Module 19

VALUE-ADDED TAX – 1

1. A domestic corporation in real estate business sold a building.

Statement 1. The sale is not subject to the value-added tax because it is not a sale of goods or
services;
Statement 2. The sale is subject to the value-added tax because sale of goods and properties
are subject to the value-added tax, and real estate is within the meaning of property.
a. True, true
b. False, false
c. True, false
d. False, true

2. Prices/costs of a VAT taxpayer with purchases from VAT suppliers, VAT not included:
Gross sales P700,000
Sales returns and allowances 30,000
Sales discounts 40,000
Purchases 210,000
Purchase returns and allowances 20,000
Purchase discounts 10,000
How much is the VAT payable?
a. 76,600
b. 54,000
c. 25,200
d. Some other amount

3. A VAT taxpayer had the following sales in a month:

Cash sales P200,000
Open account sales 500,000
Consignment sales (at suggested retail prices
0-30 days old on which there were remittances
from consignees of P200,000) 600,000
31-60 days old 700,000
61 days old and above 900,000
How much is the taxable sales?
a. 2,900,000
b. 1,800,000
c. 2,200,000
d. Some other amount

4. Taxpayer is a VAT taxpayer:

Sales, VAT not included P800,000
VAT included:
Purchases of goods sold
From VAT taxpayers 224,000
From non-VAT taxpayers 20,000
 Purchases of services from VAT taxpayers 56,000
Payments for utilities (water subject to percentage tax) 19,000
Salaries of employees 80,000
Operating expenses (no VAT component) 100,000
How much is the VAT payable?
a. 96,000
b. 72,000
c. 66,000
d. Some other amount

5. The following are data, VAT not included, of Country Appliances Marketing Co. for the last
quarter of 2011:
Sales up to December 15, total invoice value P300,000
Purchases up to December 15 200,000

Additional information:
On December 16, 2011, the Country Appliances Marketing Co., retired from its business and
the inventory valued at P190,000 net of input taxes was taken and transferred to New World
Appliances Co. There is a deferred input taxes from the third quarter of P3,500.

How much is the total value added taxes due and payable by Country Appliances Marketing
Co. in its operations in the last quarter and its retirement from business?
a. 12,000
b. 8,500
c. 34,800
d. 31,300

6. Which of the following is not a sale and therefore is not subject to the value-added tax?
a. Transfer, use or consumption not in the ordinary course of business of goods or properties
ordinarily intended for sale or use in the course of business;
b. Distribution or transfer to shareholders or investors of share in the profits of a VAT-
registered person;
c. Distribution or transfer to creditors in payment of debt;
d. Consignment of sales.

7. Which statement is correct? The value-added tax on goods on properties sold:

a. is based on gross sales and not on net sales.
b. may be due even if the goods or properties were not actually sold.
c. is not imposed on goods exported.
d. is a selling expense of the trader.

8. Under the value-added tax law, which of the following sales may not be zero-rated?
a. Export sales
b. Foreign currency denominated sales
c. Sale of goods to the Asian Development Bank
d. Sale of goods to an export-oriented enterprise
9. Which of the following statements is wrong? The value-added tax is:
a. not an expense.
b. a tax credit.
c. not a part of the gross selling price.
d. on purchases, is a part of the cost of inventory.

10. Which of the following are not account titles with balances in the books of accounts of a VAT
taxpayer?
a. Output taxes
b. Input taxes
c. Excess input taxes carry-over
d. VAT payable

11. The formula: Output taxes (less) Input taxes (equals) Value-added tax payable means that:
a. Value-added taxes are not deductible from gross income.
b. Value-added taxes paid on purchases are prepayments.
c. Value-added taxes during a taxable period may not appear in the financial statements;
d. All the above statements are correct.

12. Statement 1. The output VAT is computed by multiplying the gross selling price by 12%; or
multiplying the total amount indicated in the invoice by 12/112.
Statement 2. The output VAT is computed by multiplying the total amount indicated in the
invoice by 12%.
a. True, true
b. False, false
c. True, false
d. False true

13. Statement 1. In the books of accounts of a VAT-registered taxpayer, purchases are recorded
net of input taxes.
Statement 2. In the books of accounts of a VAT-registered taxpayer, sales are recorded net of
output taxes.
a. True, true
b. False, false
c. True, false
d. False true

14. Statement 1. A VAT payment is not an expense in the books of accounts of the VAT taxpayer.
Statement 2. The excess of input taxes over output taxes in a given month or quarter is a
deferred charge.
a. True, true
b. False, false
c. True, false
d. False true
15. Naidsky, a Korean-Japanese residing in the Philippines, bought garments from ABC Corp., a
domestic corporation, and exported the same to Japan. Total value of export is P100,000.
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

16. Statement 1. Tax pyramiding is a situation where some or all of the stages of distribution of
goods or services are taxed, with the accumulation borne by the final consumer.
Statement 2. A characteristic of the VAT is that it is a consumption tax, borne ultimately by
the users of goods or services.
a. True, true
b. False, false
c. True, false
d. False true

17. All amounts given are VAT not included:

A, Non-VAT taxpayer, sells to B, VAT taxpayer P60,000
B, VAT taxpayer, sells to C, VAT taxpayer 90,000
C, VAT taxpayer, sells to D, VAT taxpayer, an exporter 150,000
D, VAT taxpayer, exports 300,000

