TAX Reviewer

True or False 1
1. Consumption tax is a tax levied upon businesses.
2. A purchase is a form of consumption.
3. A tax on consumption will effectively causes all residents of the state to pay
tax.
4. Consumption is the acquisition or utilization of goods and services.
5. Income tax is based on the taxpayers' capacity to sacrifice for the support of
the government.
6. Consumption tax is more consistent with the "ability to pay" theory rather
than the "benefit received” theory.
7. A tax on consumption would support savings initiative.
8. Consumption taxes should not apply to basic necessities.
9. Both domestic consumption and foreign consumption are subject to
consumption tax.
10. Non-resident sellers are exempt from consumption taxes on their domestic
sales.
11. Resident sellers shall pay consumption tax on foreign consumption.
12. The sale by non-resident persons abroad is subject to Philippine
consumption tax.
13. The utilization or consumption of goods or services shall be taxable in their
country of origin.
14. The sale by non-resident persons in the Philippines is exempt from
consumption tax.
15. The sale by resident in the Philippines is subject to consumption tax.
True or False 2
1. The consumption tax for purchases of goods or services from foreign
sources shall be payable by the buyer.
2. Business tax is a form of consumption tax.
3. Consumption tax is a form of business tax.
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4. Business tax is imposed on the sales of sellers which is the purchases made
by buyers.
5. The VAT on importation is payable only by those regularly engaged in trade
or business.
6. Business taxes are paid by sellers while the VAT on importation is paid by
the buyers.
7. The statutory taxpayer and the economic taxpayer are the same with the
VAT on importation.
8. Business taxes are usually included in the price of goods and services of the
seller but are remitted by the seller to the government.
9. In business taxes, the statutory taxpayer is not the economic taxpayer.
10. The sales or importation of goods is not subject to specific percentage tax.
11. When the impact and incidence of taxation rests upon different persons, the
tax is an indirect tax.
12. Domestic pay consumption tax to domestic sellers.
13. Importers pay consumption tax to non-resident sellers.
14. Domestic sellers pay consumption tax to the government.
15. Exporters pay consumption tax to the government.
Multiple Choice - Theory: Part 1
1. Which type of consumption will pay consumption tax?

a. Domestic consumption
b. Foreign consumption
c. Both domestic and foreign consumption
d. Neither domestic nor foreign consumption
2. Which is a tax upon the usage of income?
a. Savings tax
c. Consumption tax
b. Investment tax
d. Business tax
3. Which is subject to the VAT on importation?
a. Foreign consumption from resident sellers
b. Foreign consumption from foreign sellers
C. Domestic consumption from resident sellers
d. Domestic consumption from foreign sellers
4. Which is subject to business tax?
a. Foreign consumption from resident sellers
b. Foreign consumption from foreign sellers
C. Domestic consumption from resident sellers
d. Domestic consumption from foreign sellers
5. Which is an incorrect statement regarding consumption taxes?
a. They are always indirect in nature.
b. They effectively tax everyone in the state.
C. They apply only when the goods or services are destined for
consumption within the Philippines.
d. Consumption taxes may encourage savings formation.

6. Which is correct regarding consumption tax?
a. It may help in the redistribution of wealth to society.
b. It is entirely based upon the consumers' ability to pay.
c. It applies to both domestic and foreign consumption.
d. It applies only when the seller is non-resident
b ha
7. Domestic consumption is taxable when the seller is
a. a non-resident.
b. a resident.
C. either a resident or a non-resident.
d. both a resident and a non-resident.
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8.
Foreign consumption shall
a. pay consumption tax if the seller is a resident.
b. pay consumption tax if the seller is a non-resident
C. not pay consumption tax if the seller is a non-resident.
d. not pay consumption tax regardless of the residency of the seller.
9.
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The tax on domestic consumption is referred to as
a. VAT on importation. c. Either A or B
b. Business tax.
d. Neither A nor B
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10. The tax on domestic consumption from foreign suppliers is
a VAT on importation. c. Either A or B
b. Business tax.
d. Neither A nor
11. The tax on domestic consumption from resident suppliers is
a. VAT on importation. c. Either A or B
b. Business tax. I d. Neither A nor B
12. Which is not a business tax?
a. VAT on importation
b. VAT on salesd
c. Percentage tax
. Excise
tax
13. The percentage tax is generally damar
a. 3% of sales or receipts c. 3% of mark-up
b. 3% of purchases d. 12% of mark-up
14. The VAT as a business tax is
a. 12% of sales or receipts c. 12% of mark-up an
b. 12% of purchases d. 3% of mark-up
15. The VAT on importation is

