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Value added tax a. Is an indirect national tax levied on the value added in the production of a good (or service) as I moves through the various stages of production b. Is ad valorem tax c. Is preferred in place of a personal income tax by many economists because income taxes are a disincentive to w...

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1. Value added tax a. Is an indirect national tax levied on the value added in the production of a good (or service) as I moves through the various stages of production b. Is ad valorem tax c. Is preferred in place of a personal income tax by many economists because income taxes are a disincentive to work, whereas a VAT discourages unnecessary consumption d. All of the above 2. Which of the following is incorrect? a. b. c. d.

An article exempt from vat may be exempt from percentage tax An article subjected to exercise tax may be subjected to vat An article subjected to vat may be subjected to percentage tax None of the above

3. Which of the following is incorrect? a. A. vat-taxable article may be exempt from vat b. A vat-taxable article may be subject to vat c. A taxpayer may have two business where one is subject to vat and the other is subject to percentage tax d. Manufacturers and importers of goods are subject to exercise tax 4. Which of the following is not a business tax? a. b. c. d.

Excise tax Value-added tax Other percentage tax Income tax

5. Which is correct? a. Without a business pursued in the Philippines (except importation) by the taxpayer, value added tax cannot be imposed. b. “In the course of trade business” means the regular conduct or pursuit of commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization or government entity. c. Services rendered in the Philippines by a non-resident foreign person shall be considered as being rendered in the course of trade or business even if the performance is not regular. d. All of the above. 7. Which statement is wrong? Transactions considered “in the course of trade or business”, and therefore subject to the business taxes include:

a. Regular conduct or pursuit of a commercial or an economic activity by a stick private organization b. Regular conduct or pursuit of a commercial or an economic activity by a non-stock, non-profit private organization. c. Isolated services in the Philippines by non-resident foreign persons. d. Isolated sale of goods or services. 8. Statement 1: Nonstock and nonprofit private organizations which sell exclusively to their members in the regular conduct or pursuit of commercial or economic activity are except from the value-added tax. Statement 2: Government entities engaged in commercial or economic activity are generally exempt form value-added tax a. b. c. d.

Both statements are correct Both statements are incorrect Only the first statement is correct Only the second state statement is correct.

9. The term “in the course of trade or business” does not include a. Regular conduct or pursuit of a commercial or economic activity b. Incidental business transactions c. Transactions by any person, regardless of whether or not the person engaged therein is a nonstock, non-profit private organizations (irrespective of the disposition of its net income and whether or not it sells exclusively to members) or government entity. d. None of the above 10. Who is the one statutorily liable for the payment of VAT? a. b. c. d.

Consumer Buyer Seller Buyer or seller

11. An individual who is not an employee nor a license professional, deriving gross sales or receipts not exceeding P100,000 from activities principally for subsistence or livelihood a. b. c. d.

Minimum Wage Earner Marginal Income Earner Ambulant Vendor A Privileged Store

12. Pedro is a manufacturer of fermented liquors. In making sales, all taxes on the products and transactions are passed on to the buyers. For purposes of the value added tax, which of the three (3) taxes listed below that he pays forms part of the gross selling price?

a. b. c. d.

Excise tax Value added tax Percentage tax None of the choices

13. Which is correct? a. An excise tax which imposes a tax based on weight or volume capacity or any other physical unit of measurement is called specific tax. b. An excise tax which imposes a tax based on selling price or other specified value of the article isa called ad valorem tax. c. A percentage tax which is imposed whether the transaction resulted in a gain or loss is called transaction tax. d. All of the above. 14. Which of the following taxes describes the value added tax? a. b. c. d.

Income tax Sales tax Indirect tax Personal tax

16. registration of taxpayers under the vat system may be classified as, except a. b. c. d.