The value-added tax of B:

a. Payable of P10,000
b. Payable of P9,200
c. Payable of P10,800
d. Payable of P7,200

18. Ms. XC is a VAT-registered person, with the following data for a taxable month, VAT not
included: Sales, domestic, to consumers – P600,000; Sales, direct exports – P300,000;
Purchases, total invoice cost, from VAT-registered persons: Of goods of P550,000 and of
services of P330,000.
The sales subject to the value-added tax is:
a. P600,000
b. P400,000
c. P300,000
d. P900,000

19. The Pareda Shop sells cakes and pastry items to well-known hotels around the Metro Marawi
area. The hotels are allowed credit based on the track record of the hotels. The total
amounts received or receivable from sales by the Pareda Shop in April of Year X were
P220,000, including the value-added tax. 75% of the sales are normally on account.
How much is the value-added tax on the sales amount for the month of April, Year X?
a. P22,100.52
b. P21,050.35
 c. P16,250.32
d. P23,571.43

20. Statement 1. Sales of certain goods and services to senior citizens are exempt from the value-
added tax, hence the value-added tax on the transactions id P0;
Statement 2. Sales of certain goods and service to senior citizens are zero-rated VAT sales,
hence the VAT on the transactions is P0.
a. True, true
b. False, false
c. True, false
d. False true

21. Ms. Babayo is a producer of cooking oil from coconut and corn. For January 2011, with
sales, VAT not included, of P700,000, he had the following other data for the month:
Corn and coconut purchased from farmers: P100,000
Purchases during the month of coconut and
corn from farmers 330,000
Purchases during the month from VAT suppliers,
VAT included:
Packaging materials 56,000
Supplies 16,800
The value-added tax payable for the month:
a. P56,060
b. P54,900
c. P60,650
d. P63,600

22. Sarap Products is a processor of refined sugar. It purchases sugarcane from farmers for
processing into intermediate stages until it becomes refined sugar. In a month, it had the
following sales and purchases, no tax included:

Sales P880,000
Purchases of sugarcane 220,000
Purchases of containers and paper labels 100,000

The VAT payable is:

a. P66,000
b. P88,000
c. P74,700
d. P84,800

23. Taxpayer is a
VAT-registered processor of fruit and canned sardines.
Selling prices, invoice prices not including VAT:
Processed units P200,000
Processed sardines 300,000
Costs (VAT not included, if from vatable suppliers):
 Fruits Fish
Fruits purchased from farmers 30,000
Sardines (fresh) purchased from fishermen 20,000
Raw cane sugar, purchased from millers 12,000
Tomatoes purchased from farmers 7,000
Olive oil purchased from processors of olive oil 8,000
Bottles 4,000
Tin for tin can containers 7,000 15,000
Paper labels 5,000 7,000
Cardboard for boxes 8,000 9,000
Hauling services of forwarders 4,500 10,000

How much is the VAT payable?

a. P30,040
b. P20,580
c. P5,960
d. Some other amount

24. On instalment sale of real property by a real estate dealer, the instalment VAT is allowed only
if the initial payments on the sale do not exceed twenty-five percent of the gross selling
price.
Statement 1. Gross selling price to which the initial payments are related is the consideration
stated in the deed of sale.
Statement 2. Initial payments do not include notes or other evidences of indebtedness issued
by the purchaser to the seller at the time of sale.
a. True, true
b. False, false
c. True, false
d. False true

25. Which is the best answer? In the case of a sale, barter, or exchange of real property on
instalment by a real estate dealer, subject to VAT:
a. The gross selling price shall mean the consideration stated in the sales document.
b. The gross selling price shall mean the consideration in the sales document of the fair
market value, whichever is higher.
c. The fair market value shall mean the fair market value as determined by the Commissioner
of Internal Revenue/zonal value, or the fair market value as shown in the assessment rolls
of the Provincial or City Assessors, whichever is higher.
d. The gross selling price is the consideration stated in the sales document, or the zonal
value, or the fair market value in the assessment rolls, whichever is the highest.

26. Statement 1.On a sale of real property on instalments by a real estate deal, the seller shall be
subject to VAT on the instalment payment received, including interests and penalties for
late payment.
Statement 2.On a sale of real property on instalments by a real estate dealer, where the VAT is
computed not on the consideration in the deed of sale but on the higher fair market value,
 the VAT must be billed separately with a specific mention that it is based on the market
value of the property.
a. True, true
b. False, false
c. True, false
d. False true

27. Statement 1. On a sale of real property, if the VAT is not stated separately in the deed of sale,
the consideration stated therein shall be deemed to be inclusive of the VAT, hence the
selling price net of VAT shall be determined to arrive at the proper tax base for the VAT.
Statement 2. On a sale of real property, the zonal or fair market value shall be considered as
net of VAT, hence such value shall be used to arrive at the proper tax base of the VAT.
a. True, true
b. False, false
c. True, false
d. False true

28. Sale by a real estate dealer:

Date of sale June 2, 2009
Consideration in the deed of sale P5,000,000
Fair market value in the assessment rolls 4,800,000
Zonal value 5,200,000
Payments on the consideration:
June 2, 2009 P1,000,000
June 2, 2010 2,000,000
June 2, 2011 2,000,000

