23.

DIMAGIBA CONSTRUCTION COMPANY ENTERED INTO A CONTRACT

WITH THE GOV’T TO CONSTRUCT AN EDIFICE FOR A TOTAL
CONTRACT PRICE OF P25,000,000. DURING THE MONTH, THE
GOVERNMENT PAID P10,000,000 OF WHICH IT WITHHELD 5% FINAL
VAT WITHHOLDING TAX. HOW MUCH IS THE VAT PAYABLE BY THE
COMPANY ON THE GOVERNMENT CONTRACT?
A) 150,000
B) 850,000
C) ZERO
D) 1,000,000
24. WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?
A) TRANSITIONAL INPUT TAX IS 2% OF THE VALUE OF THE INVENTORY
OR THE ACTUAL VAT PAID, WHICHEVER IS HIGHER
B) AMOUNTS RECEIVED FROM SERVICES PERFORMED BY AN
INDIVIDUAL PURSUANT TO AN EMPLOYER-EMPLOYEE
RELATIONSHIP ARE EXEMPT FROM VAT
C) EXPORT SALES BY VAT-REGISTERED PERSONS ARE NOT SUBJECT TO
VAT
D) EXPORT SALES BY PERSONS WHO ARE NOT VAT-REGISTERED ARE
VAT EXEMPT
25. TRANSACTION BY A VAT-REGISTERED TAXPAYER WHICH IS NOT
SUBJECT TO VAT:
A) FOREIGN CURRENCY DENOMINATED SALES
B) EXPORT SALE
C) TRANSACTION DEEMED SALE
D) SALE OF SERVICES RENDERED IN FOREIGN COUNTRIES
26. STATEMENT 1: THERE IS A VAT IN AN IMPORTATION BY AN
IMPORTER-MERCHANT EVEN IF HE DOES NOT INTEND TO SELL THE
IMPORTED ARTICLE

True
11. The term gross selling price
excludes taxes on the sale.

True
12. Excise tax is part of the gross selling
price.

True
13. Sales returns and allowances are
deductible against gross selling price.

True
14. Gross selling price includes cash,
accounts and installment sales.

True
 15. Constructive receipts are part of
gross receipts.

True
16. Constructive receipts are
monies which are placed in the
control of the seller of services
without restrictions.

True
17. Only discounts determinable at
the point of sale are deductible
against gross selling price.

True
18. The term “gross receipts”
includes client or customer
advances for unperformed jobs.

True
19. Gross receipts include only cash
received and excludes uncollected
income.

False
20. Promissory notes and other
evidences of indebtedness
submitted by clients or customers
are part of gross receipts.

Note: As a rule, except to life

insurers.