Chapter 8 - Value Added Tax MCQ

Chapter 8 - Value Added Tax MCQ
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1. D. None of the Which of the following shall not be subject to VAT?

above
I. MP Promotions, VAT registered, but gross sales for the
year do not exceed P3,000,000
II. Mayweather Corporation, a foreign licensor or nonresi-
dent lessor who is not VAT registered
III. Mailag Company, a domestic corporation, required to
register under VAT system but failed to register
a. MP Promotions and Mayweather Corporation

b. MP Promotions and Mailag Company
c. All of the above
d. None of the above
2. c. Either I and II A lessor of residential units shall be exempt from VAT

when:
I. Annual gross receipts do not exceed P3,000,000

II. Monthly rental per unit does not exceed P15,000
a. I only
b. II only
c. Either I and II
d. Both I and II
3. a. I only A lessor of commercial units shall be exempt from VAT

when:
I. Annual gross receipts do not exceed P3,000,000

II. Monthly rental per unit does not exceed P15,000
a. I only
b. II only
c. Either I and II
d. Both I and II
4. d. Sale of olive oil Which of the following is subject to VAT?
a. Sale of vegetables in its original state

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b. Sale of fruits in its original state
c. Sale of copra
d. Sale of olive oil
5. d. Refined brown One of the following goods is not in its original state:
sugar
a. Salted eggs
b. Corn grits
c. Polished or husked rice
d. Refined brown sugar
6. d. Fighting cock One of the following is not a poultry for VAT purposes:
a. Duck
b. Fowl
c. Goose
d. Fighting cock
7. d. Race horse One of the following is not a livestock for VAT purposes:
a. Rabbit
b. Cow
c. Pig
d. Race horse
8. d. None of the JJ owns a mango plantation. He sold his ripe mangoes to

above Paul, a fresh fruit vendor. Paul sold the ripe mangoes he
bought from JJ to Francis. Who shall be subject to VAT?
a. JJ
b. Paul
c. Francis
9. a. Subject to VAT Talion owns Eternal Gardens. He harvested fresh flowers

and sold them to Joseph. Joseph sold the flowers in their
original state to Alex. The sale of flowers by Joseph to Alex
shall be:
a. Subject to VAT
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b. Exempt from VAT
c. Exempt from VAT or subject to VAT depending on annual
gross receipts of Pedro
d. Subject to VAT if Juan did not subsequently sell it.
10. c. He does not Which of the following is the benefit of a VAT registered
have any out- taxpayer if he is subject to zero percent (0%) VAT rate?
put tax although
he may have an a. Exclusion from tax audit by tax examiner
input tax cred- b. Not required to file VAT return whether monthly or quar-
it which can be terly
claimed for re- c. He does not have any output tax although he may have
fund an input tax credit which can be claimed for refund
d. He is entitled to tax discount equivalent to 20%
11. c. Sale of coal Which of the following transactions is subject to val-

and natural gas ue-added-tax?
a. Services subject to other percentage tax

b. Educational services duly approved by DEP-ED, CHED,
and TESDA or those operated by the government
c. Sale of coal and natural gas
12. a. I and II only Which of the following shall be exempt from val-
ue-added-tax?
I. Sales by agricultural cooperatives, duly registered with

the Cooperative Department Authority to their members
as well as sale of their products, whether in its original
state or processed form, to non-members
II. Gross receipts from lending activities by credit or mul-
ti-purpose cooperatives duly registered with the Coopera-
tive Department Authority
III. Sales by non-agricultural, non-electric, and non-credit
cooperatives duly registered with the Cooperative Depart-
ment Authority
a. I and II only
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b. I only
c. II and III only
d. I, II, and III
13. a. Sale of books, Which of the following transactions is exempt from VAT?
newspaper, and
magazines a. Sale of books, newspaper, and magazines
b. Sale of literary works
c. Sale of musical compositions
d. All of the above
14. d. None of the All of the following except one, are subject to VAT?
above
a. Importation of radio and television equipment by broad-
casting and television stations
b. Lease of cold storage rooms in ice plants and cold
storage
c. Sale of paintings
15. c. Services aris- Which of the following transactions is exempt from VAT?
ing from employ-
ee-employer rela- a. Medical services such as dental and veterinary services
tionship rendered by professionals
b. Legal services
c. Services arising from employee-employer relationship
d. Services rendered by domestic air transport companies
16. c. Franchise Which of the following is not subject to VAT?

grantees of ra-
dio broadcasting a. Importation of goods in the ordinary course of business
whose gross re- b. Importation of items for personal use
ceipt for the pre- c. Franchise grantees of radio broadcasting whose gross
ceding year was receipt for the preceding year was P9,000,000
P9,000,000 d. VAT-registered person, whose annual gross receipt is
less than P3,000,000
17. a. Non-stock, Which of the following is not correct?