a. 12% of sales
b. 12% of purchases
c. 12% of mark-up
d. 3% of mark-up
16. Which form of consumption is tax-free?
a. Sales to a resident
b. Sales to a non-residente
c. Importation by an importer engaged in business
d. Importation by an importer not engaged in business
17. As to incidence of tax, the VAT on importation is a form of
a. Direct tax
c. Ad valorem tax
b. Indirect tax
d. Specific tax
18. Which of these import consumptions is tax-free?
a. Importation from a seller not engaged in trade or business
b. Importation from a seller engaged in trade or business
c. Both A and B
d. Neither A nor
19. Which importation is subject to the VAT on importation?
a. Importation by a person engaged in business
b. Importation by a person not engaged in business
c. Both A or B
d. Neither A nor B
20. Who is the statutory taxpayer to the VAT on importation?
a. Foreign seller
c. Both A and B
b. Domestic buyer d . None of these
1. Generally, the tax basis of business tax is
a. sales or receipts c. Either A or B
b. purchase cost
d. Both A and B
2. Who is the statutory taxpayer of business taxes?
a. The seller who must be engaged in trade or business
b. The seller, whether or not engaged in trade or business
c. The buyer who must be engaged in trade or business
d. The buyer, whether or not engaged in trade or business
3. The economic taxpayers of consumption taxes are
a. Sellers who are engaged in trade or business
b. Sellers, whether or not engaged in trade or business
C. Buyers who are engaged in trade or business
d. Buyers, whether or not engaged in trade or business
4. What is the method used to determine the VAT due and payable?
a. Direct method
c. Tax credit method
b. Indirect method d . Withholding method
Which statement is conceptually incorrect?
a. The buyer pays the consumption tax on his/her purchase to the seller
b. The buyer pays the consumption tax to the government
c. The seller pays the consumption tax to the government
d. The seller collects consumption tax for the government
6. Which is correct?
a. The sales to foreigners must include a business tax.
b. The sales to residents must include a business tax.
C. The purchase from abroad must include a business tax.
d. All of these
7. The deduction from Output VAT is called
a. Percentage tax
c. Input VAT
b. VAT due and payable d. VAT on importation
Which is a pure form of a sales tax?
a. Percentage tax
c. Both A and
b. Value Added Tax Std. Neither A nor B
9. Statement 1: A business which pays VAT normally does not pay percentage
tax.
Statement 2: A business which pays percentage tax also pays VAT.
Which statement is correct?
a. Statement 1
c. Both statements
b. Statement 2
d. Neither statement
10. Which of the following business taxes applies only for domestic
consumption?
a. VAT on sales
c. Excise tax
b. Percentage tax
d. All of these
two
11. Excise tax is paid by l
nd
a. Sellers
b. Buyers
C. Importers or manufacturers
d. Seller or buyer depending on who agreed to pay the excise tax
12. Export sale is (select the incorrect one)
a. Exempt from percentage tax
b. Exempt from VAT
c. Exempt from excise tax
d. All of these
13. Statement 1: Excise tax is always paid together with VAT or percentage tax.
Statement 2: Excise tax is paid at the point of sale.
Which statement is false?
a. Statement 10
b. Statement
2
d
c. Both statements
. Neither statement
14. Which is imposed with a tax of zero percent (0%)?
a. All export sales
b. Export sales of VAT-registered taxpayers
c. Import sales of VAT-registered taxpayers
d. Export sales of non-VAT registered taxpayers only
15. Which is not subject to excise tax?
a. Sin products
b. Non-essential commodities
C. Food products
d. Mineral products
16. The tax basis of consumption tax on foreign purchase is
a. sales or receipts
c. Either A or B
b. purchase costs
d. Both A and B
17. The consumption tax on domestic purchases is imposed upon the
a. sales or receipts
c. Either A or B
b. purchase cost
d. Both A and B
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18. Technically, the excise tax on the manufacture of certain articles is payable
only when the article is intended for
a. Domestic consumption C. Both A and B
b. Foreign consumption d. Neither A nor B
19. Which is correct with the VAT on importation?
a. Payable only when the importer is engaged in business
b. Payable only when the foreign seller is engaged in business
C. Payable regardless of the purpose of the importation
d. Payable only when the resident seller is not engaged in business
20. The VAT on domestic sales is an example of
a. a direct tax.
c. a regulatory tax.
b. an indirect tax.
d. a specific tax.
Multiple Choice - Problem Part 1
1. Free Company, a resident business, renders services to Mr. Erlwin, a
resident person who is not engaged in business.
Identify the statutory taxpayer and the type of consumption tax.
a. Free Company - Business tax
b. Mr. Erlwin - VAT on importation
C. Mr. Erlwin - Business tax
d. Free Company - VAT on importation
2. Baliwag Company, a non-resident business, purchased P200,000 from
Cauayan Company, a resident business. Which will pay the consumption tax
on this transaction?
a. Cauayan Company c. Both A and B

