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OPENFIRST PRE-BOARD EXAMINATIONSTAXATIONINSTRUCTIONS: Select the best answer for each of the following question**. All questions are compulsory and MUST be attempted. Mark only one answer for each item on the answer sheet provided. Strictly NO ERASURES ALLOWED. Erasures will render your examination ...

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OPEN FIRST PRE-BOARD EXAMINATIONS TAXATION INSTRUCTIONS: Select the best answer for each of the following question. All questions are compulsory and MUST be attempted. Mark only one answer for each item on the answer sheet provided. Strictly NO ERASURES ALLOWED. Erasures will render your examination answer sheet INVALID. Use PENCIL NO.2. GOODLUCK! Use the following data for the next three questions: Ivan is an operator of ten (10) buses with routes from Manila to Subic and is likewise a transportation contractor with three (3) freight trucks. For the taxable year 2018, he reported gross receipts from his bus operations of P36,000,000. His gross receipts, however, from his freight of goods or cargoes amounted only to P800,000 for the year. 1. Assuming Ivan is non-vat registered, how much is his total business tax due? a. P1,080,000 c. P1,176,000 b. P1,104,000 d. P4,416,000 2. Assuming Ivan is vat registered, how much is his total business tax due. a. P1,080,000 c. P1,176,000 b. 1,104,000 d. P4,416,000 3. Pedro is a jeepney operator. He is also engaged in the business of leasing units. His gross receipts from his jeepney operation amounted to P5,000,000 for the year. The monthly rental of the residential units is P14,00 with a total annual gross receipts of P3,500,00 for the year. Which of the following is correct? a. Pedro is required to register under the vat system b. Pedro may apply for optional vat registration c. Pedro is exempt from business and income tax d. None of the above 4. JJ is a civil engineer practicing his profession. He is also a building contractor. The business tax that he shall pay is: a. Excise tax b. Value-added tax c. Percentage tax d. All of the above 5. What input taxes may be credited? a. Input taxes from purchased of direct labor. b. Input taxes from importation of direct labor. c. Input taxes from importation of personal and household effects. d. None of the above. 6. JJ Sardines, Inc. processes canned sardines. In 2018, its gross sales never exceeds P3,000,000. In 2019, it decides to register under the VAT system. For VAT purposes, JJ Sardines can avail as input tax credit the a. Passed-on VAT and presumptive tax only. b. Passed-on VAT, presumptive input tax and transitional input tax. c. Passed-on VAT and transitional input tax only. d. Passed-on VAT only. 7. Mang Jose made the following sales during the 3rd quarter of 2018:

Gross sale – ducks, geese P 5,000,000 And turkey Gross sale – fighting cocks 1,500,000 Gross sale – specialty feeds For fighting cocks 800,000 Total sales P 7,300,000 How much is the correct business tax of Mang Jose during the quarter? a. P 876,000 c. P69,000 b. P276,000 d. none 8. For value added tax purposes, which of the following transactions of a VAT- registered taxpayer may not be zero-rated? a. export sales b. sales of goods to the Asian Development Bank c. sales of goods to an export oriented enterprise d. all of the above 9. A non-vat radio and/or television broadcasting company whose annual gross receipts of the preceding year is P 5,000,000 shall be liable to? a. Value-added tax at 12% b. Value-added tax at 0% c. franchise tax at 3% d. franchise tax at 2% Use the following data for the next two (2) questions: Pinoy Telecommunications has the following data for the first month of the second calendar quarter or 2016: Gross receipts, domestic calls P5,000,000 Payments received, overseas calls (originating from the Philippines) P3,000,000 Purchases of supplies used in connections With domestic calls, net of VAT P300,000 Purchases of equipment used in connection With both domestic calls and overseas Calls, net of VAT P800,000 Business expenses P1,000,000 10. How much is the overseas communications tax? a. P960,000 c. P500,000 b. P800,000 d. P300,000 11. How much is the VAT payable, if any? a. P828,000 c. P468,000 b. P504,000 d. P0 12. If a non-VAT registered person exports goods, what is the treatment of such transaction for VAT purposes? a. Subject to 12% VAT b. Subject to 0% VAT