non-profit private
organizations are a. Non-stock, non-profit private organizations are not sub-
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not subject to ject to VAT if their income from sales is used for non-profit
VAT if their in- purposes.
come from sales b. A VAT registered taxpayer can pass on the VAT even to
is used for non-VAT registered buyers
non-profit pur- c. Any business pursued by an individual where the aggre-
poses. gate gross sales or receipts do not exceed P100,000 dur-
ing any 12-month period, shall be considered principally
for subsistence or livelihood and not in the course of trade
or business
18. d. Goods ex- One of the following is not subject to VAT on importation:
empt from cus-
toms duties clas- a. Goods brought into the Philippines in the course of trade
sified as person- or business by VAT registered person
al and household b. Goods brought into the Philippines in the course of trade
effects belong- or business by a person who is not VAT registered
ing to residents c. Tax free goods imported by tax-exempt importer who
of the Philip- transferred them to a person who does not enjoy exemp-
pines returning tion from VAT on importation
from abroad d. Goods exempt from customs duties classified as per-
sonal and household effects belonging to residents of the
Philippines returning from abroad
19. d. Value-added Gross selling price includes all of the following, except
tax
a. Total amount which the purchaser pays to the seller
b. Total amount which the purchaser is obligated to pay to
the seller
c. Excise tax
d. Value-added tax
20. d. P265,780 Villamin Grill, a VAT registered business in Cavite, has the
following data (exclusive of VAT) for the third quarter of the
current year.
Sales, food and beverages P2,805,500

Sales, wines and beer 1,524,000
Purchases, food and beverages - VAT business 1,102,200
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Purchases, wines and beer - VAT business 1,012,500
The VAT payable due for the third quarter is
a. P201,340
b. P211,470
c. P221,480
d. P265,780
21. c. (P2,400) Hananiah Corporation has the following sales and pur-
chases for the quarter ending December 31, 2018:
October:
Sales P50,000
Purchases 40,000
Nov. & Dec.:

Sales 100,000
Purchases 80,000
Carry over input tax from previous quarter 6,000
How much is VAT payable (carry over) for the quarter

ending December 31, 2018?
a. P5,000
b. P3,500
c. (P2,400)
d. (P5,000)
22. a. Export sale by Which of the following statements is correct?

a VAT registered
person is subject a. Export sale by a VAT registered person is subject to 0%
to 0% VAT VAT
b. Export sale by a non-VAT registered person is subject
to 3% percentage tax
c. Both a and b
c. Neither a nor b
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23. c. Both a and b Which of the following statements is correct?
a. Under RA 7916, while an economic zone registered

under PEZA is geographically within the Philippines, it is
deemed a separate customs territory and is regarded in
law as foreign soil
b. Sales by suppliers from outside the borders of the eco-
nomic zones to the entities within the separate customs
territory are deemed as exports and treated as export
sales
c. Both a and b
d. Neither a nor b
24. d. Neither I nor II Which of the following statements is correct?
I. Sale to export oriented enterprises is considered export

sales under the tax code at the level of the supplier of raw
materials only
II. Sale of raw materials or packing materials to an ex-
port-oriented enterprise is considered export sales only
when export sales of such enterprise exceed 70% of total
annual production
a. I only
b. II only
c. Both I and II
d. Neither I nor II
25. c. Transport of Which among the following is subject to zero percent VAT?
passenger and
cargo by a a. Sale, importation or lease of passenger or cargo vessel
domestic carrier and aircraft including engine, equipment and spare parts
(air or sea) from thereof for domestic or international transport operations
the Philippines to b. Importation of fuel, goods, and supplies by persons
a foreign country. engaged in international shipping or transport operations
c. Transport of passenger and cargo by a domestic carrier
(air or sea) from the Philippines to a foreign country.
d. All of these
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26. a. Export sale of One of the following is a zero-rated sale under the TRAIN
a person who is Law
VAT registered
a. Export sale of a person who is VAT registered
b. Sale of nonfood agricultural products
c. Sale of gold to Bangko Sentral ng Pilipinas
d. Sale of cotton and cotton seeds
27. b. Foreign cur- Under the TRAIN law, which of the following sales is not
rency denomi- be zero-rated?
nated sales
a. Export sales
b. Foreign currency denominated sales
c. Sale of goods to the Asian Development Bank
28. b. Prepaid rental In the lease contract, which of the advance payment by the
lessee is subject to output VAT?
a. A loan to the lessor from the lessee

b. Prepaid rental
c. An option money for the property
d. A security deposit to insure the faithful performance of
certain obligations of the lessee to the lessor
29. c. Sale of com- Which of the following shall be subject to VAT?