Mandatory vat registration Option vet registration Mixed vat registration None of the above

17. Which of the following has an option to register under the VAT system in 2018? I. II. III. IV.

Common carriers by air transporting passengers, the gross receipts of which do not exceed P3,000,000. Radio and/or television broadcasting companies whose annual gross receipts of the preceding year exceeds P10,000,000. Operator of cockpit, the receipts of which do not exceed P3,000,000 during the year Seller of the vat-subject services the gross receipts of which do not exceed P3,000,000. a. IV only b. I and III only c. I and IV only d. All of the above

18. The following data were provided by spouses’ Pedro and Ana. In 2018, Pedro’s gross receipts from his practice of profession was P2,850,000 while her wife, Ana, has gross sales of P2,200,000 derived from her trading business. Assuming they are not vat registered, will they be subject to vat?

a. Yes, because their aggregate gross receipts/sales exceeded the cat threshold of P3,000,000. b. No, because for purpose of vat threshold, husband and wife shall be considered as separate taxpayers. c. Yes, because their gross receipts/sales are not specifically except from vat as provided in the tax code. d. None of the above 19. in 2016, the following gross receipts/sales were recorded by Juan: Gross receipts from practice of profession P1,250,000 Gross sales from trading activities 600,000 Gross sales – sale of agricultural food products 475,000 Assuming Juan is non-cat registered, will he be subject to vat? a. No, because his gross receipts/sales in each business do not exceed the cat threshold of P1,919,500. b. Yes, because if a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purposes of determining whether the threshold has been exceeded. c. No, because he is not vat registered d. None of the above 20. JJ is a certified public accountant. He applied for work and was hired by a Firm which is engage in Business Process outsourcing business handling accounting work for US entities. He was paid for his services. How should JJ treat such payment for business tax purposes? a. b. c. d.

Subject to 12% VAT Subject to Percentage Tax Exempt from VAT and Percentage Tax It is a zero-rated transaction

21. Where even if there is a business, there is no vat imposable when I. II. III. IV. V.

A business is pursued by an individual where the aggregate gross sales and or receipts do not exceed P100,000 during any twelve-month period. Sale of real properties for low cost housing Sale of real properties for socializing housing Sale of residential lot at P1,500,000 per unit and below beginning January 1, 2018 Sale of house and lot and other residential dwellings valued at P2,500,000 and below beginning January 1, 2018 a. I, II and III only b. II and III only c. III, IV and V only d. All of the above

22. Where even if there is no business, vat is Imposable on: I. II.

Importations of goods for personal use Services rendered in the Philippines by nonresident foreign persons, even isolated shall be considered as being rendered in the course of trade or business. a. I only b. II only c. I and II d. None of the above

23. One of the following is not a activity subject to VAT: a. b. c. d.

Sale in retail of goods by a dealer Sale of bamboo poles by a dealer Sublease of real property in the course of business Importation of ordinary feeds for poultry chicken

24. the following are exempt from vat, except a. b. c. d.

Sale of 1 sack of rice Sale of lechon manok Sale of pet food Sale of newspaper

25. the following are exempt from vat, except a. Sale of marinated fish b. Sale of gold to the bangko sentral ng pilipinas c. Association dues, membership fees, and other assessments and charges collected by home owners associations and condominium corporations. d. None of the above 26. which of the following shall be exempt from vat? a. b. c. d.

Services of banks Services of money changers and pawnshops Services of credit cooperatives All of the above

27. which of the following is exempt from VAT? a. b. c. d.

Common carriers transporting passengers by air within the Philippines Common carriers transporting passengers by sea within the Philippines Common carriers transporting passengers by land within the Philippines Common carriers transporting cargoes by air within the Philippines

28. Which of the following carrier shall be subject to value-added tax? a. Sea carrier classified as resident foreign corporation, annual gross receipts is P2,000,000. b. Air carrier classified as resident foreign corporation, annual gross receipts is P2,000,000. c. Sea carriers classified as domestic corporation, voyage is from Philippines to Japan, annual gross receipts is P2,000,000. d. None of the choices. 29. A dealer in securities sold unlisted shared of stocks of a domestic corporation in 2018 and derived a gain of P100,000 therefrom. The sale is: a. b. c. d.

Subject to capital gains tax Subject to percentage tax if ½ of 1% of gross selling price. Subject to 12% vat Exempt from business tax

30. determine the business taxes of the following for 2018 taxable year: I. II. III.

a. b. c. d.