c.. Exempt d. ”b” or “c” 13. Stock tong Co. is a manufacturer of beer. During the quarter, it had the following transactions ( net of VAT): January 4 2018: consigned beer to a retailer in Quezon city amounting to P 200,000. February 27, 2018; exported 1 000,000 worth of beer to Japan . February 27, 2018; President of San-Mor trading celebrated his birthday, consuming P 50,000 work of bill given to him by the company as a birthday gift. March 20,2018 ; declared property dividend of one case of beer for every 10 shares, amounting to P 150,000. Additional Information: From January to march, domestic sale to wholesalers amounted to P 600,000. No bill is to amount by the consignee until the end of quarter . The output tax for the quarter. The output tax for the quarter is: a. P72,000 c. P 120,000 b. P192,000 d. P60,000 Use the following data for the next two (3) questions: City Yu, a real estate dealer, sold three {3) commercial lots under the following terms ( all amount are net of VAT, if any): Lot 1 Lot 2 Lot 3 Selling Price P 250,000 P 200,000 P300,000 Cost 150,000 130,000 175,000 Gain/loss 100,000 70,000 125,000 Terms: Downpayment, 25,000 50,000 40,000 Nov. 5 2018 Due: 12/05/2018 25,000 20,000 20,000 Year 2019 200,000 130,000 240,000 14. The output tax in November 2018 is: a. P 26,500 c. P 31,800 b. P 34,800 d. P 90,000 15. The output tax for December 2018 is: a. P 5,400 c. P 31,800 b. P. 4,500 D. P none 16. Bobafoam inc. sold land and building to be resort corporation on May 21, 2018. Both parties are VAT registered. The total selling price is P 6 million 25% pertains to the building with useful life of 20 years). How much is the output tax on the transaction? a. P 720,000 c. P180,000 b. b. P540,000 d. P 3,000 17. Based on the preceding number, how much is the input tax that can be claimed by be resort?

a. P 270,000 b. P 543,000

c. P 540 000 d. P 180,000

18. Sia corp. is a fast growing vat registered business. due to its expanding workface, it needed a bigger office. It hired the services of a building contractor to constract a 25 storey building for a contract price of Php 10 million. It was agreed that sia corp. will produce the necessry materials for the contruction. For the month of January 2018, the records of sia corp. pertainging to the constraction showed the following: Billings Payments Service 1000,000 700,000 Materials 650,000 500,000 How is the credible input tax of sia corp.? A. P198,000 c. P162,000 b. P 180,000 d. P144,000 19 Based on the preceding number, assuming it is the building contractor who will provide the materials, how much is the credible input tax? A. P 198,000 c. P 162,000 b. p 180,000 d. P 144,000 20. the tax payer is a trader of poultry feeds. Determine his applicable business tax. a. subject to 12 % vat b. VAT exempt but subject to 3% OPT under section 116 c. 12% vat 3% OPT, at his option d. exempt from 12% vat and OPT 21. The taxpayer is a Lessor of residential units. Monthly rent per unit is P15,000 while his gross receipts for the year amounted to P5,000,000. Determine his applicable business tax . a. subject to 12% vat b. subject 3% OPT under the section 116 c. 12% vat or 3% OPT, at his option d. exempt from 12% vat and OPT 22. The taxpayer is a lessor of residual units. Monthly rent per units is P18,000 While his gross receipts for the year amounted to P2,500,000 only. determine his applicable business tax. a. subject to 12% vat b. subject to 3% OPT under section 116 c. 12% vat or 3% OPT, at his option d. Exempt from 12% vat and OPT 23. Banko natin sold a repossessed car to }} at P1,000,000. Banko natinis. 1. subject value added tax 11. subject to gross receipts tax of 7% 111. subject to regular corporate tax a. 111 only c. 11 and 111 b. 1 and 111 d. none of the only Above Use the following balance data for the next two (2) questions:

T corp. is a local export oriented enterprise of the business of manufacturing of sardines. In 2017 it sold to Mr. Bo Huang of china under the term FOB Shipping point. Mr. Huang specialized packaging material for his sardines. He ordered the packing material for his sardines . he ordered said packaging materials from another philippine company Norhan packaging inc.(NPI) It was agreed that NPI will deliver the packaging materials to T. corp. so that the latter can use the same for the sardines to be delivered to Mr. Huang in china . 24. What is the tax treatment for VAT purposed of the sale of T. to Mr. Huang? a. subject to 12% b. subject to 0% c. exempts d. none of the choices 25 .Based in the preceding number, what is the tax treatment of the sale of NPI to Mr. Huang A. subject tio 12% b. subject to 0% c. Exempt d. none the choices 26. Which is the following statement is correct? a. a zero-rated sale of goods or properties by a VAT registered person is a taxable transaction for VAT section purposes. b. The input tax on a purposes of goods, properties of services , related to zero-rated sale , shall be available not as tax credit only but as tax refund also . c. The transitional input tax shall be 2% of the value of the beginning inventory in hand , or actual VAT paid on such goods, material and supplies , whichever is higher, which amount shall be credible against the output tax of VAT registered of persons. d. none of the above 27 CP operated of retail business that have been generating sales not exceeding the threshold for VAT exempt persons. How ever he desire s to be registered under the VAT system for the first time in order to benefit from input tax credits. What benefit may CP entitled to once he wants to registered under the VAT system? a. Tax refund b. Presumptive input tax credit c. Transitional input tax credit d. None of the foregoing 28. Who are allowed the withhold vat from its vat suppliers? a. Entities, organization business corporation duly registered with Philippine Economic zone Authority (PEZA). b. Non-resident and individual corporations c. Government of any of its instrumentalities including government owned control corporation . d. Resident foreign corporation doing business in the Philippines. 29. Exempt for one transaction, the rest are exempt from value added tax. which one is subject to vat? a. sale of chicken by a chicken restaurant owner who did not registered as vat taxpayer and whose gross had sales during the year is P 2,800,000.