Installment output/input tax on payment of June 2, 2011

a. P0
b. P124,800
c. P249,600
d. P624,000

29. On a sale of real property on instalment subject to VAT, if the property sold is subject to a
mortgage which is assumed by the buyer:
Statement 1.If the mortgage assumed does not exceed the cost of the seller, the assumption of
the mortgage is not part of initial payments.
Statement 2.If the mortgage assumed exceeds the cost to the seller, the excess shall be part of
the initial payments.
a. True, true
b. False, false
c. True, false
d. False true

30. Sale by a real estate dealer:

Date of sale January 2, 2010
 Consideration in the deed of sale P5,000,000
Fair market in the assessment rolls 4,800,000
Zonal value 4,000,000
Cost to the seller 3,000,000
Payments on the consideration
Assumption of mortgage by buyer P2,000,000
January 2, 2010 600,000
June 2, 2010 600,000
January 2, 2011 1,800,000

Installment output/input VAT on the payment on January 2, 2011:

a. P240,000
b. P120,000
c. P216,000
d. P0

31. Sale by a real estate dealer:

Date of sale January 2, 2011
Consideration in the deed of sale P6,000,000
Fair market in the assessment rolls 5,100,000
Zonal value 4,900,000
Cost to the seller 3,000,000
Payments on the consideration
Assumption of mortgage by buyer P2,000,000
January 2, 2010 500,000
June 2, 2010 700,000
January 2, 2011 2,800,000

Installment output/input VAT on the payment on June 2, 2011:

a. P720,000
b. P72,000
c. P0
d. P300,000

32. Statement 1. In the case of a sale on a deferred payment basis not qualifying under the
instalment plan, the transaction shall be treated as a cash sale and the VAT is payable for
the month of sale.
Statement 2. In the case of a sale on deferred payment basis not qualifying under the
instalment plan, payments subsequent to initial payments shall no longer be subject to
VAT.
a. True, true
b. False, false
c. True, false
d. False, true

33. Sale by a real estate dealer

Date of sale January 2, 2011
Consideration in the deed of sale P6,000,000
Fair market in the assessment rolls 5,100,000
Zonal value 4,900,000
Cost to the seller 1,000,000
Payments on the consideration:
January 2, 2011 (date of sale) 2,000,000
January 2, 2012-11-24 2,000,000
Output/input VAT on the payment of January 2, 2011:
a. P298,000
b. P360,000
c. P300,000
d. P329,000

Module 20
VALUE-ADDED TAX – 2
1. Which statement is correct? Leasing of property shall be subject to VAT on sale of services:
a. if the property is in the Philippines and the lease agreement was executed in the
Philippines.
b. if the property is in the Philippines and the lease agreement was executed outside the
Philippines.
c. if the property is in the Philippines and the lease agreement was executed within or outside
the Philippines.
d. All of the above.

2. In the VAT sale on services, the output tax is computed:

a. on billings of the month.
b. on collections of the month on all billings made.
c. on the contract price of contracts completed during the taxable period.
d. only and strictly on labor performed under the contract of services.

3. Mr. A is a VAT-registered building contractor:

Gross receipts in a month, any tax not included:
From Mr. X, a private property owner, on the final payment
on the contract price, net of a 5% agreed retention by Mr. X P2,850,000
From Mr. Y, a payment of a 5% retention on the contract
price previously made by Mr. Y 100,000
From Mr. Z, for materials used in the contracts, on a contract
for labor and materials 500,000
Output VAT?
a. P414,000
b. P342,000
c. P72,000
d. Some other amount

4. Taxpayer is a VAT-registered person. Data for a month (no VAT component):

Cash received:
For building completed with a contract price of P5,000,000 P3,800,000
Advances received for building to be constructed 300,000
Cash received on materials returned to VAT suppliers 100,000
Cash received from owners, for materials used in
construction (not included in the figures above) 1,000,000
Cash received from owners for building permit fees 200,000
Cash received from VAT subcontractors for overpayments 300,000
Cash paid:
To VAT-registered subcontractors 900,000
To VAT-registered suppliers of materials 1,100,000
To non-VAT suppliers of materials 500,000
To the city government, for building permit fees 200,000
Advances to VAT-registered subcontractors 150,000
Operating expenses 80,000
 VAT payable is:
a. P402,000
b. P247,900
c. P305,000
d. P325,000

5. Taxpayer is a VAT taxpayer with three building contracts:

Contract price, VAT not included:
With private property owner, Building No. 1 P 6,000,000
With private property owner, Building No. 2 5,000,000
With the National Government 10,000,000
Billings on the contract price, VAT included, when proper
On contracts with private property owner, Bldg. No. 1 6,000,000
On contracts with the National Government 5,000,000
Collections on the billings:
On contracts with private property owner, Building No. 1 4,000,000
On contracts with the National Government 5,000,000
Advances received, Building No. 2 500,000
Reimbursement from private property owner, for materials
purchased for them. But billed to the VAT taxpayer, on an
invoice price (VAT not included), Bldg. No. 1 100,000
Payment to VAT taxpayers, VAT not included:
For materials for use on buildings of private property
owner, Bldg. No. 1 100,000
For materials for use on buildings of the National Government 50,000
For services, for buildings of private property owners 2,000,000
For service, for buildings of the National Government 20,000
VAT payable on contracts with private property owners?
a. P288,000
b. P300,000
c. P240,000
d. Some other amount