mercial property
by a real es- a. Sale of residential house and lot by the owners for
tate dealer for P5,000,000
P1,500,000 b. Sale of private car by its owner
c. Sale of commercial property by a real estate dealer for
P1,500,000
d. All of the above
30. b. Subject to VAT On January 1, 2018, Pedro purchased a condominium

unit worth P2,000,000 from Maxima Realty Corporation.
A month after, Pedro purchased the adjacent unit for the
same consideration. The purchased of the second (adja-
cent unit) is
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a. Exempt from VAT
b. Subject to VAT
c. Subject to 0% VAT
31. b. Subject to VAT On January 1, 2018, Pedro purchased a condominium unit

including a parking space worth P4,200,000 from Maxima
Realty Corporation. The value of the condominium unit,
as stated in the contract of sale was P3,200,000 while the
parking space was worth P1,000,000. The transaction
a. Exempt from VAT

b. Subject to VAT
c. Subject to 0% VAT
32. d. All of the above Which statement is correct? Leasing of property shall be
subject to value added tax on sale of services:
a. If the property is in the Philippines and the lease agree-

ment was executed in the Philippines
b. If the property is in the Philippines and the lease agree-
ment was executed outside the Philippines
c. If the property is in the Philippines and the lease agree-
ment was executed within or outside the Philippines
d. All of the above
33. a. II and IV only\ Which of the following receipts for 2018 current year from
lease of residential units is subject to VAT?
I. Monthly rental per unit-P14,000; Aggregate annual rent-

P3,150,000
II. Monthly rental per unit-P18,000; Aggregate annual rent-
P3,800,000
III. Monthly rental per unit-P18,000; Aggregate annual
rent- P3,000,000
IV. Monthly rental per unit-P20,000; Aggregate annual
rent- P4,000,000
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a. II and IV only
b. III and IV only
c. All of the above
34. b. Gross receipts Which is true? On sale of service, the tax base in comput-
ing for the VAT is
a. Gross selling price

b. Gross receipts
c. Amount per invoice
d. Amount shown in the official receipt
35. b. On collections In the VAT on sale of services, the output tax is computed:
of the month on
all billings made 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
for services
36. b. For the pur- Which of the following statements is false?

poses of claim-
ing input tax, as a a. Construction in progress is not depreciated until the
purchase of ser- asset is placed in service
vice, the value b. For the purposes of claiming input tax, as a purchase of
of which shall service, the value of which shall be determined based on
be determined the progress billing
based on the c. The input tax credit on the labor contracted shall be
progress billing recognized on the month the payment was made based
on the progress billing
d. Once the input tax has already been claimed while the
construction is still in progress, no additional input tax can
be claimed upon completion of the asset when it has been
reclassified as depreciable capital asset and depreciated
37. b. P51,600 The following information and data (net of VAT) are from
the records of Fantastic 4 Corporation, a VAT taxpayer in
connection with its construction contracts. They cover the
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third quarter of 2018 taxable year.
Accounts Receivable:
July 1- 180,000; Sept. 30- 120,000
Retention Receivable:
July 1- 90,000; Sept. 30- 85,000
Purchases of Materials:
July to Sept. - 480,000
Total Billings for completed works:

July to Sept. 850,000
VAT payable for the quarter is (disregard monthly pay-

ments)
a. P43,000
b. P51,600
c. P37,000
d. P82,500
38. b. P480,000 GJ is a contractor. He entered into a contract on Sep-

tember 1, 2018 which was completed on September 30,
2018. On the same date, he received the total value of
the contract amounting to P5,500,000. GJ spent for the
materials used in the contract which he acquired from
value added registered suppliers costing P1,500,000. All
amounts are exclusive of VAT. The VAT payable by GJ for
the month of September is:
a. P150,000
b. P480,000
c. P400,000
d. P595,000
39. c. P684,000 JJ Contractors entered into a contract on October 2017

to build a warehouse for Francis Corporation. The total
contract price amounting to P10,000,000 was received
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by JJ upon completion on June 30, 2018. Materials pur-
chased during construction valued at P4,000,000 were
paid on June 1, 2018 while a construction equipment
worth P3,000,000 (net of VAT) was purchased on January
1, 2018 with the following terms; down payment - 500,000,
balance payable every January 1 until fully paid starting
2019. The equipment was estimated to last for 6 years.
How much is the VAT payable of JJ for June 30, 2018?
a. P360,000
b. P690,000
c. P684,000
d. P0
40. a. Dealer in secu- A merchant of stock or securities, whether individual, part-

rities nership, or corporation, with an established place of busi-
ness, regularly engaged in the purchase of securities and
the resale thereof to customers, and who, as a merchant,
buys securities and resells them to customers with a view
to the gains and profits that may be derived there from.
a. Dealer in securities
b. Stock brokers
c. Underwriters
d. Stock merchants
41. b. P324,000 A dealer in securities has the following for the year 2018:
Sales, shares held for sale in the ordinary course of trade