b. Sale of copra by a non-vat registered copra dealer to a coconut oil manufacturer and whose gross sales amounted to P 6,250,000 c. Gross receipts of a vat registered CPA amounting to P 2,250,000 in the practice on his profession. d. Sales of books of a Non-vat registered book store and whose sales amounted to P12,000,000. 30. Delima, a vat taxpayer made a P 100,000 sales to the government invoiced at P 112,000 inclusive of output vat. Delima where purchase the same for P 90,000 net of P10,800 input vat from corporation. The government effected payment, net of the 5% final vat. The entry to record the sale to the government is a. cash P107,000 Standard input vat 5,000 Sales P 100,000 Output vat P 12,000 b. cash P100,000 standard input vat P5,000 Output vat P 7,000 Sales P100,000 Output vat P12,000 c. Cash P100,000 Standard input vat 5,000 Sales P100,000 Output vat P5,000 d. cash P106,400 Standard input vat 5,600 Sales P100,000 Output vat 12,000 31. Using the above information, the actual input vat that will be charged to cost expense is A .P2,000 c. P 5,000 b. P 3,800 d. P7,000 32. Which importation is subject to vat? a. Important of fuels amounting to P 15,000,000 by Motabato, a person engaged in International shipping. b. Importation of law, unprocessed Kobe beef from Japan worth of P 1,400,000 Trillanes , a beef dealer, for sale to various branches of Cayetano Hotels in metro manila. c. Importation of grapes worth P3,250,000 by De Lima a wine dealer. d. Importation of books worth of P 8,000,000 and schools supplies worth of P 800,000. 33. which of the following is subject to vat ? a. sale of passenger or cargo vessels and aircraft for domestic or international transport operations b. Sales o f agricultural and marine food products in their original state c. Sales by agricultural cooperatives duly registered with the cooperative Development authority d. Sales of fuel, goods and suppliers to person engaged in international shipping or air transport operations. 34. The actual effort exerted by the government to effect the exaction of what is due from the tax payer is known as a. Assessment. b. Levy c. payment

d. collection. 35. Incidence of taxation means a. shifting of tax b. refunds of tax c. payment of tax d. Imposition of tax 36. The power of taxation is basically legislative in character. Which of the following legislative function? A B C . Fix with certainly Yes No Yes The amount of tax .Identify who should Yes Yes No Collect the tax . determine who y Yes Yes Yes Should be subject to tax

D Yes Yes No

37. Which theory is taxation states that without taxes, a government should be paralyzed for lack of power to active operate it, resulting in its destruction ? e. Power to destroy theory f. Lifeblood theory g. sumptuary theory h. Symbiotic doctrine 38. Which of the following statement regarding to the special assessment in correct? a. It is based needs by the government’s need by man to support its legitimate objectives b. it is levied only on hand c. it is based in solely on the benefits derived by the owners of the land. d. none of the above 39. An example of a tax where the concept of progressivity find application is the a. Income tax on individuals. b. Excise tax on petroleum products. c. Value -added tax on certain articles. d. Amusement tax on boxing exhibitions. 40. Ligaya educational foundation, Inc., a stock educational institution organized for profit , decided to lease for commercial use a 1500 sq. m. portion of its school. The school actually directly and exclusively used the rents for the maintenance of its school buildings including payment of janitorial services. is the leased of portion subject to real property to tax? a. Yes since Lualhati is a stock and for profit educational institution. b. No since the school actually, directly, and exclusively used rents for the education purposes. c. No but it may be subject to income on the rents its receives. d. Yes since the leased portion is not actually, directly and exclusively used for educational purposes. 41. Which of the following is primary purposes of taxation? a. to raised the revenue .

