Value Added Tax Test Bank Questionnaire PDF

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Cebu Institute of Technology – University College of Management, Business, and Accountancy ARC 414 – Taxation Review Pre-final ExaminationJUNALINE SAPARIYAInstructorTest I. Instruction: Determine whether the transaction belongs to:A – VAT TRANSACTION B – ZERO-RATED VAT C – VAT-EXEMPT, OPT-EXEMPT D –...

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Cebu Institute of Technology – University College of Management, Business, and Accountancy ARC 414 – Taxation Review Pre-final Examination JUNALINE SAPARIYA Instructor Test I. Instruction: Determine whether the transaction belongs to: A – VAT TRANSACTION B – ZERO-RATED VAT C – VAT-EXEMPT, OPT-EXEMPT D – VAT-EXEMPT, SUBJECT TO OPT E. TRANSACTIONS WITH GOVERNMENT UNITS WRITE THE CORRESPONDING LETTER IN YOUR ANSWER SHEET. (20 pts) A1. Purchase of imported products D2. Sale of shares of stock through the stock market D3. Non-VAT radio and TV broadcasting franchise grantees with gross receipts of 8,000,000 per year. A4. Sale of Services to local air transport companies A5. Sale of goods with annual gross sales of 2,000,000 D6. Transport of passengers by land A7. Sale of commercial property amounting to 3,000,000 C8. Importation of supplies by international shipping business A9. Sale of processed marine food products amounting to 2,500,000 per year C10. Printing and publication of books C11. Sales of agricultural food products in their original state E12. Sales of services to Department of Finance D13. Services rendered by professionals amounting to 720,000 per year C14. Sales of duly registered cooperative C15. Sale of residential house and lot amounting to 3,000,000 A16. Sale of residential lot amounting to 2,000,000 C17. Lease of residential unit with monthly rental of 10,000 D18. Gross receipts within for services by international shipping carriers D19. Gross receipts for services rendered for overseas dispatch originating from the Philippines E20. Gross receipts for services rendered to TESDA Test II. Select the letter of the correct answer. (30 pts) 1. VAT is imposed only in the country where the goods or services are consumed. This principle would refer to a. destination principle c. business tax principle b. jurisdiction principle d. consumer principle 2. This kind of tax is imposed due to opportunity given to engage on sale, exchange, or barter of goods and services a. ad-valorem tax c. consumption tax b. privilege tax d. indirect tax 3. Which of the following rates can be used as rate for output and input VAT? a. 12% b. 7% c. 5% d. 2% 4. Which of the following is not a characteristic of VAT? a. tax on gross sales c. tax on sellers b. tax on consumption d. tax on buyers 5. The following items is not part of the taxable base for VAT purposes, except a. discounts that are expressly indicated in the invoice b. sales return with proper credit or refund was made during the month c. sales allowance with proper credit or refund was made during the month d. cost of sales of the taxable goods sold 6. Which of the following is not considered a deemed sales? a. installment sale of real property b. merchandise inventory left upon retirement

c. distribution of inventory to creditors d. consignment of goods if not sold within 60 days 7. Which of the sale of real property inventory is subject to VAT? a. low-cost housing with sale price of 375,000 per unit b. socialized housing with sales price of 150,000 per unit c. residential lot valued at 2,000,000 d. residential house and lot value at 2,500,000 8. Upon full collection of installment sale of real property, there is an additional VAT if the a. zonal value is higher than market value b. market value is higher than zonal value c. total collection is higher than zonal value or market value d. zonal value or market value is higher than the total collection 9. Transfer of amounts retained by the contractee to the account of the contractor is an example of: a. actual receipts c. advanced collection b. installment collection d. constructive receipts 10. Which of the following non-VAT business is required to register under VAT system within 30 days upon reaching the threshold amount? a. trading business b. common carrier business c. franchise grantees of radio/television broadcasting d. agricultural food products in original state 11. Which of the following services may be subject to VAT? a. Hospital services b. TESDA-registered educational services c. Professional services d. Employee’s services 12. The amount of sales to a VAT-registered person which requires that the sales invoice should contain the customer’s name, address and TIN. a. 5,000 or more c. 2,000 or more b. 3,000 or more d. 1,000 or more 13. X is a VAT-registered professional business with the following reports during the year: Collections from clients including VAT 4,480,000 Billings including VAT 1,680,000 Supplies used including VAT 560,000 Importation of equipment including VAT 112,000 The net VAT payable would be a. 600,000 b. 480,000 c. 420,000 d. 408,000 14. A VAT person reported the following during the year: Export sales, Peso denominated Export sales, Dollar denominated (peso equivalent) Importation of goods Its zero-rated transactions would be a. 3,500,000 b. 3,000,000 c. 1,000,000 d. none