b. Baliwag Company d. Neither Anor B
3. Heidenberg Corporation, a resident business, purchased P 100,000 goods
from Kiwi Company, a non-resident business.
Identify the statutory taxpayer and the type of consumption tax,
a. Heidenberg Company - Business tax
b. Kiwi Company - business tax
C. Heidenberg Company - VAT on importation
d. Kiwi Company - VAT on importation
4. Mr. Cedric, an employee, sold his residential lot to Mrs. Corneto, a real
property dealer. Who is subject to consumption tax with respect to this
transaction?
a. Mr. Cedric
c. A and B
b. Mrs. Corneto
d. Neither A nor B
5. Mr. Porma made a casual sale involving a car to Mrs. Tutyal, a resident
buyer. Mr. Porma is not a car dealer. Who is subject to consumption tax?
a. Mr. Porma
c. Both Mr. Porma and Mrs. Tutyal
b. Mrs. Tutyal
d. Neither Mr. Porma nor Mrs. Tutyal
6. Mr. Llama, an employee, imported a pair of shoes from Hongkong. Which
consumption tax is he liable to pay?
a. Business tax
c. Both
b. VAT on importation d. None
7. Kapederasyon, a charitable non-profit corporation, imports various office
supplies from XG Manufacturing Industries in China. Which is correct?
a. Kapederasyon is exempt from VAT on importation.
b. Kapederasyon is subject to VAT on importation.
C. XG Manufacturing Industries is subject to business tax.
d. XG Manufacturing Industries shall pay the VAT on the importation.
8. Mr. Cavite produces an excisable article for sale in the Philippine market.
Which is incorrect with respect to Mr. Cavite's business taxation?
a. Mr. Cavite is subject to either VAT or percentage tax
b. Mr. Cavite pays excise tax in addition to VAT or percentage tax
Mr. Cavite pays excise tax in addition to VAT and percentage tax
d. Mr. Cavite will pay excise tax without regard to whether he is a VAT or
non-VAT taxpayer.
9.
A person engaged in business is subject to 3% business tax. He has
inventories of goods in his possession costing P77,600 which he intends to
sell to earn a mark-up of 25% of cost net of the 3% business tax. He shall
invoice the sale of the P77,600 goods at
a. P100,000
c. P 97,000
b. P103,000
d. P 110,000
10. A business wants to make a P10,000 profit from the sale of an inventory
costing P30,000. The business is subject to 3% percentage tax. At what
amount shall the business invoice the sale?
a. P 41,237
c. P 40,000
b. P 41,200
d. P 38,800
11. A person who imports goods or properties will more likely pay
a. a 3% percentage tax on the importation
b. a 12% VAT on the importation
C. either 3% or 12% tax on the importation
d. no consumption tax
12. A person who is not regularly engaged in trade or business made a casual
sale of a property for P100,000. What will be the invoice price of the sale?
a. P100,000
c. P112,000
b. P103,000
d. Either B or C
13. Alison is regularly engaged in the sales of goods. He will pay
e will pay
a. Value added tax only. c. Either A or B
b. Percentage tax only. d. Neither A nor B
14. Mr. Ventura is subject to 3% percentage tax. He made a total collection of
P206,000 during a month and paid P103,000 in purchases. Compute his
percentage tax.
c. P6,180
b. P3,000
d. P12,000
a. PO
15. A business taxpayer purchased goods worth P120,000 from non-residents
and sold goods worth P140,000 for P180,000. What is the concept of "value
added" for VAT purposes?
a. P200,000
c. P 80.000
b. P140,000
d. P 60,000
16. In the immediately preceding problem, what is the basis of percentage tax?
a. P200,000
c. P120,000
b. P140,000
d. P180,000
17. Assuming the same data in the above problem, what is the basis of the VAT
on importation?
a. P200,000
c. P120,000
b. P140,000
d. P 80,000
18. Mr. Coroneti imported P300,000 equipment for business use and a
P1,200,000 car for personal use. What is the amount subject to the VAT on
importation?
a. PO
c. P1,200,000
b. P300,000 O dP 15
d. P 1,500,000
Multiple Choice - Problem Part 2
Basic Case 1
1. A business taxpayer had the following purchases and receipts:
Import of goods or services
P 190,000
Domestic purchase of goods or services 100,000
Domestic sales of goods and services
150,000
Export sales of goods or services
50,000
Compute the total amount subject to consumption tax to the business.
a. P500,000
c. P350,000
b. P400,000
d. P340,000
In the immediately preceding problem, determine the amount subject to
consumption tax if the taxpayer is not engaged in business
a. P490,000
c. P200,000
b. P390,000
d. P190,000
Basic case 2
3. A VAT-registered taxpayer recorded the following sales and purchases,
exclusive of VAT, during the month:
Sales
P 300,000
Purchases
200,000
What would be the output VAT?
a. P 48,000
c. P24,000
b. P 36,000
d. P12,000
4. What is the input VAT?
a. P48,000
bec. P24,000
b. P36,000 Don d . P12,000
5. What is the VAT payable?
a. P36,000
b. P24,000
c. P12,000
d.PO
6. Assuming the taxpayer is a non-VAT taxpayer paying 3% percentage ta.
the percentage tax shall be
a. P12,000
c. P 6,000
b. P 9,000
d. P 3,000
Basic Case 3
A business taxpayer recorded the following transactions during the month:
Philippines Abroad Total
Sales
P 350,000 P 200,000 P550,000
Purchases
_150,000 100.000 250.000
Total
P 500.000 P 300.000 P800.000
Assuming the taxpayer is a VAT-registered taxpayer
7. Compute the output VAT.
a. PO
c. P 36,000
b. P 24,000
d. P 42,000
8. Compute the VAT on importation.
a. PO
c. P18,000
b. P 12,000
d. P32,000
Assuming the taxpayer is a non-VAT taxpayer
9. Compute the percentage tax.
a. PO
c.P9,000
b. P6,000
d. P 10,500
10. Compute the VAT on importation.
a. PO
c. P12,000
b. P3,000
d. P18,000
Basic Case 4
Sindangan Company, a VAT-registered taxpayer, purchased P400,000 worth of
goods and sold the same for P800,000.
11. Assuming that the business operation of Sindangan Company is limited to
Philippine residents, what is the total business tax it will report on its sales?
a. P 96,000
c. P 24,000
b. P 48,000
d. PO
12. Assuming that the purchases were imports and the sales were exports,
compute respectively the business tax and total consumption tax.
a. P 96,000; P144,000 C. P 24,000; P72,000
b. P 24,000; P144,000 d. P0; P48,000
True or False 1
1. The VAT on importation is a business tax.
2. The final withholding VAT is a business tax.
3. The VAT on importation is 12% of the value added on importation.

4. The VAT on importation is 12% of the receipts from the sale of services
abroad.
5. Importation is subject to either VAT or percentage tax.
6. The final withholding VAT is 12% of the contract price of purchased
services from within the Philippines.
7. The sale of services abroad is subject to 12% final withholding VAT.
8. The VAT on importation is paid to the Bureau of Internal Revenue.
9. The final withholding VAT on services is paid to the Bureau of Internal
Revenue.
10. The importation of any agricultural or marine products is VAT exempt.
11. The importation of professional instruments and implements is exempt
from VAT.
12. The importation of any product intended for human consumption is VAT-
exempt.
13. The importation of ingredients which are intended for the manufacture of
goods for human consumption is VAT-exempt.
14. The importation of professional instruments and implements in commercial
quantities is VAT-exempt.
15. The importation of equipment, machinery and spare parts for marine
vessels is VAT-exempt.
True or False 2
1. Resident foreigners are not subject to the VAT on importation.
2. All agricultural or aquaculture inputs are VAT-exemption
3. The sale of processed agricultural products is vatable. de
4. The importation of books and newspapers is VAT-exempt.

