax which imposes a tax based on selling price or other specified value of the article is called
ad valorem tax.
c. A percentage tax which is imposed whether the transaction resulted in a gain or loss is called transaction tax.
d. All of the above.