or business P5,000,000
Sales, shares held as capital asset 1,500,000
Cost of shares, held for sale in the ordinary course of trade
or business 2,000,000
Cost of shares, held as capital asset 500,000
Supplies expense, net of VAT 100,000
Rent expense, net of VAT 200,000
How much is the net VAT payable?
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a. P470,000
b. P324,000
c. P270,000
d. VAT exempt
42. c. Both I and II Which of the following statement is correct?
I. Certain transactions which are not actually sale because

of the absence of actual exchange between the buyer and
the seller, are considered sale for VAT purposes
II. Output VAT should be imposed on certain transactions
which are not actually sale to avoid a situation where a
VAT registered taxpayer avail of input VAT credit without
being liable for the corresponding output VAT
a. I only
b. II only
c. Both I and II
d. Neither I nor II
43. d. May be due Which statement is correct? The output value added tax
even in the ab- on goods or properties sold:
sence of actual
sale a. Is based on gross sales and not on net sales
b. Is not imposed on goods exported
c. Is imposed on actual sale only
d. May be due even in the absence of actual sale
44. d. Consignment Which of the following is not a sale and therefore is not
sales. 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 sales.
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45. b. Distribution or One of the following is a transaction deemed sale under
transfer to cred- value added tax.
itors in payment
of debt. a. Transfer, use or consumption in the course of business
of goods or properties intended for sale or for use in the
course of business.
b. Distribution or transfer to creditors in payment of debt.
c. Consignment of goods if actual sale is not made within
forty (40) days from the date the goods were consigned.
d. Retirement from or cessation of business with respect to
beginning inventories of taxable goods existing as of such
retirement or cessation.
46. d. Dissolution Deemed sale" for VAT purposes includes inventories of

of a partnership taxable goods existing at the time of:
and the creation
of a new partner- a. Change of control of a corporation thru the acquisition
ship. of the controlling interest.
b. Change in the trade name or corporate name of the
business.
c. Merger or consolidation.
d. Dissolution of a partnership and the creation of a new
partnership.
47. d. All of the above Choose the correct statement(s) from the following:
a. A non-vat registered person could not claim the input vat

on its purchases as tax credit against its business taxes.
b. In the books of a vat registered person, the input vat is
an asset account.
c. Purchases on account from vat registered supplier is a
source of creditable input vat.
d. All of the above
48. c. The excess in- Which statement is not correct?

put taxes of a tax-
able period aris- a. The excess input taxes of a taxable month arising from
ing from domes- domestic
sales may be carried over to the succeeding month.
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tic sales may be b, The excess input taxes of a taxable quarter arising from
refunded. domestic sales may be carried over to the succeeding
quarter.
c. The excess input taxes of a taxable period arising from
domestic sales may be refunded.
d. The excess input taxes of a payable period arising from
exports sales may be refunded.
49. c. P120,000 Serbesa Company is a manufacturer of local beer. During

a particular quarter, it had the following transactions (net
of VAT):
Jan. 2: Consigned beer to a retailer in Quezon City

amounting to P200,OOO
Feb. 14: Exported P1,000,000 worth of beer to UK.
Feb. 27: President of Serbesa Company celebrated his

birthday, consuming P50,000 worth of beer given to him
by the company as a birthday gift.
Mar. 20: Declared property dividend of one case of beer

for every 10 shares amounting to P150,000.
Additional Information: From January to March, domestic

sales to wholesalers amounted to P600,000. No beer was
returned by the consignee until the end of the quarter. The
output tax for the quarter is:
a. P48,000
b. P72,000
c. P120,000
d. P192,000
50. d. All of the above Which of the following importation is subject to value
added tax?
a. Importation for personal use of the importer

b. Importation intended for resale
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c. Importation of machinery for the importers factory
d. All of the above
51. b. No, because Lester, not a vat registered taxpayer, was sent a pack-
importations, un- age of goods by his friend, Clifford who was abroad. The
less exempted, package was claimed by Lester. The Bureau of Customs
should be sub- required him to pay vat on importation. Lester refused to
ject to vat. pay the vat claiming that since he is a non-vat registered
person and that the package sent to him is intended for
personal use only, he should be exempt from paying input
vat on importation. Was Lester's ground in refusing to pay
vat correct?
a. Yes, because only vat registered importers should be

subject to vat.
b. No, because importations, unless exempted, should be
subject to vat.
c. Yes, because the package was intended for personal
use, and therefore, he was not an importer.
d. No, because Lester may actually sell the package,
depriving the BOC to collect the applicable input vat.
52. c. III only Which of the following statements is correct?
I. An importation of goods by a non-profit charitable orga-