Final VAT withheld on contracts with the National Government?

a. P250,000
b. P0
c. P500,000
d. Some other amount

6. Statement 1. Withholding VAT is required at five percent (5%) of the gross payment for the
purchase of goods by the Government or any of its political subdivision, or by a
government-owned or controlled corporation.
Statement 2. Withholding VAT is required at five percent (5%) on every release or instalment
payment on purchase of services by the Government or any of its political subdivision, or
a by a government owned or controlled corporation.
a. True, true
b. False, false
c. True, false
d. False, true

MODULE 21
VALUE-ADDED TAX - 3
4. A Co., in its first month of operations, and as a VAT taxpayer, purchased various fixed assets.
Purchases of fixed assets in the first month are as follows:
Light equipment, with a useful life of 3 years P 300,000
Heavy equipment, with a useful life of 10 years 4,000,000
How much is the input tax available?
(a) P516,000 (b) P9,000 (c) P480,000 (d) Some other amount.

5. B Co., a VAT taxpayer, made sales of P6,000,000 in a month. Goods sold were purchased
from VAT taxpayers for P2,000,000. In the same month, it made a purchase of delivery
equipment for P1,500,000 which had a useful life of three years. Amount given does not
include value added tax.
How much is the value-added tax payable?
(a) P720,000 (b) P475,000 (c) P480,000 (d) Some other amount.

6. The taxpayer is a VAT taxpayer

Data in the month, VAT not included:
Sales of goods P 1,500,000
Sale of fixed assets:
No. 1 Purchased from VAT taxpayer 200,000
No. 2 Purchased from a non-VAT taxpayer 100,000
Purchases of goods, from VAT supplier 400,000
Purchases of fixed assets, from non-VAT supplier:
No. 3, with useful life of 6 years 900,000
No. 4, with useful life of 8 years 2,000,000
No. 5, with useful life of 3 years 1,300,000
Value-added tax payable is?
(a) P122,200 (b) P146,200 (c) P204,000 (d) Some other amount.

7. A Co., a VAT taxpayer, had its delivery equipment assembled by a VAT taxpayer. It took six
months for the contractor to finish the work. A Co. purchased materials in July from VAT
suppliers at a cost of P500,000, VAT not included. Payment to the Contractor in July, 2011 on
the CIP (construction in progress), VAT not included was:
For services purchased:
On contractor’s billing on June 100,000
On contractor’s billing on July 70,000
The input taxes available in July from the CIP?
(a) P0 (b) P 80,400 (c) P60,000 (d) P 20,000

REFUND OR CREDIT FOR INPUT TAXES ON GOODS EXPORTED

1. Input tax attributable to Zero-rated sales (e.g., exports) may be:

 (a) Refunded; or
(b) Credited:
(1) Against the output taxes of the VAT taxpayer arising from domestic sales; or
(2) Against other internal revenue taxes of the Vat taxpayer.
2. In a month, VAT not Include:
Domestic sales P 660,000
Export sales 1,500,000
Purchases from VAT-registered persons:
Of goods exported 550,000
Of goods sold in the Philippines 220,000
Operating expenses 110,000
The input taxes attributable to export sales which may be refunded or credited against any
other internal revenue tax including the value-added tax on domestic sales:
a. P50,000 b. P20,000 c. P70,000 d. P66,000

Data from the books of accounts of a VAT taxpayer for January:

Domestic Exports Total

Sales P 2,000,000 P8,000,000 P10,000,000
Purchases:
From VAT taxpayers:
Of goods for sale 600,000 2,400,000 3,000,000
Of supplies and services 90,000 360,000 450,000
From non-VAT taxpayers:
Of goods for sale 100,000 1,500,000 1,600,000
Of supplies and services 20,000 80,000 100,000
There was no inventory at the beginning or end of the taxable period. If the input taxes
attributable to zero-rated sales are claimed as tax credit, the net value-added tax refundable
is:
a. P136,000 b. P 203,924.70 c. P 145,000 d. P174,000

4. Analysis of the balances in selected accounts of a taxpayer, with VAT and non-VAT business,
showed (gross profit is 60% of the selling price. There were no inventories at the beginning
and end of the taxable period):
Purchases, all from VAT-suppliers, VAT not included P1,600,000
Sales, any tax not included:
Exports, VAT business 2,000,000
Exports, Non-VAT business 1,000,000
Domestic sales, VAT business 600,000
Domestic sales, Non-VAT business 400,000
The net value-added tax refundable for the month:
 a. P36,000 b. P52,800 c. P100,000 d. P60,000

TRANSITIONAL INPUT TAX

1. A person who becomes liable to the value-added tax or any person who elects to be a VAT-
registered person shall have- input tax on his beginning inventory (inventory on transition
date) of:
(a) Goods (property);
(b) Materials; and
(c) Supplies,
At
(a) Two percent (2%) of the value of such inventory; or
(b) The actual value-added tax paid on such goods (property), materials and supplies,
whichever is higher.
There is no transitional input tax on services, or on capital goods.