Lease of residential units worth a monthly rental per unit not exceeding P15,000 (regardless of the amount of aggregate annual gross rentals) Lease of residential units with a monthly rental per unit exceeding. P15,000 but the aggregate of such rentals during the year do not exceed P3,000,000. Lease if commercial units regardless of monthly rental per unit.

I II III A B C D

A None OPT Vat

B None OPT OPT

C None OPT Vat

D Vat Vat Vat

31. Determine the correct statement form the following: In cases where a lessor has several residential units for lease, some are leased out for a monthly rental per unit of not exceeding P15,000 while others are leased out for more than P15,000 per unit, his tax liability will be: a. The gross receipts form rentals not exceeding P15,000 per month per unit shall be exempt from vat regardless of the aggregate annual gross receipts. b. The gross receipts from rentals exceeding P15,000 per month per unit shall be subject to vat if the annual gross receipts from said units including the gross receipts from units leased out for not more than P15,000 exceed P3,000,000. c. Both statement are correct

d. Both statement are incorrect 32. To be subject to vat under the TRAIN law, the lese of residential units shall have I. II.

Monthly rental per unit exceeding P15,000 Gross annual rental exceeding P3,000,000 a. Both I and II are necessary b. Both I and II are not necessary c. Only I is necessary d. Only II is necessary

33. To be subject to vat under the TRAIN law, the lese of commercial units shall have I. II.

Monthly rental per unit exceeding P12,800 Gross annual rental exceeding P3,000,000 a. Both I and II are necessary b. Both I and II are not necessary c. Only I is necessary d. Only II is necessary

34. Sale of the following real properties prior to 2018 are exempt from vat, except. a. b. c. d.

Residential lot, held for sale in the ordinary course of business, sild P1,600,000/ Residential house and lot, held for sale in the ordinary course of trade, sold for P2,700,000. Sale of real property used in the ordinary course of business. Sale of real property not primarily held for sale in the ordinary course of business.

35. Sale of the following real properties beginning January 1, 2018 are subject to vat except: a. b. c. d.

Residential lot, held for sale in the ordinary course of business, sold P1,600,000. Residential house and lot, held for sale in the ordinary course of trade, sold for P2,700,000. Sale of real property used in the ordinary course of business Sale of real property not primarily held for sale in the ordinary course of business.

36. in 2017, Ana bought one unit of residential house and lot for P2,850,000 form Lorna, a vat registered real estate developer, in one of the latter’s subdivision projects located in Bulacan. A month after the purchase, she learned that the owner of the adjacent residential house and lot, Fe, is about to relocate in Batangas. She bought the adjacent unit for P1,500,000. Based on the information provided, which of the following statements is correct? a. The purchase of residential house and lot from Lorna and Fe are subject to vat. Since the units are adjacent and the aggregate purchase price of two (2) units (P2,850,000 and P1,500,000) is more than the vat threshold of P3,199,200, the said units shall be subject to 12% vat. b. Only the sale of residential house and lot by Lorna is subject to vat, regardless of selling price, because it was made in the course of trade or business and the seller is a vat registered

c. Both acquisitions are exempt from vat, however, the sale of residential house and lot by Fe to Ana shall be subject to 6% capital gains tax. d. None of the above 37. Statement 1: the same of two (2) adjacent residential lots in the course of trade or business to one buyer within the same taxable year for P1,000,000 each is subject to vat. Statement 2: the sale of parking lot as an adjunct of a condominium unit in the course of trade or business at a gross selling price of P500,000 is exempt from vat as long as its price, together with the unit, does not exceed P3,199,000.

Statement 1 Statement 2 a. A b. B c. C d. D

A True True

B True False

C False True

D False False

38. Prior to 2018, a real estate dealer sold two (2) adjacent residential lots in the city for a price of P800,000 each, or a total price of P800,000, to a vendee who intends to erect his residential house thereon. The sale shall be classified as a: a. b. c. d.