nization shall not be subject to the value added tax.
II. In the case of importation, the importer is not the one

liable for the VAT but the person who shall buy the import-
ed goods.
III. Non-exempt persons or entities who acquire tax free

imported goods from exempt persons, entities or agencies
shall be considered the importer for Philippine VAT pur-
poses.
a. I only
b. I and Il only
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c. III only
53. b. Should be paid 50. Which statement is correct? Vat on importation

by the non-tax
exempt purchas- a. Should be paid by the tax exempt importer, if he subse-
er to whom the quently sells the goods to a non-tax exempt purchaser.
tax exempt im- b. Should be paid by the non-tax exempt purchaser to
porter sells it. whom the tax exempt importer sells it.
c. Is a liability shall either of the tax exempt importer or the
non-tax exempt purchaser.
d. Shall not pay the value added tax because the transac-
tion was exempt at the point of importation.
54. d. Goods ex- 50. One of the following is not subject to vat on importation
empt from cus-
toms duties clas- a. Goods brought into the Philippines in the course of trade
sified as person- or business by vat registered person.
al and household b. Goods brought into the Philippines not in the course of
effects belong- trade or business by a person who is not vat registered.
ing to residents c. Tax free goods imported by tax-exempt importer who
of the Philip- transferred them to a person who does not enjoy exemp-
pines returning tion from importation tax.
from abroad. d. Goods exempt from customs duties classified as per-
sonal and household effects belonging to residents of the
Philippines returning from abroad.
55. d. Facilitation ex- Which of the following is not a proper inclusion for the
pense computation of VAT on imported items?
a. Custom duties on importation

b. Excise tax on importation
c. Invoice price of the imported items
d. Facilitation expense
56. c. Aggregate Input vat on purchases of capital assets shall be spread

monthly pur- (amortized over 60 months or useful lives of the capital
chases of cap- assets if shorter than 60 months) when:
ital assets, ex-
a. Capital assets have been acquired from enterprises
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cluding VAT, ex- registered with and located at the export processing zones
ceeds P1,000,000 b. Value of asset, excluding VAT, exceeds P1,000,000
c. Aggregate monthly purchases of capital assets, exclud-
ing VAT, exceeds P1,000,000
d. VAT taxpayer has secured prior approval for him to
amortized input tax on purchases of capital assets.
57. a. Statements 1 & Statement 1: The input value-added-tax on purchase of

2 are false capital goods valued at P1,000,000 shall be spread over
60 months if the life of property is equivalent to 5 years or
more.
Statement 2: The input value-added tax on purchase of

capital goods valued at P1,000,000 shall be spread over
the life of property if the life of property is less than 5 years.
a. Statements 1 & 2 are false

b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
58. a. Total price For purposes of claiming input vat on depreciable assets,
agreed upon for the aggregate acquisition cost of a depreciable asset in
one or more any calendar month refers to the:
assets acquired
during the calen- a. Total price agreed upon for one or more assets acquired
dar month. 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.
59. c. Carry-over and A taxpayer has excess credit as a result of input taxes paid
apply his excess on purchases of capital goods. He may:
tax credit against
output taxes in a. Have his excess tax credit refunded to a VAT registered
the subsequent person.
period or peri- b. Make his application for refund in the subsequent period
ods. following the period during which the purchases were
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made.
c. Carry-over and apply his excess tax credit against out-
put taxes in the subsequent period or periods.
d. Use it in payment of any internal revenue tax of a VAT
registered person.
60. a. Claimed as in- If the depreciable capital good is sold or transferred within
put tax credit in a period of 5 years or prior to the exhaustion of the amor-
its entirety dur- tizable input tax thereon, the unamortized input tax on the
ing the month or capital goods sold or transferred can be:
quarter when the
sale or transfer a. Claimed as input tax credit in its entirety during the
was made. 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.
61. c. I, Il and Ill only Persons or firms engaged in the processing of sardines,
mackerel and milk, and in manufacturing refined sugar
and cooking oil shall be allowed.
I. Creditable input tax

II. Transitional input tax
III. Presumptive input tax
IV. Refundable input tax
a. I only
b. I and Il only
c. I, Il and Ill only
d. 1, 11, 111 and IV
62. b. Manufacturer Which of the following businesses is allowed a presump-

