CDD In-House Review
Rex B. Banggawan, CPA, MBA
TAXATION
VALUE ADDED TAX QUIZZER
EXERCISE PROBLEMS
1. The records of A, a VAT taxpayer show
October November December
Output Tax P96,000 P180,000 P60,000
Input Tax 108,000 72,000 48,000
There was an excess of input taxes over output taxes of P50,000 for the quarter ending September 2006. Determine the VAT due for October, November and for the quarter.
2. The following data are taken from the books of accounts of a VAT-registered taxpayer:
Third quarter: Sales P 1,000,000
Purchases 800,000
Excess input VAT as of end of second quarter25,000
Fourth quarter: Sales 1,500,000
Purchases 1,100,000
How much is the VAT payable for the third and fourth quarters? 3. The following data (net of VAT) are available:
Third quarter: Sales P 1,500,000
Purchases 800,000
Purchase of machinery (2nd month of 3rd quarter) 2,000,000
Unutilized input VAT as of end of second quarter 97,000
Fourth quarter: Sales 2,000,000
Purchases 100,000
How much is the VAT payable for the third and fourth quarters?
4. ABC, a VAT – registered taxpayer had the following cumulative date for the 1st quarter
of 2014 (VAT exclusive)
Janu
ary February March Sales P 1,000,00 0 P 240000 0 P 3,800,00 0
Purchase from VAT suppliers 400,000 900,000 1,400,000
Purchase of machinery from vat suppliers
(3years life) 1,200,000
Determine the VAT payable for the monthly and quarterly returns
5. Off Pring Corporation is Value-Added Tax registered dealer of appliances. The following data are for the last quarter of 2014 (CPA Exam Modified):
Sales, total invoice value P 6,921,600
Purchases, net of input taxes 5,500,000
Sales returns (based on total invoice value) 224,000
Purchase returns (net of input tax) 300,000
Deferred input taxes (carried over from the third quarter of 2014) 9,500 How much is the value-added tax due for the last quarter of 2014?
6. A VAT subject real estate dealer sold a residential lot on January 15, 2014. The following information made available on the terms of the sale:
Gross selling price 3,000,000
Initial payments in 2014 (consisting of down
payments and installments in the year of sales) 900,000
Balance to be paid in equal annual installments starting Feb 15, 2015 2,100,000
Taxation by Rex B. Banggawan,CPA, MBA Page 1 of 16
The zonal value of the residential lot was 2,800,000.
Required:
1. How much was the output tax on January 15, 2014? 2. How much is the output tax on February 17, 2015?
7. ABC Corporation sold a parcel of land to XYZ Company on July 2, 2014 for 1,000,000 plus the output VAT, with a monthly installment payments of 10,000, plus the output VAT. The zonal value of the subject property at the time of sale amounted to
1,500,000.
How much is the output tax on the installment payment?
8. The following information taken form the books of a VAT-registered enterprise was provided to you:
Domestic sales of goods P 3,000,000
Sales of packaging materials to an export oriented enterprise whose export sales exceeds 70% of the total annual production2,000,000 Local sales of goods to Asian Development Bank (ADB)500,000 Consignment of goods (not returned within 60 days
following the date of consignment) 200,000
Goods transferred for the personal use of the owner 100,000
Required:
1. How was the total taxable sales? 2. How much was the output tax?
9. The records of DEF, a building contractor, for April shows (vat not included): a. Five Storey Building
Contract Price
P 20,000,00 0 Cash Receipts (for work done):
Labor 4,000,000
Materials 6,000,000
b. Four Storey Building
Contract Price 16,000,000
Cash Receipts (no work done yet):
Advances 2,000,000
c. Cash payments to (for five storey building)
Sub – contractors 1,200,000
Materials 2,400,000
Supplier of equipment (8 years
life) 1,000,000
Determine the VAT due for April
10.A, a CPA had the following data for the month (VAT not included): a. On Professional
Services
Collections P280,000
Receivable
s 120,000
b. Amounts received from clients as reimbursements for expenses chargeable to clients
Billed to clients by VAT
suppliers 30,000
Billed to A by VAT supplier 20,000 c. Payments
to: VAT
suppliers 60,000
Non VAT suppliers 20,000
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d. Salaries of office personnel 18,000 e. Purchase of office equipment (6
years life) 1,200,000
Determine the VAT due (excess input tax) for the month
11.The following are the data of City Appliances Marketing Co. for the last quarter of 2014 (CPA Exam Modified):
Sales up to December 15, total invoice value 319,200
Purchases for November up to December 15, net of input taxes 215,000
Additional information: On December 16, 2014, the City Appliances Marketing Co. retires from its business and the inventory valued at 190,000 (acquisition cost, 200,000) is taken and transferred to New City Appliances Co. There is a deferred input tax from the third quarter of 3,500.
