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Vat
Vat
1. A tax on business is
a. Direct tax c. Property tax
b. Indirect tax d. None of the above
2. One of the following is not a major business internal revenue taxes in the tax code
a. Value added tax c. Income tax
b. Excise tax d. Percentage tax
3. Value added tax is a (an)
a. Indirect tax c. Progressive tax
b. Direct tax d. Regressive tax
4. In value added taxation, this is not a requirement for taxability of service?
a. In the course of business
b. Performed within or outside the Philippines
c. Consideration received actually or constructively
d. Supply of service is not exempt from VAT
5. Charlene is an operator of parking lots. What business tax is due on his income tax from
the business?
a. Brokers tax c. Common carriers tax
b. Caterers tax d. Value added tax
6. Mr. F is a lessor of real property and personal property (cars). The tax that he pays is
a. Excise tax c. Percentage tax
b. Value added tax d. None of the above
7. Mr. S Magler imported cigarettes from the United States for sale in the Philippines. What
business taxes in the Philippines are due?
a. VAT, excise tax, other percentage tax
b. VAT and excise tax
c. Other percentage tax and excise tax
d. VAT and percentage taxWhich of the following is not exempt from VAT
a. Importation in their original state of agricultural and marine food products
b. Importation of passenger or cargo vessel more than 5,000 tons to be used by the
importer himself as operator thereof;
c. Importation of personal and household effect belonging to residents of the Philippines
returning from abroad;
d. Importation of non-food agricultural products in their original state by a primary
producer.
8. One of the following transactions by a VAT registered person does not result to output vAT
a. Cash sales c. Sales and leaseback
b. Sales on account d. Export sales
Assuming that the input taxes paid on purchases of goods for export are claimed as tax
credit, the VAT payable by Tsukuba Company is
a. 12,895 c. 177,895
b. 10,398 d. 84,895
10.In question no. 14, assuming that the input taxes attributable to export sales are being
claimed as refund, the amount refundable is
a. 72,000 c. 84,895
b. 12,895 d. Zero
11.Joey, a non VAT taxpayer, purchased merchandise worth 11,200, VAT inclusive, from Willie,
a VAT registered seller. The passed on VAT of 1,200 on the purchase is
a. An expense c. A tax credit
b. Part of the cost of purchase d. Ignored
12.Altura sold goods at an invoice value of 123,200 to Beltran on account. Beltran sold the
same goods to Cantoria for 143,000 (exclusive of tax) cash. All of them are VAT registered
taxpayers. The accounting entry to record the sales in the books of Beltran is
a. Cash 160,160
Sales 143,000
Output Tax (143,000 x 12%) 17,160
b. Cash 143,000
Sales 143,000
c. Cash 160,160
Sales 160,160
d. Cash 143,000
Sales 125,840
Output Tax 17,160
13.The journal entry in the purchase books of Beltran in No. 17 is
a. Purchases 110,000
Input Tax (123,200 x 3/28) 13,200
Accounts Payable 123,200
b. Purchases 96,800
Accounts Payable 96,800
c. Purchases 83,600
Input tax 13,200
Accounts Payable 96,800
d. Purchases 110,000
Accounts Payable 110,000
14.In question no. 17, assuming that Cantoria is not subject to VAT. In the sale of the goods by
Beltran to Cantoria-
a. Beltran should record debit Cash 125,840
b. Beltran should record debit Cash of 143,000 in his books.
c. Cantoria should debit purchases of 125,840 and a debit Input tax of 17,160
d. Cantoria should debit Purchases of 143,000
15.Statement 1: in case tax exempt products are sold domestically to a VAT registered
person, the VAT otherwise due on such product shall be considered as Input Tax creditable
against his output tax payable
Statement 2: export sales by a VAT registered person are subject to zero-rating and so he
can claim and enjoy a crdit for the tax invoiced to him on his purchases. If he is not VAT
registered, his export sales are exempt, but he is not entitled to tax credit for inputs.
a. Both statements are true c. Both statements are false
b. False, true d. True, false
Transaction 1- an agricultural food producer sells his products in their original state to a
food processor who also buys packaging materials and containers from a manufacturer/
supplier
Transaction 2- the food processor transforms the food products into processed foods and
sells to a wholesaler/ exporter
Transaction 3- the exporter sells the goods to foreign buyers.