2. A person who becomes subject to the value-added tax for the first time can have an input tax
out of the inventory of goods, properties, materials and supplies on hand at the same time he
can be liable. This is called:
(a) Value-added tax deemed paid;
(b) Presumptive input tax;
(c) Transitional input tax;
(d) None of the above

3. One of the following statements is wrong. Identify. For a tax payer who become liable for the
first time to the value-added tax:
(a) There can be an input tax to a purchases he made when not yet a VAT taxpayer;
(b) He must use a VAT invoice on the sale of the goods purchased when not yet a VAT
taxpayer;
(c) He must still use the non-VAT invoice in use when not yet a VAT taxpayer on the sale of
goods on hand on the transition date;
(d) There will be an adjustment on the inventory valuation on the transition date.

4. Which statement is wrong?

(a) There is transitional input tax from purchases of goods or properties;
(b) There is transitional input tax from purchases of services;
(c) There is transitional input tax from purchases of materials;
(d) There is transitional input tax from purchases of supplies.

5. Sales in 2010 was P1,000,000

Value-added tax not included, May, 2011:
Sales 880,000
 Purchases from VAT-registered persons 110,000
Purchases from non-VAT registered persons 20,000
Inventory, May 1, 2011, purchased from VAT and non-VAT
Suppliers (of which P22,000 was from VAT-registered persons) 33,000
If the tax payer chose to be a VAT taxpayer as of May 1, 2011, how much was the value-
added tax payable for May, 2011?
(a) P 103,000 (b) P90,000 (c) 92,100 (d) Some other amount.

6. Sales in the preceding year not exceeded P 1,500,000. Data in January, 2011:
Sales, any tax included P120,000
Purchases from VAT suppliers, VAT included 22,400
Inventory, all purchased from VAT suppliers:
January 1, VAT included 33,600
January 31, VAT not included 10,000
The tax payer opted to be a VAT tax payer beginning January, 2011.
Value-added tax payable for January, 2011 is?
(a) P12,400 (b) P 11,100 (c) P 8,400 (d) some other amount.

7. The Tops Merchandising has the following data on operations for a month as a VAT-
registered taxpayer:
Sales, total invoice price P581,900
Purchases of goods, VAT not included:
From VAT registered persons 100,000
From non-VAT registered persons 80,000
Purchases of services, VAT not included:
From VAT registered persons 20,000
From non-VAT registered persons 8,000
From persons subject to percentage taxes 10,000
Salaries of employees 60,000
Other operating expenses 12,000
This is the first month of being liable to the value-added tax. Data on inventories (VAT not
included) at the beginning of the period follow:
Inventory, at cost P 40,000
At net realizable value 30,000
Value-added tax paid on beginning inventory 4,800
Input taxes are:
(a) P 43,790 (b) P 21,800 (c) P 19,200 (d) P 29,000

ALLOCATION OF INPUT TAXES

1. The tax payer has a VAT and a non-VAT business.

VAT transactions, VAT not included
Sales, VAT business P 800,000
 Sales, non-VAT business 200,000
Purchases from VAT suppliers:
Of goods for sale in the VAT business 300,000
Of goods for sale in the non-VAT business 88,000
Of supplies for use of both Vat and non-VAT business 2,000
Other operating expenses:
VAT business 300,000
Non-VAT business 60,000
Value-added tax payable is?
(a) P 60,000 (b) P 59,908 (c) P 59,720 (d) Some other amount

2. The net income for the period is?

(a) P 252,000 (b) P 250,192 (c) P 265,300 (d) Some other amount

3. Data for a trader with one line of business subject to the value-added tax and another line of
business not subject to the value-added tax:
Sales, VAT business, VAT included P1,008,000
Sales, non-VAT business 100,000
Purchases of goods, VAT business, VAT included 224,000
Purchases of goods, non-VAT business, VAT included 33,000
Purchases of depreciable asset, for use in VAT and non-VAT
business, VAT included 112,000
Purchases of supplies, for use in VAT and non-VAT
business, VAT included 2,240
Rental of premises, for in VAT and non-VAT business, from
Non-VAT registered person 22,000
The value-added tax payable is:
(a ) P72,984 (b) P70,000 (c) P90,000 (d) P59,800

4. Data for the moth

VAT business:
Domestic sales P 2,000,000
Export sales 3,000,000
Non-VAT business- Domestic sales 1,000,000
Purchases of goods from VAT suppliers, for VAT business 1,500,000
Purchase of goods for non-VAT business 200,000
Purchases of services for VAT and non-VAT business 900,000
Value-added tax payable is?
(a) P204,000 (b) 32,000 (c) P162,000 (d) some other amount
5. Which of the following statements is wrong? When a purchase from VAT-registered person is
for use in the VAT and non-VAT business of the purchaser, the Vat component of the total
amount paid for the purchase:
(a) May be debited at the time of purchase to the Input Taxes account;
(b) May be debited at the time of purchase to the Purchases account;
(c) Must be allocated immediately and at the time of purchase between the VAT and non-
VAT business;
(d) Must be allocated between the VAT and non VAT business at the end of the taxable
period.