of packed noo- tive input vat?
dles
a. Manufacturer of canned goods.
b. Manufacturer of packed noodles
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c. Manufacturer of packed juices
d. Manufacturer of dried fish
63. c. VAT taxpay- Who may claim transitional input tax as tax credit against
er from being output tax?
VAT exempt or
non-VAT taxpay- a. Processor or manufacturer of cooking oil or refined
er. sugar.
b. Those whose transaction is subject to zero percent VAT.
c. VAT taxpayer from being VAT exempt or non-VAT tax-
payer.
d. Those who sell goods or services to persons or entities
whose exemption from tax is provided by special law or
by international agreement to which the Philippines is a
signatory.
64. d. Taxpayers who One of the following shall not be entitled to transitional
elect to revert to input tax
being a vat ex-
empt from being a. Taxpayers who become liable to vat for the first time
vat subject. under a new legislation.
b. Taxpayers who are already vat registered person and
also deal in goods or property, the sale of which is exempt
but becomes vatable transaction under a new amendatory
law.
c. Taxpayers whose taxable transactions exceeded the vat
registration threshold of P3,000,000
d. Taxpayers who elect to revert to being a vat exempt from
being vat subject.
65. a. First day of the Once optionally registered as a vat person, the taxpayer
month following shall be liable to output tax and be entitled to input tax
the registration credit beginning on the
a. First day of the month following the registration
b. First day of the month following the close of the first
quarter after registration.
c. Tenth day of the month following the close of the first
quarter after registration.
d. Twenty fifth day following the close of the quarter.
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66. c. P19,200 Use the following data for the next two (2) questions:
A Vat taxpayer had the following data on its operations for

the month of January:
Sales, total invoice price P592,480

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:
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 at the beginning of the period bought
from VAT registered persons follow:
Inventory at cost
P44,800
Inventory at net realizable value
49,000
Value added tax paid on beginning inventory
4,800
Input Taxes are
a. P24,800
b. P20,400
c. P19,200
d. P19,650
21 / 31
67. b. P44,280 Use the following data for the next two (2) questions:
A Vat taxpayer had the following data on its operations for

the month of January:
Sales, total invoice price P592,480

Purchases of goods, Vat not included:
100,000
From non-vat registered persons 80,000
Purchases of services, Vat not included:
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 at the beginning of the period bought
from VAT registered persons follow:
Inventory at cost
P44,800
Inventory at net realizable value
49,000
Value added tax paid on beginning inventory
4,800
The value added tax payable is
a. P43,830
b. P44,280
c. P46,680
d. P59,248
22 / 31
68. d. Statements 1 Statement 1: The government or any of its political sub-

and 2 are true divisions instrumentalities or agencies, including govern-
ment-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 five percent (5%)
of the gross payment thereof.
Statement 2: The five percent (5%) final VAT withholding

rate shall represent the net VAT payable of the seller.

69. a. P0 Empleo Construction Company entered into a contract

with the government to. construct an edifice for a total
contract price of 25,000,000. During the month, the gov-
ernment paid P10,000,000 of which it withheld 5% final
withholding tax. How much is the VAT payable by the
company on the government contract?
a. P0
b. P150,000
c. P850,000
d. P1,000,000
70. d. Statements 1 Statement 1: On a sale of real property on installments by

and 2 are true a real estate dealer, the seller shall be subject to VAT on
the installment payment received, including interests and
penalties for late payment.
Statement 2: On sale of real property on installments by

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
23 / 31
property.

71. d. Statements 1 Statement 1: In the case of sale on deferred payment basis

and 2 are true not qualifying under the installment plan, the transaction
shall be treated as cash sale and the Vat is payable on the
month of sale.
Statement 2: In the case of a sale on deferred payment

basis not qualifying under the installment plan, payments
subsequent to the initial payments shall no longer be
subject to vat.

72. a. P360,000 Use the following data for the next two 2 questions:
Ivan, vat registered real estate dealer sold a residential lot

on October 2018.
The following information was made available on the terms
of the sale:
Gross selling price - P3,000,000

Initial payments consisting of down payment and install-
ments in the year of sale - 900,000
Balance to be paid in equal installments of P700,000 -
2,100,000
starting January 2019
The zonal value of the residential lot was P2,800,000
How much was the output tax due on October 2018?
24 / 31
a. P360,000
b. P300,000
c. P108,000
d. P0
73. d. P0 Use the following data for the next two 2 questions:
Ivan, vat registered real estate dealer sold a residential lot

on October 2018.
The following information was made available on the terms
of the sale:
Gross selling price - P3,000,000

Initial payments consisting of down payment and install-
ments in the year of sale - 900,000
Balance to be paid in equal installments of P700,000 -
2,100,000
starting January 2019
The zonal value of the residential lot was P2,800,000
How much was the output tax due on January 2019?
a. P360,000
b. P300,000
c. P108,000
d. P0
74. b. P24,000 Lady sells real property in the course of its business.
During the last quarter of 2018, it had sold a parcel of land
under the following terms (vat inclusive):
Total contract price P1,120,000