Transaction 4- the wholesaler delivers the merchandise to retailers
Transaction 5-the retailers sell the goods to households or ultimate consumers
Serving # 01
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10/27/2007 16:23 APP OR # 564567878
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1 SOLO SPE ML 83.00
1 XCHANGE LRG CK 12.00
CASH 500.00
CHANGE DUE 407.00
This serves as your OFFICIAL RECEIPT.
28-30
Mongolia Company, a VAT registered business has the following data in its books on July,
2008:
Domestic 709,50
Sales 0
Sales returns 26,400
Goods shipped on consignment (net of tax):
Units Unit Price
July 5 25 22,000
June 5 20 22,000
May 5 12 22,000
During the month, one consignee remitted cash net of 20% commission representing the
payment for five units delivered on June 5.
26.A creditable input tax allowed on one who becomes subject to VAT for the first time
a. Presumptive input tax c. excess input tax
b. transactional input tax d. total input tax
27.Isaac Company, a newly VAT registered business, has the following data in January (all
amounts are inclusive of tax).
The VAT payable for the quarter ending March 2008 is-
a. 12,171 c. 18,600
b. 33,792 d. 22,992
29.Statement 1: Transport of passengers and cargo by domestic air or sea vessels from the
Philippines to a foreign country is subject to VAT at a rate of 0 %.
Statement 2: transport of passengers and cargo by domestic air or sea vessels from
Mindanao to Luzon and Visayas, vice versa, is subject to VAT at a rate of 12%.
a. true, false c. false, false
b. false, true d. true, true
30.Beth had the following receipts during the month (exclusive of tax):
passen Cargo
ger
Jeepney 1 20,000
Jeepney 2 30,000
Bus 15,000 8,500
Sea vessel 1,500,0 800,0
00 00
Cessna plane for 800,00 560,0
hire 0 00
The output tax during the period is
a. 164,220 c. 283,800
b. 441,000 d. 440,220
31.Inside Job Security Agency is engaged in the selling of security services to various clients.
During the month of December, it billed on of its clients of the following
Monthly salary 6,00
0
13 th month 6,00
pay 0
Agency fee at 1,80
15 % 0
SSS/Philhealth 300
Leave with pay 450
Total 14,5
50
Based on the following data, how much is the Output VAT payable of Inside Job Security
Agency
a. 1,746.00 c. 1,440.00
b. 1,558.93 d. 1,478.57
32.Bonnevie is a real estate dealer. During the month of November 2008, he sold three (3)
lots under the following terms:
Lot 1 Lot 2 Lot 3
Selling price 250,0 200,0 300,0
00 00 00
Cost 150,0 130,0 175,0
00 00 00
Gain/loss 100,0 70,00 125,0
00 0 00
Terms:
Downpayment, 25,00 50,00 40,00
Nov 5 0 0 0
Due-
Dec 5 25,00 20,00 20,00
0 0 0
Jan to Dec 2009 200,0 130,0 240,0
00 00 00
a. false, false
b. false, true
c. true, false
d. true, true
38.-- VAT is imposed on goods brought into the Philippines, whether for use in business or not
-- In the case of goods imported into the Philippines by a VAT exempt person which are
subsequently sold to taxable persons, the latter shall be considered the importer thereof
and shall be liable for VAT due on such importation
a. true, true
b. false, false
c. false, true
d. true,false
39.Celebrado, VAT registered taxpayer, has the following data on importation in 2008:
For Own
sale use
Invoice cost (Exchange rate $1:Php 46) $ $ 850
5,650
Custom duties 12% 10%
Freight 20,00 4,000
0
Insurance 28,00 4,250
0
Other charges before release from custom 7,000 2,500
house
Facilitation fee 10,00 5,000
0
Freight from custom house to warehouse 12,00 1,200
(net of VAT) 0
Assuming the custom duties are determined on the basis of the quantity of volume of the
goods, the VAT on the importation is
a. 31,260 c. 47,981.76
b. 37,285 d. 44,742
40.In no. 44, how much is the VAT payable if the imported goods for sale were sold for
665,000 (inclusive of tax) 10 days after its delivery to the warehouse-
a. 28,279.44 c. 17,540
b. 32,298 d. 25,068
41.Robin
a. 25,000
P., imported a car from the USA for his personal
d. use.