b. to promote the general welfare of the people c. To reduced social inequality d. To encourage the economic growth. 42. In our jurisdiction, which of the following statement may be erroneous ? a. taxes are enforce charges and contributions. b. taxes are pecuniary in nature. c. Taxes are levied by the legislative or executive branch of the government. d. Taxes are assessed are according to reasonable rule of apportionment. 43. Which of the following justified the validity of the laws regarding by the summary remedies in the collection of taxes? a. Due process clause b. equal protection clause c. benefits-protection theory d. Lifeblood doctrine 44. Double taxation in its general sense means taxing the same subject twice during the same period. In this sense double taxation a. violates substantive due process . b. Does not violet substantive due process. c. violates the right to equal protection d. does not violate the right to equal protection. 45. A municipality, BB, has on ordinance which quires that all stores, restaurant, and other establishments selling liquor should pay a fixed annual fee of P 20,000. Subsequently, the municipal board proposed an ordinance imposing a sales tax equivalent to 5% of the amount paid for the purchased consumption of a liquor in stores, restaurant and other establishments. Is there double taxation? a. No. the impositions are of different nature and character. The fixed annual fee is in the nature of license fee impose through the exercise of police power, while the 5% tax on purchase or consumption is a local tax imposed through the exercise of taxing powers. b. No. prohibited against the direct duplicate taxation only applies to the national governments. c. Yes the impositions are both taxes and there for prohibited for being isolative of uniformity and equal protection sanctioned by the constitution, d. Yes, However, the impositions are valid since the case is only indirect duplicate taxation. 46. Which of the following statement about tax exemption under the constitution is incorrect? a. Exemption of religious, charitable and educational institutions applies to real to property tax only. the test is usage, not ownership. b. the word “exclusive” means solely . c. the exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of their respective purposes. d. None of the choices 47. A an individual, sold B, his brother in law, his lot with a market value of P 1,000,000.00 for P 600,000.00 A’s cost in the lot is P 100,000.00 B is financial capable of buying the lot. A also owns x Co. which has a fast growing business.

A sold some of his shares of stock in X Co. to his key executives in the latter. The selling price is P 3, 00,000 which is the book value of the shares sold but with a market value of P5, 000,000. The purpose of a in selling the shares is to enable his key executives to acquire proprietary interest in the business and have personal stakes in each business. Which of the following statement is not in accordance with the law? a. The first donation where a lot was sold by a lot was sold by a to his brother in-law for a price below its fair market value will not be subject to donor’s tax if the tax qualifies as a capital asset. b. If the lot sold is an ordinary asset, the excess of the fair market value over the consideration received shall be considered as a gift subject to donor’s tax. c. The sale of shares of stock below the fair market value thereof subject to donor’s tax. d. The sale shares of stock below the fair market value may be treated as a fringe benefit subject to fringe benefit, not donor’s tax. 48. Which the following transaction is deemed a taxable gift? A. condensation or remission of a debt b. Sale residential house and lot for less than adequate and full consideration in money or money’s worth c. Both (a) and (b) d. neither (a) and (b) 49. On January 15, 2018, daisy give a piece of land to her brother-in-law who is getting married on January 14, 2018. The assessed value and zonal value of the land were P750, 000 And P 1,000,000 respectively .The land the land had an unpaid mortgage of P200,000, which was not assumed by the done and an unpaid realty tax of P10,000 which not assumed by the done. How much the donor’s tax due? a. P297, 000 c. P 59,400 b. P 237,000 d. P 44,400 50. Mr. Ferrero Rocher, a non-resident alien, donates a Branch new car valued at P1, 200,000 to his legitimate son who is getting married in the Philippine donor’s tax purposes, the total amount of education shall be: a. P130, 000 c. P 10,000 b. P120, 000 d. none 51. Mr. Bill Morgan, a Canadian citizen but resident of el Nido, Palawan, donated in 2018 his car in Canada to his future daughter in-law who is to be married to his only son in Canada. His son and future daughter in law are both citizens and residents of Canada. What is the tax implication of the above donation? a. Donation is a subject to donor’s tax seen the done is a non-resident alien and the donated property is located in Canada. b. the donation is taxable, however, dowry exemption may be claimed as deduction. c. The donation is a taxable at 6% in excess of P250, 000 without any deduction for dowry. d. The donation is subject to graduation rates. 52. Ms. Mapagbigay, a Filipina, made the following donations in 2018: RECIPIENT Niece

Land in Quezon City with Zonal value of P 800,000. It’s a fair market value per assessor’s office is P500, 000

First cousin

200 preferred shares in a domestic corporation traded in stock market value with par value of P80 per share but with a book value of 100 per share. The highest and lowest bid price in the stock market for the said shares are P250 and P200, respectively.

Daughter of First Cous...