BUSINESS & TRASFER TAX

SOLUTIONS MANUAL
Rex B. Banggawan, CPA, MBA

CHAPTER 1

True or False
1. True
2. True
3. True
4. True
5. False
6. False (business tax, a form of consumption tax)
7. True
8. True
9. False (only domestic consumption)
10. False (country of destination)
11. True (the tax is imposed upon the buyer)
12. False (tax applies only on domestic consumption)
13. False (sale abroad is a foreign consumption)
14. False (subject to tax to the buyer)
15. True (particularly business tax)
16. True
17. True
18. False (the former is a broader concept)
19. False (it is payable by all who imports)
20. True
21. True
22. True
23. True (statutory taxpayer = seller, economic taxpayer = buyer)
24. True
25. True

Multiple Choice – Theory: Part 1

1. C
2. A
3. D
4. C
5. A
6. A
7. C
8. D
9. C
10. A
11. B
12. A
13. C
14. B
15. A
16. B
17. D
18. C
19. B
20. A

Multiple Choices – Theory: Part 2

1. A
2. D
3. A
4. C
5. B
6. B
7. C
8. A
9. A
10. C
11. D
12. C
13. B
14. B
15. C
16. B
17. A
18. C
19. B
20. A

Multiple Choice – Problem Part 1

1. D
2. B
3. A
4. D
5. D
6. C
7. A, (P77,600 x 125%0 ÷ 97%) = P100,000
8. A, (P30,000 + P10,000) ÷ 97% = P41,237
9. B
10. A
11. C, (P206,000 x 3%) = P6,180
12. C, (P200,000 sales – P120,000 purchase) not (P200,000 sales – P140,000 cost of
sales)
13. A
14. C, the VAT on importation is impose upon purchase
15. D, (P300,000 + P1,200,000)

Multiple Choice – Problem Part 2

1. C, (P200,000 importation + P150,000 domestic sales)

Note: The domestic purchase is taxable to the seller. Export sales are not subject
to consumption tax.
2. D, Only the importation is subject to consumption tax since consumption tax
on sales (Business tax) applies only to sellers regularly engaged in
business.
3. B, P300,000 x 12% = P36,000
4. C, P200,000 x 12% = P24,000
5. C, P36,000 – P24,000
6. B, P 300,000 x 3% = P9,000
7. C, P300,000 Philippine sales x 12% = P36,000
8. B, P100,000 purchase from abroad x 12% = P12,000
9. C, P300,000 Philippine sales x 3% = P9,000
10. C, same in No. 8