none,Total
because
landed
importation
cost is Phpis for
250,000
b. 30,000(about $5,000) including custom duties of Php
personal
50,000.
use.VAT payable is
c. 10,000
Purchases of materials:
From VAT registered 226,2
persons 40
From non-VAT registered 126,5
persons 00
Assuming the custom duties were based on the quantity of the goods imported, the VAT
due on the importation is-
a. 46,860
b. 52,260
c. 45,840
d. 46,050
46.Aileen, a Japanese residing in the Philippines bought garments from Cua Corporation, a
domestic corporation, and exported the same to Japan. Total value of export is 100,000.
VAT (output tax) due on the transaction is
a. 10,000
b. 5,000
c. none, because 0% applies
d. none, because the sale is exempt from VAT
47.Offspring Corporation is a VAT registered dealer of appliances. The following data are for
the month of October:
Additional info:
On October 16, 2008, City Appliances company retired from its business and the inventory
valued at 190,000, net of input taxes, was taken and transferred to New City Appliances
Company. There is deferred input taxes from the third quarter of P3,500. How much is the
total value added taxes due and payable by City Appliances Marketing Company in its
operations in October and its retirement from business?
a. 22,500 c. 6,350
b. 22,000 d. 25,350
54-55
Gabriel Panga Auto Repair Shop, VAT registered, had the following data in its books during
the period:
Receipts:
From Auto repair 85,6
20
From washing and greasing 45,4
25
Reimbursement by customer on payments made to VAT machine shops 4,35
0
Payments received for lubricants, oils and fluid provided by the shop to cars 5,78
undergoing repair 0
Disbursements:
Electric bill 3,55
0
Water bill 2,38
0
Salaries of employees 15,0
00
Payments made to machine shops, non VAT 4,35
0
Purchase of lubricants, oils and fluids 3,00
0
Purchase of capital goods (life-10 years) 24,0
00
51.Taxpayers who became VAT registered persons upon exceeding the minimum turn-over of
1.5million in any 12-month period, or who voluntarily register even if their turnover does
not exceed 1.5 million shall be entitled to a transitional input tax on the inventory on hand
as of the effectivity of their VAT registration on the following, except:
a. Supplies for use in the course of taxpayers trade or business
b. Goods which have been manufactured by the taxpayer
c. Goods in process for sale
d. Capital goods being used in the operation of the business
57 to 60
Sumilco, a manufacturer of refined sugar, became subject to VAT effective December 1, 2008.
During the month, the following are its data:
During the month, a portion of the security deposit for the faithful compliance by customer
C of its obligations to the lessor was applied to rental for January in the amount of 11,000.
At the beginning of the year, Archie had 252,000 worth of inventory of supplies and
materials for use in the business. VAT paid on the beginning inventory is 3,500.