2,000,000 1,000,000 500,000

15. Which of the following sale is not an export sale? a. sale of goods from foreign country to the Philippines b. sale of gold to the Bangko Sentral ng Pilipinas c. sale of goods to PEZA-registered/Ecozone export enterprise d. sale of locally manufactured goods to foreign country 16. One of the following is not a major business internal revenue tax in the Tax Code. a. Value-added tax b. Excise tax

c. Income tax d. Percentage tax

17. The account title to best reflect the value-added tax on a purchase:

a. Sales tax payable b. Value-added tax payable

c. Input tax d. Output tax

18. Charlie is an operator of parking lots. What business tax is due on his income from the business? a. Broker’s tax b. Common carrier’s tax

c. Caterer’s tax d. value-added tax

19. Gross receipts tax (GRT) is a business tax paid by a: a. Hotel operator b. Insurance company

c. Franchise holder d. Bank

20. Three (3) of the following are exempt from the value-added tax. Which is the exception? a. Sales or importation of medical, dental and veterinary medicines b. Services rendered by persons subject to percentage tax c. Receipts from leasing of real properties d. Export sales by persons who are not value-added tax registered. Answer: a or c 21. The following are data, VAT not included, of Country Appliances Marketing Co. for the last quarter of 2006: Sales up to December 15, total invoice value Purchases up to December 15

P300,000 200,000

Additional information: On December 16, 2006, the country Appliances Marketing Co. retired from its business and the inventory valued at P190, 000 net of input taxes was taken and transferred to New World Appliances Co. There is a deferred input taxes from the third quarter of P3, 500. How much is the total value added taxes due and payable by Country Appliances Marketing Co. in its operations in the last quarter and its retirement from business? a. P12,000

b. P8,500

c. P34,800

d. P31,300

22. 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 stock 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 for a gross selling price or receipts of P800, 000 23.Which statement is considered 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 is 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 24. Mr. A imported cigarettes from the United States for sale. At a later date, he sold the cigarettes in the Philippines. He is subject to the value-added tax. He is also subject to the business tax of: a. Excise tax

b. income tax

c. Percentage tax d. none of the above

25. Mr. B is a dealer of liquors. On his sales in the Philippines, his tax is: a. Excise tax

b. Value-added tax

c. Percentage tax d. none of the above

26. Mr. C 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 taxes mentioned here that he pays forms part of the gross selling price? a. Excise tax

b. Value-added tax

c. Percentage tax d. none of the above

27. Mr. D is a civil engineer who pays the occupation tax under the local Government Code. He is also a building contractor. The tax that he should pay is a. Excise tax

b. value-added tax

c. Percentage tax d. none of the above

28. Mr. F is a lessor of real property and personal property (cars). The tax that he pays a. Excise tax

b. Value-added tax

c. Percentage tax d. none of the above

29. Statement 1: A person subject to excise tax is also subject to value-added tax. Statement 2: A person subject to percentage tax is also subject to value-added tax. a. Both statements are correct b. Both statements are wrong. c. The first statement is correct but the second statement is wrong. d. The first statement is wrong but the second statement is correct. 30 Which of the following is not a sale and therefore is not subject to the value-added tax? a. Transfer, use or consumption not in the ordinary course of the 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 31. Which statement is correct? The value-added tax on goods or properties sold: a. Is based on gross sales and not on net sales b. May be due even if the goods or properties were not actually sold c. Is not imposed on goods exported d. Is a selling expense of the trader. 32. Under the value-added tax law, which of the following sales may not be zero-rated? a. Export sales b. Foreign currency denominated sales. c. Sales of goods to the Asian Development Bank d. Sale of goods to an export-oriented enterprise 33. Which of the following statement is wrong: The value-added tax is: a. Not an expense b. A tax credit c. Not a part of the gross selling price d. On purchases, is a part of the cost of inventory. 34. Which of the following are not account titles with balances in the books of accounts of a VAT taxpayer? a. Output taxes b. Input taxes

c. Excess input taxes carry-over d. VAT payable

35. The formula: Output taxes (less) Input taxes (equals) Value-added tax payable means that: a. Value-added taxes are not deductible from gross income b. Value-added taxes paid o purchases are prepayments...