TAX 321- Prelim QUIZ 1-TEST PDF

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TAX 321 PRELIM QUIZ 1-TEST Statement 1: A Professional also refers to a person who engages in some art or sport for money, as a means of livelihood, rather than as a hobby. Statement 2: A Professional is a person formally certified by a professional body belonging to a specific profession by virtue ...

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TAX 321 PRELIM QUIZ 1-TEST 1. Statement 1: A Professional also refers to a person who engages in some art or sport for money, as a means of livelihood, rather than as a hobby. Statement 2: A Professional is a person formally certified by a professional body belonging to a specific profession by virtue of having completed a required examination or course of studies and/or practice, whose competence can usually be measured against an established set of standards. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect Use the following data for the next three (3) questions: Ana operate a pet shop and at the same time, offers interior design services to her clients. The following data were provided by Ana for 2018 taxable year: Pet Shop:

P1,800,000

Gross sales

600,000

Cost of sales

200,000

Interior design services: 1,150,000 Gross receipts 120,000 Operating expenses 80,000 2. How much is her income tax liability for the year? a. P216,000 b. P345,000 c. P475,000 d. P540,000 3. Assuming Ana signified her intention to be taxed at 8% income tax rate on her initial quarterly income tax return, how much is her income tax liability for the year? a. P216,000 b. P300,000 c. P430,000 d. P540,000 4. Assume Ana is a vat registered taxpayer, how much is her income tax liability for the year under the 8% income tax regime? a. P216,000 b. P345,000 c. P475,000 d. P540,000 Use the following data for the next two (2) question: Pedro started to operate his taxi business in 2018. He provided the following data for tax purposes: Gross receipts

P2,500,000

Cost of direct services

750,000

Operationg expenses

400,000

5. Assuming Pedro signified his intention to be taxed at 8% income tax rate on his initial quarterly income tax return. How much is his income tax for the year? a. P216,000

b. P300,000 c. P430,000 d. P540,000 6. Assuming instead that Pedro is engaged in the business of transporting goods or cargoes and he signified his intention to be taxed at 8% income tax rate on his initial quarterly income tax return. How much is his income tax for the year? a. P180,000 b. P300,000 c. P430,000 d. P540,000 Use the following data for the next four (4) qustions: Kardo owns a nightclub and a videoke bar, with gross receipts of P2,500,000. His cost of direct services and operating expenses are P1,000,000 and P600,000 respectively, and with non-operating income of P200,000. 7. Which of the following statements is correct? a. Kardo has no option to avail the 8% income tax rate. b. Kardo’s income tax shall be computed using the graduated tax rate. c. Aside from income tax computed using the graduated income tax, Kardo is liable to prescribed business tax, which, under this case, is Amusement Tax under Sec. 125 of the Tax Code, as amended. d. All of the above 8. Kardo’s income tax due for the year shall be: a. P188,000 b. P208,000 c. P220,000 d. P250,000 9. Kardo’s business tax due for the year shall be: a. P196,000 b. P216,000 c. P480,000 d. P486,000 10. Kardo’s total tax due for the year shall be : a. P706,000 b. P486,000 c. P216,000 d. P188,000 Use the following data for the next three (3) questions: Ador, an executive of Ang Probinsyano Promotions, earned in 2018 P1,200,000 compensation income, inclusive of 13th month pay and other benefits amounting to P120,000. Aside from employment, he owns a farm, with gross sales of P5M. His cost of sales and operationg expenses are P2,000,000 and P600,000 respectively, and with non-operating income of P100,000. 11. Which of the following statements is incorrect? a. Ador has no option to avail the 8% income tax rate. b. Ador’s income tax shall be computed using the graduated tax rate. c. Aside from income tax computed using the graduated income tax rate, Ador is liable to prescribed business tax, which, under this case, is value added tax, since his gross sales/receipts and other non-operationg income exceeded the vat threshold of P3M. d. All of the above

12. Andor’s income tax due for the year shall be: a. P490,000 b. P515,200 c. P1,005,200 d. P1,200,000 13. Ador’s business tax due for the year shall be: a. P150,000 b. P153,000 c. P612,000 d. Pnil Use the followng data for the nex four (4) questions: Lorna, a self-employed resident citizen provided the following data for 2018 taxable year: Sales Cost of sales Business Expenses