5. The importation of life-saving equipment is VAT-exempt.
6. The lease of aircrafts or vessels from non-residents is exempt from the final
withholding VAT.
7. The purchase of services from foreign consultants is exempt from final
withholding VAT.
8. The importation of fuel, goods, and supplies by international carriers is
VAT-exempt.
9. The importation of agricultural machineries by farmers is exempt.
10. The importation of agricultural machineries by agricultural cooperatives is
VAT-exempt
11. The VAT on importation is payable only by those engaged in business.
12. The final withholding VAT on importation of services is payable even by
those not engaged in business.
13. The VAT on importation and the final withholding VAT can be claimed as
Input VAT creditable against Output VAT.
14. In economic reality, the VAT on importation and the final withholding VAT
are taxes paid by non-resident sellers.
15. Qualified exempt importation is exempt from VAT only if made by an
exempt person.
Multiple Choice: Theory - Agricultural or marine food products: Part 1
1. Which is subject to value added tax?
a. Sheep
c. Cut sheep meat
b. Sheep wool
d. All of these
2. Which agricultural product is VAT-exempt on importation?9 8
a. Charcoal
c. Lumber
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b. Wood
d. Corn
3. Which importation is subject to VAT?
a. Importation from abroad
b. Purchase of goods from economic zones in the Philippines TST
c. Both A and B
d. Neither A nor
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4. Which is not subject to VAT on importation?
a. Importation of goods for personal use
b. Importation of goods for business use
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c. Purchase of goods from Ecozone entities
d. Purchase of goods from other domestic sellers
5. Which of the following is subject to the VAT on importation when
imported?
a. Books
"c. Mushroom mop 10 S TAS
b. Table sugar
d. ordinary salt
6. Which non-food agricultural product is exempt from VAT on importation?
a. Chicken manure c. Live hogs
b. Eggs
d. Cattle
7. Which of the following is not exempt from VAT?
a. Grapes
c. Orchids
b. Oranges 26392 d. Kiwi fruits
8. Which seedling is vatable?
a. Grafted mango seedlings c. Narra seedlings
b. Pomelo seedlingshold. Guava seedlings
to
9. Which agricultural produce is exempt from VAT?
a. Rubber
c. Copra
b. Abaca hemp 23 d. Firewood
10. Which is vatable?
a. Bamboo shoots
b. Banana hearts
10
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c. Banana fruits
d. Bamboo polessa
11. Which is VAT-exempt?
a. Cotton soft wood c. Cotton wool
b. Cotton seeds 1994d. None of these
no side
a. Coconut lumber c. Coconut shells
b. Coconut brooms sticks d. Coconut meat
13. Which is subject to VAT on importation?
a. Wheat
c. Barley
b. Coffee bean
d. Cocoa
boom
14. Which agricultural product is subject to VAT?
a. Honey
c. Sugar cane
b. Rattan cane
d. Sugar beets
15. Which is subject to VAT on importation?
a. Cocoon silk
c. Furniture
b. Pineapple silk
d. All of these
16. Seedlings of this tree are exempt from VAT on importation.
a. Rubber tree
c. Palm oil tree
b. Paper tree
d. Mahogany tree
17. Which of the following when imported is subject to VAT?
a. Rubber
с. Cacao
b. Corn
d. Peanuts
18. Which of these seeds is not VAT-exempt?
a. Corn seeds
c. Flower seeds
b. Mustard seeds
d. Cabbage seeds
19. Which of the following feeds is subject to VAT on importation?
a. Formulated horse feeds c. Swine feeds
b. Corn grits
d. Broiler feeds
20. Feeds of the following animals are considered as specialty feeds, except for
a. Zoo animals
c. Livestock
b. Aquarium fish
d. Fighting cocks
Multiple Choice: Theory - Agricultural or marine food products: Part 2

a. Peacock feathers C. Hamsters
b. Eggs
d. Leather
2. Which is vatable on importation?
a. Tea leaves
c. Cayenne pepper
b. Tobacco leaves
d. Chinese cabbage
3. Which of these is VAT exempt on importation?
a. Almonds
c. Ginseng roots
c. Ginseng
b. Blueberries
d. All of these
4. Which is not exempt from VAT?
a. Sunflower seeds c. Peanuts
b. Beeswax
d. None of these
5. Which is not generally considered as pet under the regulation?
a. Rabbits
c. Race horses
b. Zoo animals
d. Fighting cocks
6. Which of these is non-vatable?

a. Lovebirds
c. Goldfish
b. Parrots
d. Milkfish
Which is not a VAT-exempt poultry?
a. Ducks
c. Turkeys
b. Geese
d. Game fowl roosters
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8. Which of these animals is vatable when imported?
a. Cows
c. Goats
b. Rabbits
d. Race horses
on
9. Which is a vatable agricultural input?
a. Fertilizers
c. Seeds
b. Pesticides
d. Seedlings
10. The following are generally considered as pets which are vatable when
imported except for

a. Janitor fish
c. Catfish
b. Goldfish
d. Koi fish
11. Which of these is taxable with VAT on importation?
a. Yellowfin tuna
c. Blue marlin
b. Pink salmon
d. Butterfly fish
12. Which of the following seafood is considered as vegetable and therefore
VAT-exempt?
a. Kelp
c. Sea grapes
b. Sea lettuce ("Green nori") d. All of these
13. Which of these is vatable?
a. Sea shells
b. Octopuses
c. Squids
Squids
d. Shrimps
D. Clams
14. Examples of mollusk and shellfish:
A. Crabs
B. Oysters C. Lobsters
Which of these is subject to VAT on importation?

a. A and D
c. All of these
b. B and
d . None of these
15. Which of these agricultural products is not considered as being in its
original state?
a. Kopra
c. Refined sugar
b. Muscovado sugar d . Ordinary salt
16. By revenue regulation, which of the items below is not considered in
original state?
a. Marinated fish
c. Frozen meat
b. Dried fish
d. Smoked fish
17. Which product is non-taxable with VAT on importation?
a. Fresh cow's milk c. Butter
b. Olive oil
d. Parmesan cheese
18. Which of the items below is taxable with VAT?
a. Shrink-wrapped meat c . Tetra-packed fresh fruit juice
b. Vacuum-packed vegetables d. Canned fruits
19. Which is not considered as simple processing?
a. Freezing
c. Broiling
b. Stripping
d. Marinating
20. The following advanced technological means of packaging are deemed not
to alter the nature of agricultural marine food products thereby retaining
their original state. Which is the exception?
a. Canning
c. Plastic shrink wrapping
b. Vacuum-packing
d. Tetra-packing
Multiple Choice: Theory - Other exempt importation
1. Which is not exempt from VAT on importation?
a. Importation of books
b. Importation of school supplies
c. Importation of magazines
d. All of these
2. Which importation is not VAT-exempt?
a. Importation of personal and household effects of residents coming to
resettle in the Philippines
Importation of personal and household effects of foreigners coming to
settle permanently in the Philippines
C. Importation of personal and household effects which are subject to
customs duties
d. All of these
3. The importation of professional instruments and implements may be