How much is the total value-added tax due by the City Appliances Marketing Co. in its operations in the last quarter and its retirement form business?
12.A taxpayer registered under the VAT system on January 2, 2014 after his sales
exceeded 1,919,500 in the previous year. He became subject to VAT for the first time. The following selected data were taken from his books:
Inventory, December 31, 2013 purchased from VAT-registered seller:
Cost P 60,000
Net realizable value 50,000
VAT paid on December 31, 2013 inventory 6,000
Inventory, December 31, 2013 purchased from VAT-exempt seller 80,000
Sales, net of VAT 181,000
Purchases, net of VAT 70,000
How much was the VAT payable?
13.Sweet Tooth, Inc. manufactures refined sugar. The following selected data are taken form its books:
Sale of refined sugar, net of VAT P 2,000,000
Purchase of sugar cane from farmers 500,000
Purchases of packaging materials, gross of VAT 784,000
Purchases of labels, gross of VAT 112,000
Advance payment of VAT before release from refinery 60,000 How much is the VAT payable?
14.A VAT-registered trader had the following transactions:
Sales of goods to private entities, net of VAT P 2,500,000 Purchases of goods sold to private entities, gross of VAT896,000
Sales to a government owned corporation (GOCC), net of VAT 1,000,000 Purchases of goods sold to GOCC, net of VAT 700,000
Required:
1. How much is the withholding VAT? 2. How much is the standard input tax?
3. What is the treatment of the excess actual input VAT attributable so sales to GOCC?
4. How much is the creditable input tax on sale to private entities? 5. How much is the VAT payable?
15.A VAT-registered taxpayer engaged the services of a non-resident service provider. The contract price was 500,000 which was paid by the VAT-registered taxpayer in full.
Required:
1. How much was the amount of withholding VAT to be withheld by the VAT – registered taxpayer?
2. How much input tax could be claimed as credit by the VAT-registered taxpayer?
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16.Abel Corporation is a merchandising concern and has an inventory of goods for sale amounting to 1,000,000. Nel Corporation, a real estate developer, exchanged its real estate properties for the shares of stocks of Abel Corporation resulting to the
acquisition of corporate control.
Required:
1. Is the inventory of goods owned by Abel Corporation subject to output tax? 2. Is the exchange of real estate properties held for sale or for lease for shares of
stocks subject to VAT?
3. Assuming Abel Corporation is another real estate dealer, is there an output VAT imposable on the above transfer?
DRILL QUESTIONS
1. Value Added Tax is a/an
a. Indirect Tax b. Direct Tax c. Local Tax d. Personal Tax
2. One of the following is not a major business internal revenue tax in the Tax Code
a. VAT b. Excise Tax c. Income Tax d. Percentage Tax
3. 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 b. Output Tax c. Excise Tax d. Sales Tax
4. It means the VAT due or paid by a VAT-registered person on importation of goods or local purchases of goods, properties or services, including lease or use of properties, in the course of trade or business
a. Output tax b. Input tax c. Deferred input tax d. VAT payable 5. 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
6. 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
7. 1st Statement – Any person who, in the course of his trade or business, sells, barters,
exchanges or leases goods or properties, or renders service, and any person who import goods, shall be liable to VAT
2nd Statement - In the case of importation of taxable goods, the importer, whether an
individual corporation and whether or not made in the course of his trade or business, shall be liable to VAT
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 8. 1st Statement – For VAT purposes, a taxable person is any person liable for the
payment of VAT, whether registrable in accordance with the tax code.
2nd Statement – The status of a “VAT – registered person” as a VAT – registered person
shall continue until the cancellation of such registration
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 9. Who is the one statutorily liable for the payment of VAT?
a. Buyer b. Seller c. Consumer d. None of the choices
10.1st Statement: The term “in the course of trade or business” means the regular
conduct of pursuit of a commercial or economic activity, excluding transactions incidental thereto, by person who operate business solely for profit
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2nd Statement: Non – resident persons who perform services in the Philippines are
deemed to be making sales in the course of trade or business, even if the performance of service is not regular
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 11.Which of the following shall be included in the term “goods or properties”?
