AC 3103 BUSINESS TAX MOCK EXAM

Theory
1. In value added taxation, this is not a requirement for taxability of service  *
a. In the course of business
b. Performed within or outside the Philippines
c. Consideration received actually or constructively
d. Supply of service is not exempt from VAT

2. The Value-added tax is not an/a: *

a. Direct Tax
b. Indirect tax
c. Excise tax
d. Ad-valorem tax

3. No VAT shall be imposed to form part of the cost of goods sold destined for consumption
outside of the territorial border of the taxing authority. *
a. Cross Border Doctrine
b. Rule of Reciprocity
c. Constructive Receipt Doctrine
d. International Comity

a. Only statement 1 is correct

b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

5. Reyborn imported cigarettes from the United States for sale in the Philippines. What
business taxes in the Philippines shall be imposed to Reyborn? *
a. VAT, excise tax, other percentage tax
b. VAT and excise tax
c. Other percentage tax and excise tax
d. VAT and percentage tax

6. What is the tax base of the tax on winnings of persons who own race horses? *
a. Actual amount paid for every winning ticket
b. Actual amount paid for every winning ticket after deducting the cost of the ticket
c. Prize
d. Gross receipts

7. Which of the following is subject to VAT? *

a. Importation of rabbit
b. Sale of banana by 7-Eleven store
c. Sale of roasted chicken for take out
d. Sale of marinated spicy-flavored milkfish

8. Sale of silver and other metallic minerals by a VAT-registered taxpayer to Bangko Sentral
ng Pilipinas is subject to? *
a. 12% VAT
b. 0% VAT
c. 3% percentage tax
d. Neither VAT nor 3% percentage tax

9. Which of the following is not included in the term “gross selling price”?  *
a. Total amount of money or its equivalent paid by the purchaser
b. Delivery, freight and insurance paid by the purchaser
c. Value-added tax passed on by the seller to the buyer
d. Excise tax

10. A restaurant owner who sells food and drinks in his restaurant is: *
a. A seller of goods
b. A seller of services
c. A seller of both goods and services
d. Not subject to value-added tax

11. Catering Bernardo Corporation (CBC) is a VAT registered company which has been
engaged in the catering business for the past 10 years. It has invested a substantial portion of
its capital on flat wares, table linens, plates, chairs, catering equipment, and delivery van. CBC
sold its first delivery van, already 10 years old and idle to DJP Gravel and Sand Corporation
(DJPGSC), a corporation engaged in the business of buying and selling gravel and sand. The
selling price of delivery van was way below its acquisition cost. The sale of delivery van by
CBC to DJPGSC is: *
a. An unrelated transaction to CBC, hence, not subject to VAT
b. An isolated transaction which is not subject to VAT
c. The sale is subject to VAT being a transaction incidental to the catering business which is a vat
registered activity of CBC.
d. None of the above

12. Which of the following shall be exempt from VAT? *

a. Services of banks
b. Services of money changers and pawnshops
c. Services of credit cooperatives
d. All of the above

13. Except for one transaction, the rest are exempt from Value-added tax. Which one is subject
to VAT? *
a. Sale of chicken by a restaurant owner who did not register as vat taxpayer and whose gross sales during
the year is P2,800,000
b. Sale of copra by a non-VAT registered copra dealer to a coconut oil manufacturer and whose gross sales
amounted to P6,250,000
c. Gross receipts of a VAT-registered CPA amounting to P2,250,000 in the practice of his profession
d. Sale of books by a non-VAT registered book store and whose sales amounted to P12,000,000

14. *

a. TRUE, TRUE, TRUE

b. TRUE, FALSE, TRUE
c. FALSE, TRUE, FALSE
d. FALSE, FALSE, FALSE

15. *

a. Only statement 1 is correct

b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

16. Which of the following is incorrect? The percentage tax is: *

a. A tax on sale of services
b. Imposed on a sale of goods
c. Imposed together with VAT
d. Imposed together with Excise tax

17. *

a. TRUE, FALSE, FALSE, TRUE

b. FALSE, TRUE, FALSE, FALSE
c. FALSE, FALSE, FALSE, FALSE
d. FALSE, TRUE, TRUE, FALSE

18. All of the following, except one, are not subject to common carrier’s tax *
a. Owner of a parking lot/building
b. Rent-a-car companies
c. Common carriers by land engaged in carriage of goods or cargo
d. Domestic airline company

19. *

a. Only statement 1 is correct

b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

20. The operator of one of the following is not subject to amusement tax.  *
a. Cockpits
b. Racetracks
c. Bowling Alleys
d. KTV Karaoke joints
21. Which of the following is not considered as a percentage tax? *
a. Stock transaction tax on shares traded through local stock exchange
b. 15% tax on shares not traded through the local stock exchange
c. 10% overseas communications tax
d. 3% tax on keepers of garage