SALES INVOICE AND ACCOUNTING PERIOD

2. Statement 1: In the books of accounts of a VAT-registered taxpayer, Purchases are recorded

net of input taxes.
Statement 2: In the books of accounts of a VAT-registered taxpayer, Sales are recorded net of
output taxes.
(a) True, true (b) False, false (c) True, false (d) False, true

3. Which is correct? The inventory balance in the financial statements at any given date of a
VAT-registered person is;
(a) Balance, net of input taxes;
(b) Balance, inclusive of input taxes;
(c) Balance on which the transitional input taxes is computed annually
(d) Balance where the value-added tax thereon may be calculated by multiplying it by 12%.

4. Which statement is correct?

(a) The sales invoice that shows the total, with an indication that it includes the value-added
tax, even if it does not show the tax separately, is a correctly prepared invoice;
(b) The invoice which shows the selling price and the value-added tax separately, and with a
total which is a correct amount is a properly prepared invoice.
(c) An invoice which shows the selling price and the value-added tax separately, but where
the value-added tax is wrong, which is paid by the buyer, is a violative of the revenue
regulations of sales invoices:
(d) A sales invoice by a VAT taxpayer can be used only on a VAT sale.

5. Statement 1: A value-added tax payment is not an expense in the books of accounts of the
VAT taxpayer.
Statement 2: The excess of input taxes over output taxes in a given month or quarter is a
debit balance of the Input Taxes account in the books of accounts.
(a) True, true (b) False, false (c) True, false (d) False, true
6. The taxpayer is a VAT-registered operator of a dining hall
Data on sale:
Item 1 (food) P
1,500
Item 2 (beverage) 200
Service charge 170
City food tax 17
City beverage tax 10
What will the sales invoice show?
(a) P 2,101 (b) P1,700 (c) P 2,074 (d) some other amount

7. On the amount of P100,000, charged by a Certified Public Accountant for services rendered,
before a 10% withholding income tax, and not inclusive of the 12% value-added tax, with a
proper disclosure of the details shown in the voucher covering he payment received, the
payment shall be:
(a) P100,000 (b) P112,000 (c) P102,000 (d) Some other amount

8. The invoice prepared by a VAT taxpayer showed the following details:

Selling price P 100,000

Value-added tax 14,000
Total P 114,000
The value-added Output Tax that should be in the books of accounts, and paid to the Bureau
of Internal Revenue is:
(a) P13,540.22 (b) P 12,120.33 (c) P 12, 214.28 (d) Some other
amount

9. The taxpayer has both a VAT and non-VAT business with two sets of invoices:
Sales, VAT not included:
Of VAT business, using VAT invoice P500,000
Of non-VAT business using VAT invoice 100,000
Of non-VAT business using non-VAT invoice 200,000
Purchases of goods from VAT suppliers, VAT not included
For VAT business 120,000
For non-Vat business 110,000
Purchase of supplies for use of both VAT and non-Vat business from
VAT suppliers, VAT not included 5,000
How much is the VAT payable?
(a) P57,150 (b) P57,600 (c) P45,600 (d) some other amount
VALUE-ADDED TAX DECLARATIONS AND RETURN

2. Balances per books of accounts:

Deferred input taxes, June, 2011: P 15,000
Sales, July 800,000
Purchases, July 500,000
Sales, August 400,000
Purchases, August 60,000
Sales, September 500,000
Purchases, September 200,000
Value-added tax payable, September 2011 is?
(a) P51,200 (b) P112,800 (c) P36,000 (d) some other amount.

3. Eusebio Peralta, a VAT taxpayer, had the following data for each of the months indicated of
its taxable VAT year:
Data for the month of: October November December
VAT not included:
Sales P1,150,000 P2,000,000 P1,850,000
Purchases 600,000 1,600,000 1,500,000
There was a deferred input tax of P20,000 at the end of September. The value-added tax
payable at the end of December:
(a) P86,000 (b) P 42,000 (c) P 95,000 (d) P 115,000

CHAPTER 22
VALUE-ADDED TAX – 4
Importation

8. Which statement is wrong? Value-added on importation of goods:

(a) Is imposed on an importation for sale or for use in business;
(b) Is imposed on an importation for personal use;
(c) Should be paid prior to removal from customs custody;
(d) Is not available as input tax even if related to business.

9. Robin P., imported a car from U.S.A. for his personal use. Total landed cost is P250,000
(about U.S. $10,000) including custom duties of P50,000, VAT payable is?
(a) P27,500
(b) P 10,000
(c) P20,000
(d) None, because the importation is for personal use.
10. An importer wishes to withdraw its importation from the Bureau of Customs. The imported
goods is subjected to a 10% customs duty in the amount of P12,500 and the other charges in
the amount of P9,500. The value-added tax due is:
(a) P12,500 (b) P13,750 (c) P13,364 (d) P17,640

11. The following data pertains to a value-added taxpayer for November, 2011.
Sales, total invoice price P896,000
Local purchase from VAT supplier, total invoice cost 268,800
In, October, there was an importation of goods to be sold, with a landed cost o P200,000.
There was no sales in October.
The value-added tax payable for November:
(a)P80,000 (b) P 43,200 (c) P38,000 (d) P56,000

12. Taxpayer is VAT-registered

Any value-added tax not included: Sale Own Use
Invoice cost (Exchange rate is $1.50) $80,000 $4,000
Based on cost:
Freight and insurance 4% 4%
Other expenses up to the point of removal
from customs house 6% 6%
Transfer expenses from custom house to
warehouse in Manila ½% ½%
Selling price of goods (imported for sale) within the same taxable period of importation,
value-added tax included, was P5,600,000.
Value-added tax payable on the sale:
(a)P 0; (b) P 50,000 (c) P 60,000 (d) P 72,000

13. Which statement is correct? The value-added tax payable on an importation:

(a)Should be paid by the tax-exempt importer, if he subsequently sells the goods to a non-
tax-exempt purchaser.
(b) Should be paid by the non-tax-exempt purchaser to whom the tax-exempt importer sells
it.
(c)Is a liability either of the tax-exempt importer or the non-tax-exempt purchaser;
(d) Shall not pay the value-added tax because the transaction was exempt at the point of
importation.