I – Real properties whether or not held primarily for sale to customers or held for lease in the ordinary course of trade or business
II – The right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right III – The right or the privilege to use any industrial, commercial or scientific
equipment
IV – The right or the privilege to use motion picture film, films, tapes and discs; and V – Radio, television, satellite transmission and cable television time.
a. I, II, III, IV and V c. II, III, IV and V only
b. I, III, and V only d. I only
12.Which of the following shall be subject to VAT?
a. Sale of a residential house and lot c. Sales of private car by its owner b. Sale of an apartment house d. All of the above
13.In the case of sale of real properties on the installment plan, the real estate dealer shall be subject to VAT on the:
a. Selling price;
b. Selling price or fair market value whichever is lower c. Selling price of fair market value whichever is higher
d. Installment payments, including interest and penalties, actually or constructively received by the seller
14.1st statement – In the case of sale of real property on the deferred payment basis, not
on installment plan (initial payments exceed 25% of the gross selling price), the
transaction shall be treated as cash which makes the entire selling price taxable in the month of sale.
2nd statement – Transmission of property to a trustee shall not be subject to VAT if
the property is to be merely held in trust for the trustor and/or beneficiary. a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 15.Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale
to his son as gift on account on his graduation. For VAT purposes, the transfer is: a. not subject to VAT because it is a gift
b. subject to VAT because it is a deemed sale transaction c. not subject to VAT because it is subject to gift tax d. subject to VAT because it is considered an actual sale
16.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
17.In case of sale, barter or exchange or real property subject to VAT, the term “fair market value” shall mean:
a. the fair market value as determined by the Commissioner of Internal Revenue (zonal value)
b. the fair market value as shown in the schedule of values of the Provincial and City Assessor (real property tax declaration)
c. whichever is lower between the zonal value and the value per real property tax declaration
d. whichever is higher between the zonal value and the value per real property tax declaration
18.1st statement: If the gross selling price is based on the zonal value or market value of
the property, the zonal or market value shall be deemed inclusive of VAT.
2nd statement: If the VAT is not billed separately, the selling price stated in the sales
document shall be deemed to be inclusive of VAT
a. Both statements are correct c. Only the first statement is correct
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b. Both statements are incorrect d. Only the second statement is correct 19.First statement: “VAT-exempt transactions” refer to the sale of goods or properties
and/or services and the use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of VAT (input tax) on purchases.
Second statement: The person making the exempt sale of goods, properties or
services shall not bill any output tax to his customers because the said transaction is not subject ot VAT.
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 20.Which of the following goods when sold or imported shall not be exempt from VAT?
a. agricultural and marine foods products in their original state
b. livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption
c. breeding stock and genetic materials therefore
d. processed or manufactured agricultural and marined food products
21.Which of the following shall be considered livestock for VAT-exempt transactions purposes?
I – cows II – bulls and calves III – pigs IV – sheep V – goats VI – rabbits
a. all of the above c. all of the above except VI
b. none of the above d. I, II and III only
22.Which of the following shall not be considered as poultry for VAT-exempt transactions purposes?
a. Fowls b. ducks and geese c. fighting cocks d. turkey
23.Which of the following are not considered livestock or poultry for VAT-exempt transactions purposes?
I – fighting cocks II – race horses II – zoo animals IV – other animals generally considered as pets
a. I, II, III and IV b. I, II, and III only c. I and II Only d. II, III and IV only
24.Marine food products shall include fish and crustaceans, such as, but not limited to which of the following?
I – eels II – trout III – lobster IV – shrimps V – prawns VI – oysters VII – mussels VIII – clams
a. All of the above c. III, IV and V only
b. None of the above d. VI, VII and VIII only
25.One of the following is not an activity subject to VAT
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
26.Taxpayer operates a Grocery Store and is not – VAT registered. His annual gross sales amounted to P1,500,000 for the year although his operations resulted to net loss for the year 2006. He is subject to
a. 3% OPT b. VAT c. MCIT - 2% d. None, operation is a
loss
27.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 transactions
d. Entities which are exempt from income tax are also exempt from VAT 28.Which of the following importation is subject to VAT?
a. Importation of frozen meat c. Importation of apples for personal consumption
b. Importation of bamboo poles d. Importation of grapes for sale 29.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. Sales of newspaper
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30.Meat, fruit, fish, vegetables and other agricultural and marine food products shall be considered in their original state even if they have undergone the simple process of preparation or preservation for the market. Which of the following shall be considered as simple processes of preparation or preservation for the market?