subject to VAT when the
a. volume is not in commercial quantity.
b. goods accompany the person or arrive within 30 days before or after
his/her arrival.
c. importation involves vehicles and machineries.
d. All of these
4. Which importation is exempt from VAT?
a. Importation of books by a school
b. Importation of books by a student
c. Importation of books by a bookstore
d. All of these
5. The importation of which transport medium is exempt from VAT?
a. Sea or air
c. A and B
b. Land
d. None
6. Examples of Transport vehicles:
A. Bus
B. Cars
C. Vessels
D. Aircraft
Which of these is not exempt from VAT when imported?
a. Cand D
c. All of these
b. A and B
d. None of these
7. Which importer is exempt from VAT on importation of fuel, goods and
supplies?
a. Domestic carriers
b. International carriers
c. Domestic carriers on their international operations
d. Either B or C
8. Which of the following items is subject to VAT on importation to an
individual who is intending to settle in the Philippines?
a. Vehicles
b. Professional instruments
c. Household effects
d. Personal effects
The importation of fuel, goods and supplies is not exempt from VAT when
used in
a. Domestic operation
b. International shipping operations
C. International transport operations
d. Any of these
10. Which is vatable?
a. Importation of life saving equipment
b. Importation of safety or rescue equipment
c. Importation of spare parts, steel or other metal plates for marine
vessels
d. None of these
11. The importation of vessel or aircraft for domestic operations is
a. vatable.
b. always VAT exempt.
C. VAT exempt if the importer complies with maximum service life set by
law.
d. vatable if the importer complies with maximum service life set by law.
12. The importation of fuels, goods and supplies for domestic shipping or air
transport operations is
a. vatable.
b. always VAT exempt.
C. vatable if the importer is a domestic carrier.
d. VAT-exempt if the importer is a domestic carrier.
13. The importation of farm machineries and equipment is exempt when
imported by
a. a member of a cooperative.
b. a trader engaged in business.
C. an agricultural cooperative.
d. A or C
14. Who has the burden of proving exemption from VAT on importation?
a. The government c. The seller
b. The importer-buyerd. Both A and C
15. Which is a qualified exempt importation?
a. Importation by a cooperative of farm equipment
b. Importation by a cooperative of rice

c. Importation of books
d. Importation of marine food products
16. Which is not a qualified exempt importation?
a. Importation of fuels or supplies by a person engaged in domestic
transport operations
b. Importation of fuels or supplies by an international carrier
C. Importation of cargo vessels and aircraft by those engaged in domestic
transport operations
d. Importation of cargo vessels and aircraft by those engaged in
international transport operations
17. Which of these is non-vatable?
a. Purchase of services from a foreign service provider who is not
engaged in business
b. Purchase of goods from a foreign service provider who is engaged in
business abroad
C. Purchase of goods from economic zone enterprises
d. None of these
18. Who shall pay the VAT on importation when a VAT-exempt entity
subsequently sells an imported article or goods to a non-exempt entity?
a. The exempt buyer
b. The non-exempt buyer
C. Both A and B
d. Neither A nor B
19. Importation is not subject to VAT when
a. made by a VAT-registered business.

b. made by a non-VAT-registered business.
c. it involves exempt goods.
d. coursed through an exempt importer.
20. Which is not included in landed cost?
a. Dutiable value
b. Custom's duty
C. Excise tax
d. VAT
21. Which is not included in the landed cost?
a. Purchase price
b. All incidental cost of bringing the goods to the Customs warehouse
Taxes other than VAT paid prior to the withdrawal of the goods
d. Cost of transporting the goods from the Customs warehouse to the
importer's warehouse or residence
Multiple Choice -Problems 1
1. Oceanizers, Inc. purchased the following from abroad:
Sea shells and coral decor
Tuna and salmon
Total
320,000
120,000
440,000
What is the amount of taxable importation?

a. PO
c. P200,000
b. P120,000
d. P320,000
be
2. Mr. A imported various personal and household effects with a value
aggregating P400,000. P320,000 of these was subjected to a 8% customs
duty by the BOC. What is the VAT on importation?
a. PO
c. P42,240
b. P 41,472
d. P48,000 to TAVE
3. A bookstore company imported the following items:
Books
Professional instruments
School supplies
Total
Landed cost
P 350,000
200,000
350,000
P 900.000
What is the total VAT on importation?
a. PO
c. P72,000
b. P 66,000
d. P108,000
4. Mr. C, a VAT-registered food retailer, imported the following from China:
Landed cost
Fruits
P 250,000
Vegetables
180,000
Frozen meat
50,000
Marinated milkfish
100,000
Total
P 580.000
Compute the VAT on importation.
a. PO
c. P 51,600
b. P 12,000
d.P69,600
5. Alexis Furnitures, a percentage taxpayer, imported the following household
equipment:
Landed cost
Machineries, for business use
P 1,150,000
Heating system, for home use

250,000
Total
P 1.400.000
Compute the VAT on importation
a. PO
c. P 150,000
b. P27,000
d. P 168,000
6. Danes AgriCorp imported the following:
Seeds
Fertilizers
Farming equipment
Herbicides and pesticides
Total
Landed cost
P 400,000
750,000
450,000
250.000
1.850,000
a. PO
c. P 72,000
b. P 42,000
d. P 84,000
C.
7. Home Appliance Company imported the following for personal use:
Furniture
P600,000
Rattan
250,000
Lumber
450,000
a. P 30,000
c. P 156,000
b. P 72,000
d. P 204,000
8. Mr. Huligan imported rice from Vietnam. Details of his importation show
the following:
Total invoice value
Fe P 1,000,000
Freight and insurance in transit
50,000
BOC and other charges
20,000
a. PO
c. P 126,000
b. P 120,000
Obd. P 128,400
9. An agricultural supply dealer imported the following:
Corn grits
Hog feeds
Specialty feeds
P 200,000
350,000
300.000
a. PO
c. P42,000
h P36.
000
d p 102.000
10. The following data relates to the importation of cigarettes by Mr. Shinto:
Total invoice value
BOC charges
Customs duties
Excise taxes
P 1,000,000
300,000
200,000
300.000
SS
a. P120,000
c. P 180,000
b. P 156,000
d. P 216,000
Multiple Choice - Problems 2
1. Don Pepito imported a harvester from the United States with a total cost of
P1,100,000 before Customs duties. The importation is subject to 10%
Customs duties. What is the VAT on importation?
a. P 158,400
c. P 129,600
b. P 145,200
d. PO
2. In the immediately preceding problem, assuming that the importation is
made by an agricultural cooperative, what is the VAT on importation?
a. P 158,400
c. P 129,600
b. P 144,000
d. PO
3. Mr. Smile, a professional practitioner, imported the following:

Calculators and computers for his firm P 900,000
Books
600.000
Total
P 1.500.000
How much is subject to VAT on importation?
a. PO
c. P 1,200,000
b. P 900,000
d. P 1,500,000
4.
Mr. Juan Manuel Marquez arrived in the Philippines with an immigration
visa. He had with him the following:
Clothing, shoes, and apparel
P 100,000
Professional instruments and implements 150,000
Personal car
300,000
Total costs of personal belongings P _550.000
Compute the total amount subject to VAT on importation.
a. PO
c. P 300,000
b. P 200,000
d. P 550,000
5. Mr. Xhi, a non-VAT taxpayer, made the following domestic purchases of

goods:
Purchase of scrap metals from a PEZA-locator
Purchase of machine from a VAT supplier
P 200,000
800,000
What is the imposable VAT on importation?
a. PO
c. P 96,000
b. P 24,000
d. P 120,000
6. Atlantis Shipping Company imported P 3,000,000 worth of vessel fuels and
supplies for domestic use. The company earmarked 60% of this for
domestic use while 40% was reserved for its international operations.
What is the VAT on importation?
а. - PO
c. P 216,000
b. P 144,000
d. P 360,000
7. Mr. Beer, a VAT-registered trader, imported equipment with a dutiable
value of $40,000 from abroad. The importation was subject to P100,000
BOC charges before 10% customs duties on dutiable value. The exchange
rate to the Peso was P43.00: $1.
a. P 218,400
c. P 232,400
b. P 227,040
d. P 239,040
8. If an importer paid 15% customs duties in the amount of P24,000 plus
P134,000 charges to the Bureau of Customs, what is the VAT on
importation?
a. PO
c. P 35,280
b. P 18,960
d. P 38,160
9. Shanum Company had the following data regarding its importation:
Invoice price in US Dollars
$ 12,000
Other costs to bring goods to the Philippines P 145,000
BOC charges
100,000
Customs duties is 10% of dutiable value
Peso-Dollar Exchange rate
P 42.80: $1 ITA
a. PO
c. P91,032.00
b. P 81,643.20
d. 298,935.20
10. Mr. Dolinger imported various merchandise from abroad. The importation
was invoiced at $ 5,000. Mr. Dolinger also incurred the following costs of
importation:
Insurance
P 4,000
Freight
15,000
Wharfage fee
4,000
Arrastre charge
7,000
Brokerage fee
8,000
Facilitation fee
5,000
Mr. Dolinger was also assessed P 24,000 and P 18,000, respectively, for
customs duties and excise tax. The applicable exchange rate was P42.50:$1.
What is the VAT on importation?
a. P 25,500
c. P 35,100
b. P 30,540
d. P 35,700
True or False- Part 1
1. Once employed, one cannot be considered engaged in business.
2. All sales by a businessman are considered made in the course of business.
3. A business involves habitual engagement in a commercial activity.
4. "Commercial activity" means provision of goods or services to the public for

a profit.
5. To be construed as being engaged in business, one must be employed.
6. A self-employed individual is engaged in business.
7. An employee is not engaged in business.
8. All casual sales of properties are considered not made in the course of
business.
9. The sale of ordinary assets by a business is considered made in the course
of business.
10. The sale of capital assets by a business is also considered made in the
course of business being incidental to business operations.
11. A business which is not registered is exempt from business taxes.
12. Government agencies and instrumentalities and non-profit organizations or
associations may be considered as businesses on their unrelated
operations; hence, these are subject to business tax.
13. The absence of a profit motive may preclude an activity from being
considered as business.
14. Government agencies and instrumentalities and non-profit organizations or
associations are generally considered as businesses.
15. A company director is considered to be engaged in business.
True or False - Part 2
1. Marginal income earners are exempt from both business tax and income
tax.
2. An employed professional is engaged in business.
3. Self-employed professionals rendering services to clients are engaged in
business.
4. Agents and brokers are considered as employees; hence, they are not
considered engaged in business.
Consultants and movie artists are considered engaged in business.
6. Businesses for mere subsistence are not considered business because they
are non-profit.
Businesses for mere subsistence have gross receipts not exceeding
P100,000 per year.
8. The owner of a business for mere subsistence is called a marginal income
earner.
9. A professional, consultant, or artist can qualify as a marginal income earner
as long as his receipts do not exceed P100,000 in any 12-month period.
10. A sale made by a non-resident is presumed to be made in the course of
business despite irregularity of sales transactions.
11. A non-profit organization is subject to business tax on all of its receipts if it
engages in activities subject to business tax.
12. Exemption from income tax means exemption from business tax.
13. A non-profit organization will be exempt from business tax if it uses the
income generated from activities subject to business tax for non-profit
purposes.
14. An individual, trust, estate, partnership, corporation, joint venture,
cooperative or association will pay business tax.
15. Only sales outlets are required to pay the annual registration fee.
16. The Certificate of Registration shall be exhibited in a conspicuous place in
the principal place of business.
17. The husband and the wife are taxable as a single person; hence, they pay
under a consolidated business tax return.
18. Businesses are required to register in the revenue district office (RDO)
which has jurisdiction over their principal place of business.
19. Businesses pay an annual registration fees of P1,000.
20. Every distinct establishment with or without sales operation shall pay the
annual registration fee.
True or False - Part 3
1. The term "goods or properties" includes real properties held primarily for
sale, lease or use in the ordinary course of business.
2. The term "goods or properties" includes the right or privilege to use paten
copyright, design, secret formula, trademark and other property or right
3. Businesses are classified as sellers of goods or sellers of services for
purposes of business taxes.
4. Sellers of goods are taxable on gross receipts while sellers of services are
taxable on gross selling price.
5. The sale of radio, television, satellite transmission and cable television time
is a sale of service not a sale of goods or properties,
6. Real estate brokerage is considered a sale of goods or properties rather
than sale of services.
7. A contractor is a seller of goods or property not a seller of services.
8. Leasing or distribution of cinematographic films is a sale of service.
9. Dealers in securities and lending investors are sellers of goods rather than
sellers of services.
10. The sale of electricity by generation, transmission and distribution
companies is considered sale of goods or properties.