14. After recognizing the value-added tax payable for the month of January, the books of account
of Value Company, a merchandising concern, showed a debit balance in the Input Taxes
account of P12,000. Sales and purchases at total invoice prices/costs, for February were:
Sales P896,000
Sales returns and allowances 56,000
 Sales discount 22,400
Purchases of:
Goods for sale, from VAT-registered persons 224,000
Goods for sale, from non-VAT registered persons 55,000
Services, from VAT-registered persons 20,160
Equipment (life of 10 years) from VAT-registered persons 112,000
Importation of goods for sale:
Invoice cost, country of origin 20,000
Freight 500
Insurance 200
Customs duty 600
Excise tax 100
Other expenses prior to removal from customs custody 300
Other expenses after removal from customs custody 250
Operating Expense 30,000
The value-added tax payable for February:
(a)P34,836 (b) P46,836 (c) P 113,236 (d) P 38,658

Module 23 (1-9)
VALUE-ADDED TAX 3

Acquisition of capital goods

1. A Co., in its first month of operations, and as a VAT taxpayer, purchased various fixed assets.
Purchases of fixed assets in the first month were as follows:
Light equipment, with a useful life of 3 years P 300,000
Heavy equipment, with a useful life of 10 years 4,000,000
How much is the input tax available?
a. P516,000
b. P9,000
c. P480,000
d. Some other amount

2. B Co., a VAT taxpayer, made sales of P6,000,000 in a month. Goods sold were purchased
from VAT taxpayers for P2,000,000. In the same month, it made a purchase of delivery
equipment for P1,500,000 which had a useful life of three years. Amount given do not
include the VAT.
How much is the VAT payable?
a. P720,000
b. P475,000
c. P480,000
d. Some other amount
3. The taxpayer is a VAT taxpayer
Data in a month, VAT not included:
Sales of goods P1,500,000
Sales of fixed assets:
No. 1, purchased from VAT taxpayer 200,000
No. 2, purchased from non-VAT taxpayer 100,000
Purchases of goods, from VAT supplier 400,000
Purchases of fixed assets from VAT suppliers:
No. 3, with useful life of 6 years 900,000
No. 4, with useful life of 8 years 2,000,000
No. 5, with useful life of 3 years 1,200,000
What is the VAT payable?
a. P122,200
b. P146,200
c. P204,000
d. Some other amount

4. A Co., a VAT taxpayer, had its delivery equipment assembled by a VAT taxpayer. It took six
months for the contractor to finish the work. A Co., purchased materials in July from VAT
suppliers at a cost of P500,000, VAT not included. Payment to the contractor in July 2011
on the CIP (construction in progress), VAT not included was:
For services purchased:
On contractor’s billing in June P100,000
On contractor’s billing in July 70,000
The input taxes available in July from the CIP?
a. P0
b. P80,400
c. P60,000
d. P20,400

Refund/credit for input taxes on goods exported

5. In a month, VAT not included:
Domestic sales P 660,000
Export sales 1,500,000
Purchases form VAT-registered persons:
Of goods exported 550,000
Of goods sold in the Philippines 220,000
Operating expenses 110,000
The input taxes attributable to export sales which may be refunded or credited against any
other internal revenue tax including the VAT on domestic sales is:
a. P50,000
b. P20,000
c. P70,000
d. P66,000

6. Data from books of accounts of a VAT taxpayer for January:

 Domestic Exports Total
Sales P2,000,000 P8,000,000 P10,000,000
Purchases:
From VAT taxpayers:
Of goods for sale 600,000 2,400,000 3,000,000
Of suppliers and services 90,000 360,000 450,000
From non-VAT taxpayers:
Of goods for sale 100,000 1,500,000 1,600,000
Of supplies and services 20,000 80,000 100,000
There was no inventory at the beginning or end of the taxable period.
If the input taxes attributable to zero-rated sales are claimed as tax credit, the net VAT
refundable is:
a. P136,000
b. P203,924.70
c. P145,000
d. P174,000

7. Analysis of the balances in selected accounts of a taxpayer, with VAT and non-VAT business,
showed (Gross profit is 60% of the selling price. There were no inventories at the
beginning and end of the taxable period):
Purchases, all from VAT suppliers, VAT not included P 1,600,000
Sales, any tax not included:
Exports, VAT business 2,000,000
Exports, non-VAT business 1,000,000
Domestic sales, VAT business 600,000
Domestic sales, non-VAT business 400,000
The net VAT refundable for the month is:
a. P36,000
b. P52,800
c. P100,000
d. P60,000

Transitional input tax

1. A person who becomes subject to the VAT for the first time can have an input tax out of the
inventory of goods, properties, materials and supplies on hand at the time he became
liable. This is called:
a. VAT deemed paid
b. Presumptive input tax
c. Transitional input tax
d. None of the above

2. One of the following statements is wrong. Identify. For a taxpayer who becomes liable for
the first time to the VAT:
a. there can be an input tax on purchases he made when not yet a VAT taxpayer.
 b. he must use a VAT invoice on the sale of the goods purchased when not yet a VAT
taxpayer.
c. he must still use the non-VAT invoice in use when he was not yet a VAT taxpayer on the
sale of goods on hand on the transition date.
d. there will be an adjustment on the inventory valuation on the transition date.