60.Marinda is a VAT registered grocery owner and sugar dealer. She submitted lists of
inventory as of December 31, 2007 to the Revenue District Officer as follows:
Sales Purchas
es
Grocery (total invoice 1,042,5 650,100
value) 25
Sugar (excluding VAT) 480,00 420,000
0
67-68
Goodbooks Educational supply, VAT registered, is engaged in the business of selling books,
school supplies and gift items. The following are the record of its purchases and sales
during the month of October (inclusive of tax):
Sales-
VAT business, VAT included 560,0
00
Non-VAT business 100,0
00
Purchases-
Merchandise, VAT business, VAT included 154,0
00
Merchandise, non VAT business, VAT included 67,10
0
Capital goods, VAT business, VAT included 34,77
6
Capital goods, non VAT business, VAT included 27,50
0
Capital goods, for use in both business, VAT 56,00
included 0
Rent of store, VAT business, VAT included 14,56
0
Rent of warehouse, VAT & non-VAT business, 6,200
VAT excluded
Freight of goods, (VAT and non VAT business), 2,576
VAT included
Telephone bills, VAT and non-VAT, VAT included 1,624
73-75
Mildred enterprises, a VAT registered trader had the following data during the last quarter
of the year:
Purchas Sales
es
October 627,20 392,0
0 00
Novemb 599,20 862,4
er 0 00
Decemb 959,61 789,6
er 6 00
76-78
The books of accounts of Franklin Corporation, VAT registered , revealed the following data
in 2007:
1st quarter
Sales 700,00
0
Purchases 500,00
0
Purchase of machinery (Feb) 1,500,0
00
Unutilized input tax as of end of 40,000
1st quarter
2nd quarter
Sales 1,500,0
00
purchases 200,00
0
78.A new businessman consulted you relative to the filing of tax return and payment of his
business tax. The business is VAT registered although he is expecting to earn an annual
gross receipts ranging from 900,000 to 1,200,000 only. These are his questions:
Questions
1 2 3
a VAT June July
. 20 25
b VAT June July
. 25 25
c Non June July
. VAT 20 25
d Non June July
. VAT 20 20
85-86
The City Government of Inga has the following purchases for the month of August 2009
from VAT suppliers of goods and/or services:
79.The amount payable to Sina after withholding taxes of VAT and income tax is
a. 11,200 c. 9,400
b. 10,600 d. 10,500
80.The amount payable to Daman Services Inc. after withholding taxes of VAT and income tax
is
a. 56,000 c. 52,500
b. 50,000 d. 53,500
VAT Exercises
True or false
1. A VAT registered person who issues a VAT invoice for a VAT exempt sale but fails to
display on the invoice the term VAT Exempt shall be subject to VAT on that sale.
2. The input tax of a VAT purchaser is the output tax of the VAT seller
3. Services rendered to persons engaged in International shipping or air transport
operations are subject to 12% VAT.
4. The excess of output VAT over the input VAT is a current asset of the taxpayer
5. The input VAT on purchase of capital goods valued at 2,000,000 shall be spread over 60
months ,or the life of the asset, whichever is shorter, subject to 70% cap.
6. Persons engaged in sale of services may also be allowed to claim tax credit on
presumptive input tax.
7. Gross receipts on services rendered by all franchise grantees are subject to franchise
tax.
8. .
9. .
10.A physician is not subject to VAT because in exercising his professional services he is
not engaging himself in business.
11.There is no creditable input tax on sales to government or any of its political
subdivisions, instrumentalities or agencies, including government-owned or controlled
corporations.
12.If the invoice price is inclusive of VAT, the amount given is multiplied by 3/28 to get the
VAT component thereon.
13.A taxpayer who operates a VAT and a non-VAT business cannot claim input tax credit on
purchases of goods to be used in his VAT business.
14.Any input tax attributable to zero-rated sales by a VAT registered person may at his
option be refunded or applied for a tax credit certificate which may be used in the
payment of internal revenue taxes.
15.Banks and other banking institutions are subject to VAT.
16.Importation of goods are subject to VAT even if the intention of the importer is to use
the imported goods for personal purposes.
17.The gross receipts derived from exercise of a profession and from other lines of vatable
business shall be combined for purposes of determining the threshold of 1,500,000
18.The account Output Tax must appear in the current liability section of the balance
sheet.
19. Lease of copyright on taxation books are subject to VAT.
20.Input tax, being a tax, is an expense on the part of purchaser and is deductible from
gross income for purposes of computing the net income.
21.VAT is a regressive tax.
22.System loss on electricity that are being charged by electric cooperatives to consumers
are subject to 12% VAT.
23.Printing of invoices and receipts (including delivery receipts) requires the approval of
BIR
24.Purchases and sales are recorded in the books of non-VAT taxpayer at an amount
which is net of input/output taxes
25.A sale of power or fuel which is generated from solid waste is subject to 0% VAT.
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