I – freezing II – drying III – salting IV – broiling V – roasting VI – smokingVII – stripping
a. all of the above c. I, II, III, and IV only
b. None of the above d. All of the above except IV and V
31.Meat, fruit, fish and vegetables and other agricultural and marine food products shall be considered in their original state even if they have undergone advanced
technological means of packaging. Which of the following shall not be considered as advanced technological means of packing?
a. shrink wrapping in plastics c. tetra-pack
b. vacuum packing d. freezing
32.Which of the following shall be considered as agricultural products in their original state and shall be exempt from VAT?
I – polished and/or husked rice III – raw cane sugar and molasses V – copra
II – corn grits IV – ordinary salt VI – bagasse
a. I, II, III, IV, V and VI c. I and II only
b. I, II, III, IV and V only d. III and IV only
33.Which of the following sale or importation of goods shall not be exempt from VAT? a. fertilizers
b. seeds, seedlings and fingerlings
c. fish, prawns, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds
d. specialty feeds
34.This refers to non-agricultural feeds and foods for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets
a. Fertilizers c. specialty feeds
b. fish, prawn, livestock and poultry feeds d. pet feeds
35.Which of the following goods when imported shall not be exempt from VAT? I – vehicle II – vessel III – aircraft IV – machinery
V – other goods for use in the manufacture of products VI – merchandise of any kind in commercial quantity
a. All of the above c. I, II, III and IV only
b. None of the above d. V and VI only
36.First statement: Services subject to (other) percentage taxes shall not be subject to VAT.
Second statement: services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane into raw sugar are exempt from VAT a. both I and II are correct c. Only I is correct
b. neither I nor II is correct d. Only II is correct
37.This refers to those persons producing for others poultry, livestock or other agricultural and marine foods products in their original state
a. agricultural contract growers c. agricultural operators
b. millers d. fishpond operators
38.First statement: Medical, dental, hospital and veterinary services, including laboratory services, except those rendered by professionals are exempt from VAT Second statement: if the hospital or clinic operates a pharmacy or drug store, the sale of drugs and medicine is subject to VAT
a. both I and II are correct c. Only I is correct b. neither I nor II is correct d. Only II is correct 39.Educational services are exempt from VAT if rendered by:
I – private educational institutions duly accredited by DepED, CHED and TESDA II – government educational institutions
a. both I and II are correct c. Only I is correct b. neither I nor II is correct d. only II is correct 40.The exemption from VAT of educational services does not include:
I – seminars II – in-service trainings III – review classes
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IV – other services rendered by persons who are not accredited by DepEd, the CHED and/or the TESDA
a. I, II , III and IV b. I, II, III only c. I and II only d. IV
only
41.Which of the following shall not be exempt from VAT?
a. services rendered by individual pursuant to an employer-employee relationship b. services rendered by regional or area headquarters established in the Philippines
by multinational corporations which act as supervisory communications and
coordinating centers for their affiliates, subsidiaries or branches in the Asia pacific region and do not earn or derive income from the Philippines
c. Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws
d. Services rendered by professionals such as CPAs, engineers, lawyers, etc.
42.Which of the following statements is INCORRECT?
a. A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax
b. the input tax on purchases of goods, properties or services, related to zero-rated sales, shall be available as tax credit only in accordance with the Regulations c. For purposes of zero-rating, the export sales of registered export traders shall
include commission income
d. The exportation of goods on consignment shall not be deemed export sales until the export products are in fact sold by the consignee
43.Which of the following export sales require payment in acceptable foreign currency and accounting in accordance with the rules and regulations of the Bangko ng Sentral ng Pilipinas (BSP).
I – The sale an actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods exported
II – The sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods
III – The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed 70% of the total annual production
IV – Sale of gold to the BSP
V – Transactions considered export sales under Executive Order No. 226, otherwise known as Onmibus Investments Code of 1987, and other special laws
VI – The sales of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations
a. I, II, III, IV, V, and VI c. II, IV and V only
b. I and II only d. V only
44.“Considered export sales under Executive Order NO. 226” shall mean:
I – the Philippine port F.O.B value determined from invoices, bills of lading, inward letters of credit, landing certificates and other commercial documents of export products exported directly by registered export producer
II – the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same
a. Only I is correct c. Both I and II are correct
b. Only II is correct d. Neither I nor II is correct
45.Without actual exportation, which of these shall be considered constructively exported for purposes of VAT?