P2,800,000 1,125,000 650,000

Gain on sale of shares of foreign corporation 50,000 Interest income from peso bank deposit 80,000 Interest income from bank deposit under FCDS 120,000 Gain on sale of shares of DC (non-listed) 150,000 Gain on sale of land in the Philippines held as capital asset with cost of P1,500,000 when the zonal value is P1,200,000 500,000 14. How much is the total income tax expense of Lorna for the year? a. P321,500 b. P351,500 c. P374,000 d. P389,000 15. How much is the total income tax of Lorna assuming she opted to be taxed at 8%? a. P321,500 b. P342,500 c. P358,000 d. P384,500 16. Assuming Lorna is a vat-registered taxpayer, how much is her total income tax expense assuming she opted to be taxed at 8% income tax rate? a. P321,500 b. P351,500 c. P384,500 d. P389,000 17. Using the same data except that her gross sales for the year was P3,800,000, how much is her total income tax expense assuming she opted to be taxed at 8% income tax rate? a. P321,500 b. P351,500 c. P352,000 d. P690,500 18. Statement 1: The provision of the Tax Code, as amended, which allows an 8% income tax rate on gross sale/receipts and other non-operation income in excess of P250,000 is available only to purely self-employed and/or professionals.

Statement 2: The P250,000 mentioned in the 1st statement is not applicable to mixed income earners since it is already incorporated in the first tier of the graduated income tax rates applicable to compensation income. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect 19. The income tax due of a mixed income earner who opted to be taxed at 8% income tax rate shall be: a. The tax due from compensation, computed using the graduated tax rate.

b. The tax due from self-employment and/or practice of profession, resulting from the multiplication of the 8% income tax rate with the total of the gross sales/receipts and other non-operating income. c. Either “a” or “b” , at the option of the self-employed and/or professional d. The sum of “a” and “b” 20. Juan is a MIXED INCOME EARNER. He is a self-employed resident citizen and currently the Finance manager of Omega Corporation. The following data were provided for 2018 taxable year. Compensation Income

P1,800,000

Sales

2,800,000

Cost of sales

1,125,000

Business Expenses Interest income from peso bank deposit

600,000 80,000

Gain on sale of land in the Philippines held as capital asset with cost of P1,500,000 when the zonal value is P1,200,000 500,000 How much is his total income tax expense assuming he opted to be taxed at 8%? a. P321,500 b. P788,500 c. P808,000 d. P358,000 21. Statement 1: Individual taxpayers who are not allowed to avail the 8% preferential income tax rate is not required to submit/attach Financial Statements (FS) Statement 2: Individual taxpayers who are allowed to avail the 8% preferential income tax rate is not required to submit/attach Financial Statements (FS) a. Only Statement 1 is correct b. Only Statement 2 is correct c. Both statements are correct d. Both statements are incorrect 22. When Pedro registered in the BIR, he initially presumed that his gross sales/receipts and other non-operating income for the taxable year will not exceed the P3,000,000 vat threshold. However, his actual gross, sales/receipts amounted to P4,000,000 during the taxable year. Statement1: Pedro shall pay the required percentage tax covering the sales/receipts and other non-operationg income, from the beginning of the taxable year or commencement of business/practice of profession until the time he becomes liable to vat, without imposition of penalty of timely paid in the immediately succeeding month/quarter. Statement 2: Pedro has to file two (2) business tax returns during the month/quarter (percentage tax and vat) a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect Use the following data for the next 3 questions: 23. Lorna is a newly registered non-vat taxpayer engaged in merchandising of cellphone accessories on February 1, 2018. In September 2018, her cumulative gross sales/receipts reached P3,500,000. Assume further that she availed 8% income tax rate upon her registration with the BIR on February 1, 2018 or upon filing of her first quarterly income tax return. Which of the following statements is correct?

b.