Downpayment, 10/05/2018
112,000
1st installment (12/31/2018)
112,000
2nd installment(2/1/2019)
560,000
25 / 31
The output vat in the last quarter of 2018 is
a. P12,000
b. P24,000
c. P26,000
d. P0
75. c. P108,000 Alex is in the course of trade selling real property. During
the month of February, it had the following data (per sales
document, inclusive of vat)
Cash sales P560,000
Sales on deferred payment basis (initial payments ex-
ceeds 25% of selling price) 336,000
The real property sold for cash had a zonal value of

P600,000 exclusive of vat and the property sold under de-
ferred payment basis had a fair market value of P200,000,
exclusive of vat.
How much is the output vat on the sale of real property?
a. P84,000
b. P96,000
c. P108,000
d. P112,320
76. d. Only one Which of the following is not correct pertaining to the
invoice for transactions of a business which is engaged in Vat and
both Vat and non-Vat transactions?
non-Vat transac-
tions shall be is- a. Vat invoice shall be issued for vat transactions.
sued. b. Non-Vat invoice shall be issued to Non-Vat transactions.
c. Separate Vat invoice for the taxable transactions and
Non-vat invoice for the Vat exempt transactions.
d. Only one invoice for both Vat and non-Vat transactions
shall be issued.
77. c. Must be al- Which of the following statements is wrong? When a pur-
located immedi- chase from a
26 / 31
ately and at the VAT-registered person is for use both in the VAT and
time of purchas- Non-VAT business of purchaser, the VAT component of the
es between the total amount paid for the purchase:
VAT and Non-VAT
business. 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 pur-
chases between the VAT and Non-VAT business.
d. Must be allocated between the VAT and Non-VAT busi-
ness at the end of the taxable period.
78. d. P4,320 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 quarter, the taxpayer made sales of goods in
the amount of P336,000 inclusive of vat. The sales of the
non VAT business amounted to P200,000 with a separate
percentage tax of P6,000 for a total of P206,000. During
the same quarter, repairs in the building amounted to
P56,000 inclusive of vat. Supplies purchased for common
use amounted to P11,200 inclusive of vat.
The creditable input tax is:
a. P6,000
b. P5,000
c. P1,200
d. P4,320
79. c. P31,680 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 quarter, the taxpayer made sales of goods in
the amount of P336,000 inclusive of vat. The sales of the
non VAT business amounted to P200,000 with a separate
percentage tax of P6,000 for a total of P206,000. During
the same quarter, repairs in the building amounted to
27 / 31
P56,000 inclusive of vat. Supplies purchased for common
use amounted to P11,200 inclusive of vat.
The vat payable is:
a. P25,000
b. P30,000
c. P31,680
d. P34,800
80. b. P62,208 Data for a trader with one line of business subject to value
added tax and
another line of business not subject to value added tax:
Sales, vat business, vat included

P896,OOO
Sales, non vat business
200,000
Purchases of goods, vat business, vat included
224,000
Purchases of goods, nonvat 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 22,400
The value added tax payable shall be:
a. P59,808
b. P62,208
c. P82,608
d. P86,208
81. d. P69,948
28 / 31
The following data during the month relates to William
Company, a VAT registered person:
Domestic sales, invoice amount

P330,OOO
Domestic sales to export traders
274,996
Export sales
200,000
Purchases of goods for domestic sales
374,000
Purchases of supplied on domestic sales
69,848
Purchase of service
154,000
Purchase of goods for export. 55,000
Total input tax is
a. P20,650
b. P40,350
c. P54,350
d. P69,948
82. a. (P5,127) The following data during the month relates to William
Company, a VAT registered person:
Domestic sales, invoice amount

P330,OOO
Domestic sales to export traders
274,996
Export sales
200,000
Purchases of goods for domestic sales
374,000
Purchases of supplied on domestic sales
69,848
Purchase of service
154,000
29 / 31
Purchase of goods for export. 55,000
Value added tax payable/excess tax if input taxes on ex-

ports are claimed as tax credit
a. (P5,127)
b. P4,350
c. P19,446
d. P20,650
83. b. P57,600 83. A VAT-registered person has the following data:
Export sales, total invoice amount P400,000

Domestic sales, total invoice amount 672,000
Purchase of raw materials, used to manufacture goods for
export and domestic sales, VAT inclusive
560,000
Supplies used for both export and domestic sales, VAT
inclusive 448,000
Purchase of equipment used in the manufacture of goods
for export and domestic sales, VAT exclusive
300,000
The amount of input tax which can be refunded or convert-

ed into tax credit certificates at the option of the VAT-reg-
istered person is:
a. P50,400
b. P57,600
c. P144,000
d. P86,400
84. c. Both I and II In order that an invoice will qualify as a VAT invoice or
receipt for purposes of claiming tax credit for input tax, it
must contain:
I. The vat registration number.