I – sales to bonded manufacturing warehouses of export-oriented manufacturers II – Sales to export processing zones
III – Sales to registered export traders operating bonded trading warehouses
supplying raw materials in the manufacture of export products under guidelines to be set by the Board of Investment (BOI) in consultation with the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC)
IV – Sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not
a. I, II, III, and IV c. I and II only
b. I, II and III only d. IV only
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46.It means the sale to a non-resident of goods, except automobiles and non-essential goods, assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.
a. Export sale c. Effectively zero-rated sale
b. Foreign currency denominated sale d. Transaction deemed sale 47.Which of the following shall be considered export sale?
I. Sales for locally manufactured and assembled goods for household and personal use to Filipinos abroad and other non-residents of the Philippines as well as returning Overseas Filipinos under the Internal Export Program of the government paid for in convertible foreign currency and accounted for in accordance with the rules and regulations of the BSP
II. Sales of goods, properties or services made by a VAT-registered supplier to BOI-registered manufacturer or producer whose products are 100% exported
a. Neither I nor II c. I only
b. Both I and II d. II only
48.Which of the following local sales of goods or property will not be effectively subject to VAT at zero-rate?
a. Sales to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority (SBMA)
b. Sales to enterprises duly registered and accredited with the Philippine Economic Zone Authority (PEZA)
c. Sales to Development Bank of the Philippines (DBP) d. Sales to International Rice Research Institute (IRRI)
49.1st statement – The term “effectively zero-rated sale of goods and properties” shall
refer to the export sale of goods and properties by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws or international agreement
2nd statement – Except for export sales and foreign currency denominated sale, other
cases of zero-rated sales shall require prior application with the appropriate BIR office for effective rating and without and approved application for effective
zero-rating, the transaction otherwise entitled to zero-rating shall be considered exempt a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 50.Which of the following sales requires price application with the appropriate BIR office
for zero rating?
a. Export sales c. Sales to Asian Development Bank
b. Foreign currency denominated sales d. None of the choices
51.Which of the following shall not be considered “deemed sale” pursuant to the Tax Code?
a. Transfer use or consumption not in the 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 in the profits of VAT-registered person or creditors in payment of debt or obligation
c. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned
d. Retirement from or cessation of business with respect to all goods on hand, whether capital goods, stock-in-trade, supplies or materials as of the date of such retirement or cessation whether or not the business is continued by the new owner or successor
52.1st statement: Transfer of goods or properties not in the course of business can take
place when VAT-registered person withdraws goods from his business for his personal use
2nd statement: Property dividends which constitute stocks in trade or properties
primarily held for sale or lease declared our of retained earnings on or after January 1, 1996 and distributed by the company to its shareholders shall be subject to VAT based on the zonal value or fair market value at the time of distribution, whichever is applicable
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct
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53.Which of the following circumstance shall give rise to transactions “deemed sale” for purposes of VAT?
I – Change of ownership of the business (i.e., single proprietorship incorporates; or the proprietor of a sole proprietorship sells his entire business)
II – Dissolution of a partnership and creation of a new partnership which takes over the business
a. Both I and II c. I only
b. Neither I nor II d. II only
54.1st statement: The Commissioner shall determine the appropriate tax base in cases
where a transaction is deemed a sale, barter or exchange of goods or properties or where the gross selling price is unreasonably lower than the actual market value 2nd statement: The gross selling price is unreasonably lower than the actual market
value if it is lower by more than 30% of the actual market value of the same goods of the same quantity and quality sold in the immediate locality on or nearest the dale of sale
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 55.For transactions deemed sale, other than retirement or cessation of business, the
output tax shall be based on the:
a. Selling price of the goods deemed sold as of the time of occurrence of the transaction
b. market value of the goods deemed sold as of the time of the occurrence of the transaction
c. acquisition cost of the goods deemed sold
d. acquisition cost or the current market price of the goods whichever is lower 56.The VAT shall apply to goods or properties originally intended for sale or use in
business, and capital goods which are existing as of which of the following occurrences?
I – Change of business activity from VAT taxable status to VAT-exempt status
II – Approval of request for cancellation of registration due to reversion to exempt status
III – Approval of request for cancellation of registration due to a desire to revert to exempt status after the lapse of three (3) consecutive years from the time of
registration by a person who voluntarily registered despite being VAT-exempt. IV – Approval of request for cancellation of registration of one who commenced
business with the expectation of gross sales or receipts exceeding 1,500,000, but who failed to exceed this expectation during the first twelve months of operation.
a. I, II, III, and IV c. I and II only
b. I, II, and III only d. III and IV only
57.Which of the following occurrence shall not be subject to VAT?
