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CDD Quizzer on Value Added Tax

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


Novem
October
ber
P180,00
Output Tax
P96,000
0
Input Tax
108,000
72,000

Decemb
er
P60,000
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)
Unutilized input VAT as of end of second quarter
Fourth quarter: Sales
2,000,000
Purchases
100,000

2,000,000
97,000

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 1 st quarter
of 2014 (VAT exclusive)
Janu
Febru
Mar
ary
ary
ch
P
P
P
1,000,00 240000 3,800,00
Sales
0
0
0
1,400,00
Purchase from VAT suppliers
400,000 900,000
0
Purchase of machinery from vat suppliers
1,200,0
(3years life)
00
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

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CDD Quizzer on Value Added Tax

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
Cash Receipts (for work done):
Labor
Materials
b. Four Storey Building
Contract Price
Cash Receipts (no work done yet):
Advances
c. Cash payments to (for five storey
building)
Sub contractors
Materials
Supplier of equipment (8 years
life)

P
20,000,00
0
4,000,000
6,000,000
16,000,00
0
2,000,000
1,200,000
2,400,000
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
P280,00
Collections
0
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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

d. Salaries of office personnel


e. Purchase of office equipment (6
years life)

18,000
1,200,00
0

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
Purchases for November up to December 15, net of input taxes

319,200
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
Sales, net of VAT
Purchases, net of VAT

80,000

181,000
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
Purchases of goods sold to GOCC, net of VAT
700,000

1,000,000

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?

Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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

Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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 buyers 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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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 BOIregistered 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 zero-rating and without and approved application for effective zerorating, 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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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

Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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

CDD Quizzer on Value Added Tax

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 noodlebased 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 VATregistered 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

CDD Quizzer on Value Added Tax

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 sellers 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
th
b. 20 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
P10,0 P12,00
Monthly rent/unit
P9,000
00
0
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
Taxation by Rex B. Banggawan,CPA, MBA

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CDD Quizzer on Value Added Tax

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:
Cash sales
Open Account Sales
Installment Sales

P200,000
100,000
100,000

Note: Receipt from installment sales


Consignment made (net of VAT):
June 15, 2007
May 15, 2007
April 15, 2007
P60,000

40,000
100,000
100,000
100,000

Compute the
output VAT.
a. P52,800
b.
P48,000
c.

d. P67,200

88.A, a VAT registered, made the following purchased during the month of January
2007
P
Goods for sale, inclusive of VAT
224,000
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 VAT paid on inventory as of December 31, 2006
Value of inventory as of December 31, 2006, VAT exempt goods
Sales, net of VAT
Sales, gross of VAT
Purchases, net of VAT
Taxation by Rex B. Banggawan,CPA, MBA

P50,0
00
6,000
60,00
0
140,0
00
45,00
0
70,00
0
Page 14 of 16

CDD Quizzer on Value Added Tax

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

CDD Quizzer on Value Added Tax

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

-- END OF HANDOUT --

Taxation by Rex B. Banggawan,CPA, MBA

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