262144405-Vat - Business Tax notes PDF

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Vat Exercises A tax on business is a. Direct tax b. Indirect tax c. Property 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 b. Excise taxc. Income tax d. Percentage tax 3. Value added tax is a (an) a. Indirect tax b....

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Vat Exercises 1. A tax on business is c. Property tax a. Direct 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 c. Income tax a. Value added tax d. Percentage tax b. Excise tax 3. Value added tax is a (an) c. Progressive tax a. Indirect 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. Broker’s tax c. Common carrier’s tax b. Caterer’s tax d. Value added tax 6. Mr. F is a lessor of real property and personal property (cars). The tax that he pays is c. Percentage tax a. Excise tax d. None of the above b. Value added tax 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 d. Export sales b. Sales on account Computation of VAT payable 9. Tsukuba Company, a VAT registered business, had the following data during the quarter; Export sales 1,815,000 Domestic sales (tax included) 1,232,000 Purchases of goods for export 672,000 Purchases of goods for domestic sales 323,120 Purchases of supplies on domestic sales, exclusive of tax 124,850 Assuming that the input taxes paid on purchases of goods for export are claimed as tax credit, the VAT payable by Tsukuba Company is c. 177,895 a. 12,895 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 Sales

160,160

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 Cantoriaa. 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 Number 21-23 are based on the following info: 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 16. Based on the information above, which transaction is VAT exempt? a. Transaction 1 c. Transaction 3 b. Transaction 2 d. Transaction 4 17. Which transaction is zero rated? c. Transaction 3 a. Transaction 1 d. Transaction 4 b. Transaction 2 18. Based on the information above, the Vat are absorbed by a. Food processor c. Retailer b. Wholesaler/exporter d. Households/ ultimate consumer 19. Buboy a government employee, ate in one fast food chain in Dipolog City. He was issued the following receipt; Greenwich-Dipolog City Branch (0369) Rizal Ave. Cor Lacaya St., Dipolog City TIN # 000-333-143-879 VAT POSO1 SN: 455686 BIR Permit No: 1776-897-67543-455 Serving # 01 -------------------------------------------------------------------------------

10/27/2007

16:23 APP OR # 564567878

------------------------------------------------------------------------------1 SOLO SPE ML 83.00 1 XCHANGE –LRG CK 12.00 I item (s) VATable VAT-exempt 12 % VAT TOTAL DUE

93.00 83.04 0.00 9.06 93.00

CASH CHANGE DUE This serves as your OFFICIAL RECEIPT.

500.00 407.00

Based on the receipt issued above a. The amount of 83.04 represents the input tax of the fastfood chain b. The input tax deductible from the output tax of Buboy is 9.96 c. The total invoice price of 93 is inclusive of the 12% VAT d. Buboy has been subjected to VAT twice; first on th 93 and second, on the 9.96 Number 25-26 are based on the ff. info; 20. The pastry shop sells cakes and pastry items to well-known hotels around the Metro Manila area. The hotels are allowed credit based on the track record of the hotels. The total amounts received or receivable from sales by the Pastry shop in the 2nd quarter of 2008 were 224,000, including the value added tax. Seventy five percent of the sales are normally on account. How much is the value added tax on the sales for the 2 nd quarter of 2008? c. 26,880 a. 20,000 b. 24,000 d. 15,000 21. The account title to best reflect the value added tax in the preceding number is a. Sales tax payable c. Input tax d. Output tax b. Value added tax payable 22. Cruz, a trader, made the following transactions of goods, exclusive of VAT, during the second quarter: Cash Sales 200,000 Open account sales 100,000 Consigned goods delivered: April 15 100,000 May 15 100,000 June 15 100,000 The output tax for the second quarter isa. 40,000 b. 48,000

c. 60,000 d. 36,000

28-30 Mongolia Company, a VAT registered business has the following data in its books on July, 2008: Domestic Sales 709,500 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 Goods withdrawn for use by the company Goods taken as payment to creditor Freight and Insurance of goods Purchases: Raw Materials Supplies Capital goods Salaries of employees

38,500 26,950 4,675 484,000 61,600 60,500 235,000

During the month, one consignee remitted cash net of 20% commission representing the payment for five units delivered on June 5. Another consignee remitted cash of 220,000, gross of 20 % commission, representing payment for 10 units sold in July. Other than the commission, Mongolia Company gave 5 % discount/rebate to the consignee for selling ten units in a one month period. 23. The output tax in July is a. 124,450 b. 121,050 24. The input tax is a. 61,078 b. 73,293 25. The amount of VAT payable is a. 87,813 b. 69,350

c. 161,106 d. 134,255 c. 65,440 d. none of the above c. 66,525 d. 78,404.46

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). Merchandise inventory 204,000 Actual VAT paid on the inventory 16,000 Sales, total invoice amount 469,000 Purchases 57,400 Fifty percent (50%) of the merchandise inventory on Jnauary 1 were purchased from non-VAT registered sellers. The VAT payable by Isaac Company is a. 30,100 c. 3,960 b. 28,100 d. 4,950 28. An owner of heavy equipment is engaged in equipment rental. It used to be VAT exempt because its annual receipts never exceeded 1,500,000. On January 2, 2008 it decided to register under the VAT system. The following data were from the first quarter ending March 31, 2008. Rental from heavy equipment of 12% VAT Purchases of supplies (February) gross of VAT Inventory of supplies: Subject to VAT Jan 1, 2008 Not subject to VAT VAT paid on the inventory of supplies, Jan 1, 2008