I – Change of control of a corporation by the acquisition of the controlling interest of such corporation by another stockholders or group of stockholders
II – Change in the trade or corporate name of the business III – Merger or consolidation of corporation
a. I, II, and III b. I and II only c. II and III only d. III only
58.Janina Corporation is a merchandising concern and has an inventory of goods, for sale amounting to 1,000,000. Nelloso Corporation, a real estate developer, exchanged its real estate properties for the shares of stock of Janina resulting to the acquisition of corporate control. What is the tax consequence of the transaction to Janina
Corporation involving its inventory of goods?
a. Not subject to output tax despite the change in corporate control because the same corporation still owns them
b. Subject to output tax because VAT applies not only to actual sales but also to transfers, barters or exchanges of goods
c. Not subject to output tax because VAT to actual sales only
d. Tax consequence cannot be determined because the information is not complete
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59.Using the same data in the immediately preceding number, what is the tax
consequence on the real properties held for sale or for lease exchanged by Nelloso Corporation for the shares of stock of Janina Corporation?
a. Subject to VAT, whether the exchange resulted to corporate control or not b. Subject to VAT, when the exchange resulted to corporate control only
c. Not subject to VAT, whether the exchange resulted to corporate control or not d. Not subject to VAT because the corporation still owned the real properties 60.Which of the following is not deductible from Gross Selling Price?
a. Discounts determined and granted at the time of sale, which are expressly indicated in the invoice, the amount thereof forming part of the gross sales duly recorded in the books of accounts
b. Discount determined and granted after the agreed sales quota is met by the buyer c. Sales discount indicated in the invoice at the time of sale, the grant of which is not
dependent upon the happening of a future event, deductible within the same month or quarter given
d. Sales returns and allowances for which a proper credit or refund was made during the month or quarter to the buyer for sales previously recorded as taxable sales 61.Any input tax on the purchases or importation of goods shall be creditable against the
out tax if:
I – evidenced by a Vat invoice or official receipt II – issued by a VAT-registered person
III – in the course of trade of business
a. I, II and III are correct c. Only I is correct b. Only I and II are correct d. Only III is correct
62.Where a VAT-registered person purchases or imports capital goods, which are
depreciable assets for income tax purposes, the aggregate acquisition costs of which (exclusive of VAT) in a calendar month exceeds 1,000,000 regardless of the acquisition cost of each capital good, shall claimed as credit:
a. over a period of 60 months in all cases
b. over a period of 60 months unless the estimated life is not less than 5 years in which case over the actual number of months comprising the estimated life c. in full in the month acquired
d. in full in the quarter acquired
63.The aggregate acquisition cost of a depreciable asset in any calendar month refers to the:
a. total price agreed upon for one or more assets acquired during the calendar month b. payments actually made during the calendar month
c. total price agreed upon for one asset only acquired during the calendar month d. initial payments made if purchased on installment plan
64.If the depreciable capital good is sold or transferred within a period of 5 years or prior to the exhaustion of the amortizable input tax thereon the unamortized input tax on the capital goods sold or transferred can be
a. claimed as input tax credit in its entirety during the month or quarter when the sale or transfer was made
b. amortized over the remaining life of the capital good
c. claimed as input tax credit in its entirety or amortized over the remaining life of the capital good at the option of the taxpayer
d. expensed outright in the month or quarter the sale or transfer was made
65.Which of the following input taxes shall not be credited against output taxes arising from sales to non-Government entities?
a. Input tax on purchase or real properties for which VAT has actually been paid b. Input tax on purchase of service in which VAT has actually been paid
c. Transitional and presumptive input taxes
d. Input taxes that can be directly attributable to VAT taxable sales of goods and services to the Government or any of its political subdivisions, instrumentalities or agencies including GOCCs
66.1st statement – The input tax attributable to VAT-exempt sales shall not be allowed as
credit against the output tax but should be treated as part of cost or expense
2nd statement – For persons engaged in both zero-rated sales under the Tax Code and
non-zero rated sales, the aggregate input taxes shall be allocated ratably between the zero-rated sale and non-zero rated sale
a. Both statements are correct c. Only the first statement is correct
Taxation by Rex B. Banggawan,CPA, MBA Page 11 of 16
b. Both statements are incorrect d. Only the second statement is correct 67.Which of the following shall be entitled to transitional input tax credits on beginning
inventories?