12% VAT transactions 0% VAT transactions VAT exempt transactions None of the foregoing

39. Assume the taxable year in the preceding number is 2018, the sale shall be classified as a. b. c. d.

12% VAT transactions 0% VAT transactions VAT exempt transactions None of the foregoing

40. Clifford purchase a condominium unit from his friend in 2017, Ronald (condo unit owner) for P3,000,000 and a parking lot from the subdivision developer for P800,000. The correct amount of vat is a. b. c. d.

P456,000 P360,000 P96,000 P0

41. Prior to 2018, a subdivision developer sold five (5) residential house and lots, each to different vendees, for P3,000,000 per lot, or a total sale of P15,000,000 for the taxable period. These sales shal be classified as: a. b. c. d.

12% VAT transactions 0% VAT transactions VAT exempt transactions None of the foregoing

42. Assume the sale in the preceding number was made in 2018, the sale shall be classified as: a. b. c. d.

12% VAT transactions 0% VAT transactions VAT exempt transactions None of the foregoing

43. Statement 1: Lease of a parking lot attached to a residential unit at P8,000 per month is exempt from vat. Statement 2: Lease of 8 residential units at P18,500 per month is subject to vat.

Statement 1 Statement 2 a. A b. B c. C d. D

A True True

B True False

C False True

D False False

44. Statement 1: Sale of drugs and medicines of pharmacy run by the hospitals to outpatients are subject to VAT. Statement 2: Pharmacy items used in the performance of medical procedures in hospital units such as in the operating and delivery rooms and by other departments are considered part of medical services rendered by the hospital, hence, not subject to vat.

Statement 1 Statement 2 a. A b. B c. C d. D

A True True

B True False

C False True

D False False

45. Statement 1L Sale of drugs and medicines prescribed for the treatment/and or prevention of diabetes, high-cholesterol and hypertension is exempt from vat beginning January 1, 2019.

Statement 2: Importation of drugs and medicines prescribed for the treatment/and or prevention of diabetes, high-cholesterol and hypertension is exempt from vat beginning January 1, 2019.

Statement 1 Statement 2 a. A b. B c. C d. D

A True True

B True False

C False True

D False False

46. Statement 1: the word “vat exempt” shall prominently be included in the invoice issued for the sale of drugs and medicines prescribed for the treatment/ and or prevention of diabetes, high-cholesterol and hypertension. Statement 2: The word sale of drugs not included in the list of vat exempt drugs and medicines prescribed for the treatment/and or prevention of diabetes, high-cholesterol and hypertension as identified ad published by the Food and Drug Authority (FDA) shall be subject to vat. No choices and answer

56. On January 5, 2018, Pinoy Food Corporation, va-registered, sold on account goods for P112,000 inclusive of vat. The term was: 2/10, n/30. Payment was made in January 10, 2018. The total amount due is: a. b. c. d.

P110,000 P107,000 P112,000 P109,760

57. Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land held for sale to his sone as gift on account of his graduation. For VAT purposes, the transfer is: a. b. c. d.

Not subject to VAT because it is a gift Subject to VAT because it is a deemed sale transaction Not subject to VAT because it is subject to gift tax Subject to VAT because it is considered an actual sale

58. One of the following is not a transaction deemed sale: a. Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or use in the course of business.

b. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT-registered person or creditors in payment of debt. c. Retirement from or cessation from business with respect to all goods on hand as of the date of such retirement or cessation. d. Consignment of goods if actual sale is made within 60 days following the date such goods are consigned. 59. The following are the data of Davao International for the last quarter of 2018: Sales up to Dec. 15 (invoice value) Purchases up to Dec, (net) Additional Information:

P380,000 150,000

On December 16, 2016, the Company retired from its business and the inventory valued at P190,000 remained unsold. There is a deferred input tax from the third quarter of P3,500. How much is the total value-added taxes payable of Davao International? a. b. c. d.

P42,100 P21,500 P22,800 P19,300

60. Genson Distribution Inc., a VAT taxpayer, had the following data in a month: Cash sales P200,000 Open account sales 500,000 0 to 30 days old (on which there were remittances From consignee of P200,000) 600,000 31 to 60 days old 700,000 61 days old and above 900,000 How much is the output tax? a. P348,000 b. P216,000 c. P264,000 d. P108,000 61. Ana, a vat registered lessor of commercial spaces received P1,33...