22. Section 124 of the tax code, as amended, provides that every fire, marine or miscellaneous
insurance agent authorized under the insurance code to procure policies of insurance as he may
have previously been legally authorized to transact business on risks located in the Philippines
for companies not authorized to transact business in the Philippines shall pay a tax equal to:  *
a. 2%
b. 4%
c. 5%
d. 10%

23. _________ is a merchant of stocks or securities, whether an individual, partnership, or

corporation, with an established place of business, regularly engaged in the purchase of
securities and their resale to customers. He buys securities and sells them to customers with a
view to the gains and profits that may be derived therefrom. *
a. Dealer in securities
b. Real estate dealer
c. Franchise grantees
d. Lending investor

24. Which of the following statements is not correct about percentage tax?  *
a. It is a business tax.
b. It is a transfer tax.
c. It is an advalorem tax.
d. It is not a progressive tax.

25. A keeper of garage whose gross receipts for 2018 exceed P3,000,000 is subject to:  *
a. Value-added tax
b. Garage sales tax
c. Common carriers tax
d. Franchise tax

a. Both statements are correct.

b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.

27. Supply the missing information. “… all franchises on radio and/or television broadcasting
companies whose annual gross receipts of the preceding year does not exceed _____________,
subject to Section 236 of this Code, a tax of ____ and on gas and water utilities, a tax of
____.” *
a. PhP10,000,000; 3%; 2%
b. PhP3,000,000; 3%; 2%
c. PhP10,000,000; 2%; 3%
d. P3,000,000; 2%; 3%
28. The tax imposed by Section 120. Tax on Overseas Dispatch, Message or Conversation
Originating from the Philippines shall not apply to: *
a. News services
b. Diplomatic services
c. International organizations
d. None of the above

29. One of the following is subject to overseas communications tax: *

a. Long distance call by a son from Manila to his father in Iloilo City.
b. Monthly telephone bill from PLDT.
c. Telephone bill on a call by a mother in the Philippines to her son in London.
d. Telephone call by Magda in Hong Kong to her friend in Manila.

30. A domestic carrier by sea is engaged in the transport of passengers, goods, and cargoes. It
is not VAT registered and its annual gross receipts do not exceed P 3,000,000 during 2018. To
what business taxes is it liable? *
a. 12% VAT
b. 3% OPT under Section 116
c. 3% common carrier’s tax under Section 117
d. Not subject to business tax

31. *

a. i and ii
b. i and iii
c. i, ii, and iii
d. i only

32. *

a. iii only
b. ii and iii
c. iv only
d. None of the above

33. *

a. i only
b. ii only
c. both statements are correct
d. both statements are incorrect

34. A pool of land transportation vehicles whose accessibility to the riding public is facilitated
through the use of common point of contact which may be in the form of text, telephone,
and/or cellular calls, email, mobile applications or by other means. *
a. Domestic Common Carriers
b. International Carriers
c. Transportation Network Vehicle Services (TNVS)
d. Partners

35. *

a. i only
b. ii only
c. either is correct
d. neither is correct

36. *

a. i only
b. ii only
c. either is correct
d. neither is correct

37. Which of the following is exempt from VAT? *

a. Common carriers transporting passengers by air within the Philippines.
b. Common carriers transporting passengers by sea within the Philippines.
c. Common carriers transporting passengers by land within the Philippines.
d. Common carriers transporting cargoes by air within the Philippines.

38. The following are exempt from VAT, except *

a. Sale of 1 sack of rice
b. Sale of lechon manok
c. Sale of pet food
d. Sale of newspaper

39. One of the following is not an activity subject to VAT: *

a. Sale in retail of goods by a dealer
b. Sale of Bamboo poles by a dealer
c. Sublease of real property in the course of business
d. Importation of ordinary feeds for poultry chicken

40. Sta. Lucia Realty, a real estate dealer, sold a commercial lot amounting to P 800,000. This
transaction is *
1 point
a. Subject to VAT
b. Subject to OPT
c. VAT-exempt
d. Zero-rated sale

41. Among Us TelCo., VAT-registered, provides services for domestic and overseas calls. It is
a taxpayer as far as what business tax is concerned? *
a. Value-added tax
b. Overseas communications tax
c. VAT on domestic calls and overseas communications tax on overseas calls
d. Franchise tax

42. *

a. Both statements are correct.

b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.

43. *

a. Both statements are correct.

b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.