I – taxpayers who became VAT-registered persons upon exceeding the minimum turnover of 1,500,000 in any 12-month period
II – Taxpayers who voluntarily register even if their turnover does not exceed 1,500,000 (except franchise grantees of radio and television broadcasting whose threshold is 10,000,000)
a. Both I and II c. I only
b. Neither I nor II d. II only
68.Which of the following shall be allowed presumptive input tax?
I – Persons or firms engaged the processing of sardines, mackerel and milk
II – Persons or firms manufacturing refined sugar, cooking oil and packed noodle-based instant meals
a. Both I and II c. I only
b. Neither I nor I d. II only
69.1st statement: Presumptive input tax is equivalent to 4% of the gross value in money of
the purchases of primary agricultural products used as inputs to the production. 2nd statement: The term processing shall mean pasteurization, canning and activities
which through physical or chemical process alter the exterior texture or form of inner substance of a product in such a manner as to prepare it for special use to which it could not have been put it its original form or condition
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 70.1st statement: The transitional input tax shall be 2% of the value of the beginning
inventory on hand or actual VAT paid on such goods, materials and supplies,
whichever is higher, which amount shall be creditable against the output tax of VAT-registered person
2nd statement: The value allowed for income tax purposes on inventories shall be basis
for computation of the 2% transitional input tax, excluding goods that are exempt from VAT under Sec 109 of the tax code
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 71.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
72.“A” at the time of retirement, had 1,000 pieces of merchandise which was deemed sold a value of 20,000 with an output tax of 2,400. After retirement, “A” sold to “B”, 500 pieces for P12,000. In the contract of sale or invoice, “A” stated the sales invoice number wherein the output tax on “deemed sale” was imposed. The corresponding tax paid on the 500 pieced was 1,200, which was included in the P12,000.
How much input tax would “B” entitled to?
a. 2,400 b. 1,200 c. 1,000 d. none
73.1st statement: The government or any of its political subdivisions, instrumentalities or
agencies, including government owned or controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and/or services subject to VAT, deduct and withhold a final VAT due at the rate of 5% of the gross payment thereof.
2nd statement: The 5% final VAT withholding rate shall represent the net VAT payable
of the seller
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 74.1st statement: Standard input VAT is allowed for sales of goods or services to
government or any of its political subdivisions, instrumentalities or agencies including GOCC.
Taxation by Rex B. Banggawan,CPA, MBA Page 12 of 16
2nd statement: Standard input VAT is in lieu of the actual input VAT directly
attributable or ratably apportioned to sales to government or any of its political subdivisions, instrumentalities or agencies including GOCCs.
a. Both statements are correct c. Only the firs statement is correct b. Both statements are incorrect d. Only the second statement is correct 75.In case of sales to government or its political subdivisions, instrumentalities or
agencies including GOCCs which of the following is correct?
I – Should actual input VAT exceed five percent of gross payments, the excess may form part of the seller’s expenses or cost
II – If the actual input VAT is less than five percent of the gross payment, the difference must be closed to expensive or cost
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 76.1st statement: VAT withheld and paid for the non-resident recipient which VAT is
passed on to the resident withholding agent by the non-resident recipient of the income, may be claimed as input tax by said VAT-registered withholding agent upon filling his own VAT Return
2nd statement: If the resident withholding agent is a non-VAT, said passed-on VAT by
the non-resident recipient of the income, evidenced by duly filed BIR form no. 1600, shall form part of the cost of purchased services, which may be treated either as an asset of expense, whichever is applicable of the resident withholding agent.
a. Both statements are correct c. Only the first statement is correct b. Both statements are incorrect d. Only the second statement is correct 77.Monthly VAT declarations is filed on or before the
a. 10th day from the end of each month c. 25th day from the end of each month
b. 20th day from the end of each month d. 30th day from the end of each month
78.Quarterly VAT return shall be filed on or before the a. The 10th day from the end of each quarter
b. The 20th day from the end of each quarter
c. The 15th day from the end of each quarter
d. The 25th day from the end of each quarter
79.Statement 1- A taxpayer whose gross sales or receipts exceeded the amount of
P1,500,000 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 c. Only statement 1 is true b. Both statements are false d. Only statement 2 is true 80.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 enjoy 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
81.Which of the following lessors of residential units is/are subject to VAT?