11. The term gross selling price excludes taxes on the sale.
12. Excise tax is part of the gross selling price.
13. Sales returns and allowances are deductible against gross selling price.
14. Gross selling price includes cash, accounts and installment sales.
15. Constructive receipts are part of gross receipts.
16. Constructive receipts are monies which are placed in the control of the
seller of services without restrictions.
17. Only discounts determinable at the point of sale are deductible against
gross selling price.
18. The term "gross receipts" includes client or customer advances for
unperformed jobs.
19. Gross receipts include only cash received and excludes uncollected income.
20. Promissory notes and other evidences of indebtedness submitted by clients
or customers are part of gross receipts.
True or False Part 4
1 Non-VAT taxpayers pay their quarterly tax in three monthly payments.
Loans or agency monies received by the business are part of gross receipts.
Receipts that do not redound to the benefit of the taxpayer are not included
in gross receipts.
There are three types of business taxes: VAT, percentage tax and excise tax.
There are two types of business taxpayers: VAT and Non-VAT taxpayers.
Normally, VAT and percentage tax are mutually exclusive.
Excise tax is an addition to either VAT or percentage tax for businesses
manufacturing or importing excisable articles.
The accounting period for business tax is called the taxable year.
VAT taxpayers pay their quarterly tax in two monthly and one quarterly
payment.
10. The taxable quarters of an individual are patterned after that of the
calendar quarter
11. The taxable quarters of a corporation adopting a fiscal year for income tax
purposes shall be synchronized with its fiscal year.
1 Corporations pay quarterly VAT while individuals pay VAT annually,
13. VAT taxpayers use BIR Form 2551 while non-VAT taxpayers use BIR Form
2550.
14. A few percentage taxpayers are required to pay their tax quarterly while
most pay their taxes monthly.
15. Exempt sales will not be subject to VAT or percentage tax.
6. APO
True or False Part 5
1. Services specifically subject to percentage tax are subject to VAT if not
subjected to percentage tax.
2. Sales from goods or services, other than exempt sales and services subject
to percentage tax, are vatable.
3. The term "vatable sales" means sales automatically subject to VAT.
4. All services specifically subject to percentage tax are taxed at a rate of 3%.
5. All taxpayers with vatable sales or receipts in the past 12-months
aggregating P1,919,500 from whatever type of sales are subject to VAT.
A person who wishes to register as a VAT taxpayer despite not meeting the
VAT threshold is called a "registrable person."
7. The VAT payable is computed as output VAT less 3% percentage tax.

8. If the aggregate sales or receipts from all sources (exempt, specifically
subject to percentage tax, and others) exceed P3,000,000, the person is
subject to VAT.
9. Franchise grantees of radio or television broadcasting companies which
exceeded P1,000,000 in annual sales must register as VAT taxpayer.
10. Persons who optionally register as VAT taxpayers can cancel their VAT
registration within three years.
11. Franchise grantees of television or radio broadcasting companies cannot
cancel their VAT registration,
12. Registrable persons shall be subject to VAT. They shall pay VAT with the
benefit of an input VAT credit plus the percentage tax.
1. Which of the following entities below is not considered as a business?
a. A sari-sari store with P500,000 annual sales
b. A news stand with sales exceeding P100,000
C. A cigarette vendor with sales not exceeding P100,000
d. An employed professional earning part-time self-employment income
not exceeding P100,000
2. Which of the following is not considered as engaged in business?
a. A purely self-employed individual
A self-employed and employed individual
c. A purely employed individual
d. A and B
3. Which of the following is not subject to business tax even if made by a
registered business?
a. Sale of goods
b. Sale of services
C. Sale of properties considered as ordinary assets and
d. Sale of properties considered as capital assets
4. Which is not engaged in business?
a. A corporate director
b. A broker
C. An agent taob
d. A security dealer
5. Which of these is least likely to be subjected to business tax?
a. Sale of stocks held as inventory
b. Sale of bonds held as inventory
c. Sale of stocks held as investment
d. None of these
6. Which is considered engaged in business even if not regularly engaged in
trade?
a. A non-resident seller who exports to the Philippines
b. An importer who imports goods into the Philippines
c. A seller who makes a one-time sale of real property
d. Any seller who sells goods or services at a price above P100,000 during
the year
7. Which of the following are considered engaged in business?
A. Government agencies C. Sales agents
B. Non-profit organization D. Consultants
a. A and B
c. B and C
b. Cand D
d. None of these
Which of these is always presumed to be made in the course of business;
hence, it is subject to business tax under the regulations?
a. Export sales
c. Domestic sales
b. Importation
d. All of these
DOS
The business tax on exempt sales is
a VAT
c. A or B
b. Percentage tax
d. None of these
de
10. The consumption tax on importation is
a VAT
c. A or B
b. Percentage tax
d. None of these
11. The consumption tax on domestic sales is
a. VAT
c. A or B
b. Percentage tax
d. None of these
12. The business tax on services specifically subject to percentage tax is
a. VAT
C. A or B
b. Percentage tax
d. None of these
13. Which is more likely to qualify as a marginal income earner?
a. Artist
c. Sales agent
b. Consultant
d. Operator of a single unit tricycle
14. Statement 1: Sellers of goods are subject to percentage tax.
Statement 2: Sellers of services are subject to VAT.
a. Statement 1
b. Statement 2
c. Both statements
15. Statement 1: Both the husband and the wife are subject to either VAT or
percentage tax,
Statement 2: The husband may pay VAT while the wife may pay percentage
tax.
Which statement is false?
a. Both statements
b. Neither statement
c. Statement 1 only
d. Statement 2 only
16. Statement 1: An employed taxpayer will pay an annual registration fee.
Statement 2: A self-employed taxpayer will pay an annual registration fee.
a. Statement 1
b. Statement 2
c. Both statements
17. The term "gross selling price" excludes
a. The contract price of the goods sold
b. Discounts which are contingent upon future events
C. Delivery charges
d. Sales returns and allowances
18. The term "gross receipts" excludes
a. Reimbursements for customer expenses paid by the service provider
b. Reimbursements for out-of-pocket expenses incurred by the service
provider
c. Advances made by the client for services yet to be rendered
d. Cash collections for services rendered
19. Which is not a constructive receipt?
a. Bank deposits made available to the service provider without
restriction
b. Transfer of amounts retained by the payor to the account of the
contractor-service provider
c. Judicial consignation by the payor of the contract price which the
service provider wishes to donate to the payor
d. Collection of revenue for past services rendered
20. Which is part of gross receipts?
a. Amounts received which will be remitted to other persons
b. Receipt of notice from a debtor to offset the consideration of the service
for the debt of the service provider
Receipt from bank loans
d. Receipt from issuance of stocks or issuance of certificates of
indebtedness
1. A non-VAT registered service provider shall pay
a. 3% percentage tax on its gross receipts
b. 12% VAT on its value added
C. 12% VAT on its export sales or receipts
d. 3% percentage tax on its export sales
2. Which must be present to construe the existence of a business?
a. Regularity of transaction
b. Offering of services or goods to the public for a profit
C. Actual presence of profit during the period
d. Both A or B
3. A person who made a one-time or casual sale of properties is
a. Exempt from business tax.
b. Subject to percentage tax.
C. Subject to value added tax.