II. The total amount which the purchaser pays or is oblig-
ated to pay the seller with the indication that such amount
30 / 31
includes the vat.
a. Only II
b. Neither I nor II
c. Both I and II
d. only I
85. c. 25th day from Quarterly VAT return is filed on or before the:
the end of each
quarter a. 15th day from the end of each quarter
b. 20th day from the end of each quarter
c. 25th day from the end of each quarter
d. 30th day from the end of each quarter
86. c. Be liable to per- Mr. Juan Dela Cruz, VAT-exempt, issued VAT invoice to
centage tax, VAT, Pedro, VAT registered trader. As a consequence, Mr. Juan
and a surcharge Dela Cruz would:
of 50%
a. Be liable to VAT without the benefit of input tax credit;
b. Not be liable to Vat because he is VAT- exempt;
c. Be liable to percentage tax, VAT, and a surcharge of 50%
d. Not be liable to any business tax but may be liable to
income tax.
87. d. Statements 1 Statement 1: If the sale involves goods, properties or

and 2 are true services some of which are subject to and some of which
are VAT zero-rated or VATexempt, the invoice or receipt
shaH clearly indicate the break-down of the sales price
between its taxable, exempt and zero-rated components,
and the calculation of the VAT on each portion of the sale
shall be shown on the invoice or receipt.
Statement 2: The seller has the option to issue separate

invoices or receipts for the taxable, exempt, and zero-rated
components of the sale.
31 / 31

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Chapter 8 - Value Added Tax MCQ

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Chapter 8 - Value Added Tax MCQ

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1. D. None of the Which of the following shall not be subject to VAT?

a. MP Promotions and Mayweather Corporation

2. c. Either I and II A lessor of residential units shall be exempt from VAT

I. Annual gross receipts do not exceed P3,000,000

3. a. I only A lessor of commercial units shall be exempt from VAT

I. Annual gross receipts do not exceed P3,000,000

4. d. Sale of olive oil Which of the following is subject to VAT?

a. Sale of vegetables in its original state

8. d. None of the JJ owns a mango plantation. He sold his ripe mangoes to

9. a. Subject to VAT Talion owns Eternal Gardens. He harvested fresh flowers

11. c. Sale of coal Which of the following transactions is subject to val-

a. Services subject to other percentage tax

I. Sales by agricultural cooperatives, duly registered with

16. c. Franchise Which of the following is not subject to VAT?

17. a. Non-stock, Which of the following is not correct?

Sales, food and beverages P2,805,500

The VAT payable due for the third quarter is

Nov. & Dec.:

Carry over input tax from previous quarter 6,000

How much is VAT payable (carry over) for the quarter

22. a. Export sale by Which of the following statements is correct?

a. Under RA 7916, while an economic zone registered

24. d. Neither I nor II Which of the following statements is correct?

I. Sale to export oriented enterprises is considered export

a. A loan to the lessor from the lessee

29. c. Sale of com- Which of the following shall be subject to VAT?

30. b. Subject to VAT On January 1, 2018, Pedro purchased a condominium

31. b. Subject to VAT On January 1, 2018, Pedro purchased a condominium unit

a. Exempt from VAT

a. If the property is in the Philippines and the lease agree-

I. Monthly rental per unit-P14,000; Aggregate annual rent-

a. Gross selling price

36. b. For the pur- Which of the following statements is false?

Total Billings for completed works:

VAT payable for the quarter is (disregard monthly pay-

38. b. P480,000 GJ is a contractor. He entered into a contract on Sep-

39. c. P684,000 JJ Contractors entered into a contract on October 2017

How much is the VAT payable of JJ for June 30, 2018?

40. a. Dealer in secu- A merchant of stock or securities, whether individual, part-

Sales, shares held for sale in the ordinary course of trade

How much is the net VAT payable?

42. c. Both I and II Which of the following statement is correct?

I. Certain transactions which are not actually sale because

a. Transfer, use or consumption not in the ordinary course

46. d. Dissolution Deemed sale" for VAT purposes includes inventories of

a. A non-vat registered person could not claim the input vat

48. c. The excess in- Which statement is not correct?

49. c. P120,000 Serbesa Company is a manufacturer of local beer. During

Jan. 2: Consigned beer to a retailer in Quezon City

Feb. 14: Exported P1,000,000 worth of beer to UK.

Feb. 27: President of Serbesa Company celebrated his

Mar. 20: Declared property dividend of one case of beer

Additional Information: From January to March, domestic

a. Importation for personal use of the importer

a. Yes, because only vat registered importers should be

52. c. III only Which of the following statements is correct?

I. An importation of goods by a non-profit charitable orga-

II. In the case of importation, the importer is not the one

III. Non-exempt persons or entities who acquire tax free

53. b. Should be paid 50. Which statement is correct? Vat on importation

a. Custom duties on importation