44. *

a. Both statements are correct.

b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
Problems
1. *

a. P 120,000
b. P 420,000
c. P 30,000
d. P 105,000

2. Using the same information above, how much is the total business tax due for the 2nd
Quarter of 2020 of Faye Micz? *
a. P 312,000
b. P 708,000
c. P 108,000
d. P 432,000

3. Mexxanine Pastry Shop sells cakes and pastry items to well-known hotels around the Metro
Manila area. The hotels are allowed credit based on the track record of the hotels. The total
amounts received or receivable from sales by the pastry shop in the 2nd Quarter of 2020 were
P224,000, including value-added tax. Seventy-five percent of the sales are normally on
account. How much is the value-added tax on sales for the 2nd quarter of 2020?  *
1 point

a. P 20,000
b. P 24,000
c. P 26,880
d. P 15,000

4. *

a. P 40,000
b. P 48,000
c. P 60,000
d. P 36,000
5. Manila Bay Company, a supplier in Manila, sold merchandise on May 5, 2020 for 100,000
exclusive of VAT to Dolomite Company, a store in Cebu. The terms are 2/10, n/30 FOB
Shippine point, freight prepaid. Cost of freight per way bill is P1,120. Payment was made by
Dolomite Company on May 12, 2020 after a return of defective merchandise worth P5,600, tax
inclusive. How much is the balance of output tax? *
a. P 12,840
b. P 11,400
c. P 11,172
d. P 11,280

6. *

a. P 40,800
b. P 63,600
c. P 61,157
d. P 45,600

7. *

a. P 432,000
b. P 258,000
c. P 378,000
d. P 270,000

8. Bukonat, a vat registered lessor of commercial spaces received P1,337,500 rentals during the
year from various clients, net of the 5% creditable withholding tax on rental income. How
much is the correct output vat? *
a. P 154,800
b. P 142,500
c. P 150,000
d. P 160,500
9. *

a. P 12,000
b. P 24,000
c. P 30,000
d. P 120,000

10. *

a. P 240,000
b. P 216,000
c. P 214,285
d. The company is VAT exempt under Section 109 of NIRC

11. *

a. P 22,740
b. P 21,250
c. P 15,450
d. P 7,590

12. WE HATE MOCHA DDS radio station has an annual gross receipts ranging from
4,000,000 to 5,000,000. During the month, it has a gross receipts from advertisements of
330,000 while disbursements subject to VAT amounted to 224,000 inclusive of tax. Compute
for the applicable business tax. *
a. P 30,000
b. P 9,900
c. P 50,000
d. P 10,000
13. *

a. P 82,620
b. P 81,828
c. P 72,900
d. P 19,980

14. *

a. P 1,050,000
b. P 630,000
c. P 525,000
d. None of the choices

15. *

a. NONE, since Cynthia is a senator and owner of Camella Homes

b. P 18,000
c. P 23,505
d. P 43,005

16. No to historical revisionism, a closely held corporation, decided to open itself to the public.
The initial public offering of its shares had a selling price of 6,250,000 which is 22.5% of its
total outstanding shares after the listing in the local stock exchange. The percentage tax due
is *
a. P 31,250
b. P 125,000
c. P 1,406,250
d. P 250,000
17. Tatay Digidig, a horse-owner, received gross winnings of 120,000 during the current
month. His tax on winnings should be: *
a. P 6,000
b. P 12,000
c. P 18,000
d. P 24,000

18. *

a. P 220,000
b. P 88,000
c. P 200,000
d. P 80,000

19. *

a. P 960,000; P 1,800,000; P 1,800,000

b. P 240,000; P 450,000; P 300,000
c. P 240,000; P 450,000; P 1,200,000
d. P 960,000; P 450,000; P 450,000

20. Fuerza Airlines, a domestic corporation flying domestic routes, had the following gross
receipts for the month ended April 2020: carriage of passenger, P4,500,000; carriage of cargo,
P7,000,000. The correct amount of business tax for the month ended April 2020 is: *
a. P 0
b. P 345,000
c. P 135,000
d. P 1,380,000

For the next 3 numbers

21 *

a. I, II, III and IV are correct

b. I, II and III are correct
c. Only I and II are correct
d. Only III and IV are correct

22. How much is the percentage tax due? *

a. P480,000
b. P90,000
c. P120,000
d. P210,000

23. How much is the VAT due? *

1 point

a. P480,000
b. P90,000
c. P120,000
d. P210,000

24. Cymon the Cutie sold goods at an invoice value of P123,200 to Manny the lawyer on
account. Manny the lawyer sold the same goods to Harries the cool for P143,000 (exclusive of
tax) cash. All of them are VAT registered taxpayers. The accounting entry to record the sale in
the books of Manny the lawyer: *
1 point

A.

B.

C.

D.
25. *

a. P 414,000
b. P 342,000
c. P 72,000
d. P 62,000

26. *

a. P 100,000
b. P 200,000
c. P 400,000
d. P 800,000