3. Which statement is wrong?

a. There is a transitional input tax from purchases of goods or properties.
b. There is a transitional input tax from purchases of services.
c. There is a transitional input tax from purchases of materials.
d. There is a transitional input tax from purchases of supplies.

4. Sales in 2010 was P1,000,000

VAT not included, May 2011:
Sales 880,000
Purchases from VAT-registered persons 110,000
Purchases from non-VAT registered persons 20,000
Inventory, May 1, 2011, purchased from VAT and non-VAT
suppliers (of which P22,000 was from VAT registered persons) 33,000
If the taxpayer chose to be a VAT taxpayer as of May 1, 2011, how much was the VAT
payable for May 2011?
a. P103,200
b. P90,000
c. P92,100
d. Some other amount

5. Sales in any preceding year never exceeded P1,500,000. Data in January 2011:
Sales, any tax not included P120,000
Purchases from VAT suppliers, VAT included 22,400
Inventory, all purchased from VAT suppliers:
January 1, VAT included 33,600
January 31, VAT not included 10,000
The taxpayer opted to be a VAT taxpayer beginning January 2011.
VAT payable for January 2011?
a. P12,400
b. P11,100
c. P8,400
d. Some other amount

6. The Tops Merchandising had the following data on operations for a month as a VAT-
registered taxpayer:
Sales, total invoice price P581,900
Purchases of goods, VAT not included:
From VAT-registered persons 100,000
From non-VAT registered persons 80,000
Purchases of services, VAT not included:
 From VAT-registered persons 20,000
From non-VAT registered persons 8,000
From persons subject to percentage taxes 10,000
Salaries of employees 60,000
Other operating expenses 12,000
This is the first month of being liable to the VAT. Data on inventories (VAT not included) at
the beginning of the period follow:
Inventory at cost P 40,000
at net realizable value 30,000
VAT paid on beginning inventory 4,800
Input taxes are?
a. P43,790
b. P21,800
c. P19,200
d. P29,000

Allocation of input taxes

1. The taxpayer has a VAT and a non-VAT business.
VAT transactions, VAT not included.
Sales, VAT business P800,000
Sales, non-VAT business 200,000
Purchases from VAT suppliers:
Of goods for sale in the VAT business 300,000
Of goods for sale in the non-VAT business 88,000
Of supplies for use of both VAT and non-VAT business 2,000
Other operating expenses:
VAT business 300,000
Non-VAT business 60,000
VAT payable?
a. P60,000
b. P59,808
c. P59,720
d. Some other amount

2. Data for a trader with one line of business subject to the VAT and another line of business not
subject to the VAT:
Sales, VAT business, VAT included P1,008,000
Sales, non-VAT business 100,000
Purchases of goods, VAT business, VAT included 224,000
Purchases of goods, non-VAT business, VAT included 33,600
Purchase of depreciable asset, for use in VAT and
non-VAT business, VAT included 112,000
Purchases of supplies, for VAT and non-VAT business,
VAT included 2,240
Rental of premises, for VAT and non-VAT business, from
non-VAT registered person 22,000
 The VAT payable is:
a. P72,894
b. P70,000
c. P90,000
d. P59,800

The Polez Group of Companies has franchises on public utilities. P Co. is in radio broadcasting, O Co. is
in generating and selling electricity, and L Co. in distributing water in their franchise areas. The radio
broadcasting is in its first year of operations, and it did not register as a VAT taxpayer. Data in a particular
month, any tax not included, follow:
Gross Receipts:
P Co., for time sold to its clients P2,000,000
O Co., for electricity supplied to its customers 3,000,000
O Co., for leasing electrical equipment to a subdivision 900,000
L Co., for water supplied to its customers 2,900,000
L Co., for leasing recreation areas within its water filter sites 200,000
How much was the aggregate of the franchise taxes paid?
(a) P58,000 (b) P60,000 (c) P118,000 (d) some other amount

Mr. K is a businessman with transactions in and out of the Philippines. Local and overseas calls for a
period involved (any tax not included):
Overseas calls:
For calls originating from the Philippines:
Paid by the subscriber in the Philippines P65,000
Paid by the receiver of the call outside the Philippines 14,500
For calls coming into the Philippines:
Paid by Mr. K 15,000
Paid by callers 23,000
Local calls, paid by Mr. K:
Other than long distance 7,000
Long distance 20,000
Value-added tax billed to Mr. K?
(a) P3,240 (b) P2,400 (c) P840 (d) some other amount

Statement 1: Banks are subject to the value-added tax;

Statement 2: Banks are subject to the gross receipts tax, which is a percentage tax.
(a) True, True (b) False, False (c) True, False (d) False, True