336,000 112,000 50,400 60,000 5,400

The VAT payable for the quarter ending March 2008 isc. 18,600 a. 12,171 d. 22,992 b. 33,792 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): passenger Cargo Jeepney 1 20,000 Jeepney 2 30,000 Bus 15,000 8,500 Sea vessel 1,500,000 800,000 Cessna plane for hire 800,000 560,000 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 6,000 13 th month pay 6,000 Agency fee at 15 % 1,800 SSS/Philhealth 300 Leave with pay 450 Total 14,550 Based on the following data, how much is the Output VAT payable of Inside Job Security Agency c. 1,440.00 a. 1,746.00 d. 1,478.57 b. 1,558.93 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 250,000 200,000 300,000 Cost 150,000 130,000 175,000 Gain/loss 100,000 70,000 125,000 Terms: Downpayment, Nov 5 25,000 50,000 40,000 DueDec 5 25,000 20,000 20,000 Jan to Dec 2009 200,000 130,000 240,000 All amounts indicated above do not include the tax.

33.

34.

35.

36.

37.

The VAT in November is a. 26,500 c. 34,800 b. 31,800 d. 90,000 Based on the information given in no. 37, the VAT for the month of December is c. 10,000 a. 5,400 b. 4,500 d. None Dimagiba 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 government paid 10,000,000 of which it withheld 5 % final withholding tax. How much is the VAT payable by the company on the government contract? c. 0 a. 150,000 d. 1,000,000 b. 850,000 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 employee-employer 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 Transaction by a VAT registered taxpayer which is not subject to VAT: a. Foreign currency denominated sale b. export sale c. transaction deemed sale d. sale of service rendered in foreign countries. Statement 1: There is a VAT in an importation by an importer-merchant even if he does not intend to sell the imported article. Statement 2: a person who is exempt from VAT may register under the VAT system

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 sale Own use Invoice cost (Exchange rate $1:Php 46) $ 5,650 $ 850 Custom duties 12% 10% Freight 20,000 4,000 Insurance 28,000 4,250 Other charges before release from custom house 7,000 2,500 Facilitation fee 10,000 5,000 Freight from custom house to warehouse (net of VAT) 12,000 1,200 Assuming the custom duties are determined on the basis of the quantity of volume of the goods, the VAT on the importation is c. 47,981.76 a. 31,260 d. 44,742 b. 37,285 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 warehousea. 28,279.44 c. 17,540 b. 32,298 d. 25,068 41. Robin P., imported a car from the USA for his personal use. Total landed cost is Php 250,000 (about $5,000) including custom duties of Php 50,000. VAT payable is a. 25,000 d. none, because importation is for personal b. 30,000 use. c. 10,000 42. Lavadena Construction Corporation, is a VAT registered general construction company. Its data for the quarter are revealed below: Contract 1- Residential house Contract Price 1,200,000 Php Collection during the month 616,000 Php Contract 2- Warehouse Contract Price 1,000,000 Php Percentage of completion 70% Collection during the month 220,080 Importation of construction equipments from Japan: Invoice cost, Japan (1$: Php 44) $7,500 Value per Bureau of customs Php 340,000 Customs duties 35,000 Freight and insurance 17,000 Purchases of materials: From VAT registered persons From non-VAT registered persons

226,240 126,500

Revenue from rent of equipment to another contractor: 17,920. Assuming the custom duties were based on the quantity of the goods imported, the VAT due on the importation isa. 46,860 b. 52,260 c. 45,840 d. 46,050 43. The VAT payable by Lavadena Company during the quarter is a. 21,420 b. 19,200 c. 6,450 d. 20,400

44. Bata, a VAT registered person had the following data:

Price actually paid for the period Price actually paid for the goods bought from Japan Related insurance premiums and freight from Japan Custom duties amount to 40% of dutiable amount Other import charges and expenses amount to 120% of custom duties

P 600,000 100,000

The VAT on importation is a. 82,560 b. 145,920 c. 135,360 d. 157,920 45. Patogrok Company contracted with Sapotize Construction Corporation to Construct the former’s building where only the labor will be supplied by the latter. The data on the construction (inclusive of tax) during the month are as follows: Progress billings by Sapotize Company Payment to Sapotize Company Purchase of materials by Patogrok Co.

P600,000 504,000 442,400

Which of he following is false? a. construction in progress is not depreciated until the asset is placed in service. b. for purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billings. c. the input tax credit on the labor contracted shall be recognized on the month the payment was made based on the progress billings 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 a depreciable capital asset and depreciated. 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: Sales, total invoice value Purchases, net of input taxes Sales return Purchases return, net of input tax Deferred input taxes (carried over from third quarter

P5,800,000 2,820,000 200,000 300,000 9,500

The VAT payable for the month of Oct by company is a. 320,000 c. 80,000 b. 285,500 d. 288,100 48. The following are the data of City Appliances Marketing Company for October, 2008: Sales upto Oct 15, total invoice value Purchases upto Oct 15, net of input taxes

P266,000 215,000

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 b. 22,000

c. 6,350 d. 25,350...