A B C D
No. of apartment
units 20 15 10 10
Monthly rent/unit P9,000 P10,000 P12,000 P14,000
a. B and D b. C and D c. B, C and D d. D only
82.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
83.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
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84.A imported an article from USA. The invoice value of the imported article was $7,000 ($1:P50). The following were incurred in relation with the importation
Insurance P15,000 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 P50,000 customs duty and P30,000 excise tax. A spent P5,000 for trucking from the customs warehouse in Quezon City. The VAT on importation is:
a. P50,000 b. P35,000 c. P50,500 d. P60,000
85.Assuming that the imported article above was sold for P600,000, VAT exclusive. The VAT payable is
a. P60,000 b. P12,000 c. P9,500 d. P9,200
86.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 2007 was P224,000, including the VAT. 75% of the sales are normally account. How much is the output tax for the month of April 2007?
a. P22,000 b. P20,000 c. P16,500 d. P24,000
87.A, trader, made the following sales of goods during the month of June 2007, exclusive of VAT: Compute the output VAT. a. P52,800 b. P48,000 c. P60,000 d. P67,200
88.A, a VAT – registered, made the following purchased during the month of January 2007
Goods for sale, inclusive of VAT 224,000P
Supplies, exclusive of VAT 20,000
Office air conditioner, total invoice amount 56,000 Home appliances for residence, gross of VAT 17,600 Repair of store, total invoice amount
evidenced by
ordinary receipt of the contractor 4,400
Creditable input taxes are
a. P26,400 b. P29,400 c. P24,000 d. P32,400
89.A taxpayer registered under the VAT system on January 1, 2007. His records during the month show
Value of inventory as of December 31, 2006, purchased from VAT
registered persons - P50,000
VAT paid on inventory as of December 31, 2006 6,000
Value of inventory as of December 31, 2006, VAT exempt goods 60,000
Sales, net of VAT 140,000
Sales, gross of VAT 45,000
Purchases, net of VAT
70,00 0
Taxation by Rex B. Banggawan,CPA, MBA Page 14 of 16
Cash sales P200,000
Open Account Sales 100,000
Installment Sales 100,000
Note: Receipt from installment sales 40,000
Consignment made (net of VAT):
June 15, 2007 100,000
May 15, 2007 100,000
VAT payable is
a. P11,100 b. P7,221 c. P3,100 d. P18,100
90.The following are the data of City Appliance Marketing Corporation, for the last quarter of 2006.
Sales up to December 15, gross of output tax P336,000 Purchases up to December 15, net of input tax 215,000
Additional Information:
On December 16, 2006, City Appliance Marketing Corporation retired from its
business and the inventory valued at P190,000 was taken and transferred to New City Appliance Corporation. There is a deferred input tax from the third quarter of P3,500. How much is the total VAT due and payable by City Appliance Marketing Corporation in its operations in the last quarter and its retirement from business
a. P22,500 b. P3,500 c. P6,350 d. P29,500
91.Assuming that New City Appliance Corporation has the following data for the first quarter of 2007?
Sales, total invoice value P448,000
Purchases, total invoice 224,000
How much is the VAT payable of New City Appliance Corporation for the first quarter of 2007?
a. P28,000 b. P1,200 c. P30,000 d. P24,000
92.A, is a VAT – registered dealer of appliances. The following data are for the last quarter of 2006
Sales, net of output tax P 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 third quarter of 2006 9,500 The VAT payable for the last quarter of 2006 by A is
a. P120,500 b. P70,500 c. P80,000 d. P158,500
93.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 invoice of the VAT business amounted to P336,000. The sales of the non-VAT business amounted to P200,000 with a separated percentage tax of P6,000 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
94.Using the above data, the VAT payable is
a. P24,000 b. P25,000 c. P31,680 d. P26,400
95.A Refining Company manufactures refined sugar. It had the following data during the first quarter of 2007
Sale of refined sugar, net of VAT P2,000,000
Purchases from farmers of sugar cane used in the manufacture of refined sugar 500,000
Purchases of packaging materials, gross of VAT
784,000
Purchase of labels gross of VAT 112,000
The VAT payable is
a. P124,000 b. P112,500 c. P70,000 d. P62,000
96.M, building contractor showed to you the following data
Contract price net P5,000,000
Cash received (VAT included) 2,240,000
Receivables 3,000,000
Advances on other contracts still unearned (w/o VAT) 1,000,000 Payments (VAT excluded):
For materials 500,000
For supplies 100,000
For operating expenses (depreciation and salaries)200,000 For services of sub – contractors (VAT included) 1,680,000
Taxation by Rex B. Banggawan,CPA, MBA Page 15 of 16
The VAT payable is
a. P108,000 b. P348,000 c. P350,000 d. P12,000
97.A, 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
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