a. Lorna is required to register under the vat system on or before October 31, 2018, one month from the time she exceeded the P3,000,000 vat threshold. She is required to file Percentage return covering the sales/receipts and other non-operating income from February 1 to September 30, 2018 due on or before October 20, 2018, without imposition of penalty if timely paid. c. She is liable to vat beginning October 1, 2018. d. All of the above 24. Statement 1: Lorna shall be automatically subjected to graduated income tax rates from the time the gross sales/receipts and other non-operationg income exceeded the vat threshold. Statement 2: The 8% income tax rate paid by Lorna shall be credited/deducted from her annual income tax due using the graduated income tax regime. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements is correct d. Both statements is incorrect 25. Assume that Lorna did not avail the 8% income tax rate upon her registration with the BIR on February 1, 2018 or upon filing of her first quarterly income tax return. Which of the following statements is correct? Statement 1: She is subject to the graduated income tax rate. Statement 2: The last quarterly percentage return that she needs to file should cover the period from July 1 to September 2018, which is due on or before October 20, 2018. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements is correct d. Both statements are incorrect Use the following data for the next two (2) questions: 26. In 2018, Pedro signified his intention to be taxed at 8% income tax rate on gross sales in his 1st quarter income tax return. His gross sales during the year exceeded the vat threshold of P3M as follows: Q1 Q2 Q3 Q4/Annual (8% tax) (8% tax) (8% tax) (Graduated) Sales P500,000 P500,000 P2,000,000 P3,500,000 Cost of sales (300,000) (300,000) (1,200,000) (1,200,000) Gross Income 200,000 200,000 800,000 2,300,000 Operating Expenses (120,000) (120,000) (480,000) (720,000) Net taxable income P80,000 P80,000 P320,000 P1,580,000 how much is Pedro’s annula income? a.

220,000

b.

289,200

c.

509,200

d.

2,060,00

27. How much us Pedro’s total business due for the year? a. P90,000

b. b. P195,000 c. P510,000 d. nil 28. Juan initially presumed that his gross sales/receipts and other con-operating income for the taxable year will not exceed P3,000,000 vat threshold. Consequently, he registered an a non-vay taxpayer, However, his acually gross sales/receipts and other non-operating income exceeded the vat treshold during the taxable year. Which of the following statments is correct? a. He shall immediately update his/her registration to reflect the change in tax profile from non-vat to vat taxpayer. He shall be required to update registration immediately within the month following the month s/he exceeded the vat threshold. c. He shall be liable to vat prospectively starting on the first day of the month following the month when the threshold is breached. d. All of the above. 29. When Ana registered in the BIR, she initially presumed that his gross sales/receipts and other non-operating income for the taxable year will exceed the P3,000,000 vat threshold . Hence, she registered under the vat system. However, her actual gross sales/receipts for the immediately preceding 3-year period did not exceed the vat threshold. Statement 1: She shall update the registration records on or before the first quarter of a taxable year to reflect the change in the registration Statement 2: She shall remain liable for vat as long as there is no update of registration and vat registered invoices/receipts are conticously issued. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statement is correct d. Both statement is incorrect 30. G.I. Joe, an alien employed in Pan Pacific Petroleum, a Petroleum Service Contractor, received compensation income of P5M in 2018, inclusive of P400,000 13th month pay and other benefits. G.I. Joe’s Income tax due for the year shall be: a. P490,000 b. P931,000 c. P1,421,200 d. nil 31. Which of the following statements regarding minimum wage earner (MWE) is correct? a. The MWE is exempt from income tax on his basic statutory minimum wage (SMW). b. The MWE is exempt from income tax on his overtime pay, holiday pay, night shift differential, and hazard pay. c. The MWE is subject to income tax on income other than those mentioned in “a” and “b”. d. All of the above 32. What is the correct treatment of overtime pay, holiday pay, night shift differential, and hazard pay received by those whose basic pay is more than the SMW? a. Exempt from income tax b. Subject to income tax, and consequently, to the withholding tax on compensation income c. Considered as fringe benefit subject to fringe benefit tax, provided the employee is holding management or supervisory position. d. Non of the above. 33. Minimum Wage Earners (MWEs) receiving “other benefits” exceeding P90,000 limit shall be a. Taxable on the excess benefits only...