d. Subject to either percentage tax or value added tax.
A VAT-registered person shall pay
a. 3% percentage tax and VAT
b. 12% VAT on its sales or receipts
C. 12% VAT on its value added
d. 12% VAT on its export sales
Who are subject to VAT?
a. Those who optionally register as VAT taxpayers.
b. Those who are mandatorily required to register as VAT taxpayers.
c. Those who are registrable to VAT.
d. Any of these.
6. Who are not required to register to the VAT system?
a. Those who are below the VAT threshold
b. Those whose only sales are exempt sales
c. Those who only derive receipts from services specifically subject to
percentage tax
d. Any of these
7. A non-VAT registered seller of goods shall payu
a. 3% percentage tax on its gross receipts
b. 12% percentage tax on its value added
C. 3% percentage tax on its sales
d. 12% VAT on its gross receipts
8. AVAT-registered seller of goods shall be subject to

a. 12% output VAT on sales
b. 12% output VAT on gross receipts
c. 3% percentage tax on sales
d. 3% percentage tax on gross receipts
9. Who is entitled to claim (deduct) input VAT against output VAT?
a VAT registered persons only
b. VAT registrable persons only
c. Non-VAT registered persons
d. All of these
10. Who pays percentage tax?
a. Those who exceed the VAT threshold and opt to be register as non-VAT
b. Those who did not exceed the VAT threshold but are registered as VAT
taxpayers
Only those service providers specifically subject to percentage tax
Those providers of services specifically subject to percentage tax and
those whose sales or receipts in any 12-month period are below the
VAT threshold.
11. When the receipts from services specifically subject to percentage tax
exceeds the VAT threshold, future receipts from these services are
a. exempt from percentage tax.
b. still subject to the same percentage tax.
c. subject to VAT.
d. Subject to 3% percentage tax.
12. A VAT-registered person who did not exceed the VAT threshold will pay
a. VAT
c. Both A and B
b. Percentage tax
d. Either A or B at his discretion
13. Once the vatable sales or receipts exceed the VAT threshold, future monthly
sales from vatable sales or receipts shall be subject to
a. 3% percentage tax.
b. Percentage taxes of various rates.
C. 12% VAT
d. 0% VAT.
14. A marginal income earner shall pay
a. 3% percentage tax. c. Either A or
Bo
| b. 12% VAT.
d. Neither A nor B
lt
15. The export sales of VAT-registered taxpayers are
a. subject to zero-rated VAT.
b. exempt from business tax.
c. subject to 12% VAT.
d. subject to 3% percentage tax.
16. The export sales of non-VAT registered taxpayers are
a. subject to zero-rated VAT.
b. exempt from business tax.
C. subject to 12% VAT.

d. subject to 3% percentage tax.
17. A non-VAT person with exempt sales exceeding the VAT threshold is still
a. Exempt from business tax on exempt sales
b. Exempt from VAT on all its sales
C. Exempt from percentage tax on all sales de
las
d. A and B
18. A VAT-registered person who exceeded the VAT threshold will pay
a. VAT
c. Both A and B
b. Percentage tax
19. A non-VAT registered person who exceeds the VAT threshold shall pay
a. VAT
c. Both A and B
b. Percentage tax
20. A non-VAT registered person who did not exceed the VAT threshold shall
pay
a. VAT
c. Percentage tax at various rates
b. 3% Percentage tax d. Either A or B at his discretion
21. What is the general VAT threshold?
a. P1,919,800
c. P3,000,000
b. P1,919,500
d. P10,000,000
22. Which is a special VAT threshold?
a. P1,919,800
c. P3,000,000
b. P1,919,500
d. P10,000,000
23. The mandatory or voluntary registration as VAT taxpayers under the
special threshold is
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year.
d. perpetually irrevocable.
24. Mandatory or voluntary registration as a VAT taxpayer under the general
threshold is
C. revocable within a year.
25. The VAT registration upon commencement of operation based upon
expectation of exceeding the VAT threshold shall be
c. revocable within a year if sales do not actually exceed the VAT
threshold.
name
Multiple-Choice - Problems 1
1. Mrs. Belle, self-employed, generated the following receipts during the year
Proceeds of health insurance
P 300,000
Receipts from business advisory services
250,000
Receipts of rentals from boarding house
100,000
What is the total amount subject to business tax?
a. P100,000
c. P 350,000
b. P 250,000 ford. P 650,000
2.
A person engaged in business sold the following properties:
Sales of goods held for sale
Sale of personal residence
Sale of personal car
200,000
2,000,000
500,000
Compute the sales in the course of business subject to business tax.
a. PO
. c. P 2,200,000
b. P200,000.
d. P 2,700,000
3. Mr. Julio, employed, received the following from his employer: la
Proceeds of property insurance
Proceeds of bank loan
Compensation income
200,000 W
300,000
500,000
What is the amount subject to business tax? dach bo
a. PO
c. P 300,000
b. P200,000
d. P 500,000
4. Mr. Jun Kim, a security broker, effected the sales of several securities of Kim
Jong-un. The following relates to the sale:
Sales
Sale of stocks
Sale of bonds
Total
120,000
280,000
400.000
Commission
P 1,200
2,800
4,000
Compute the amount of receipts or sales of My Jun Kim subject to business
tax.
OULOS
a. PO
000.00
c. P 400,000
b. P 4,000 0.02
d. P 404,000
Assuming Kim Jong-un is an investor in stocks, what is the amount subject
to business tax?
a. PO
c. P 400,000
b. P 4,000
d. P 404,000
Mr. Masipag had annual gross receipts not exceeding P100,000. During the
month, he made the following sales:
od
P
Sale of car rugs Oos
Sale of cigarettes
Sale of candies
Total
had to be
2,000
3,000
3,000
8.000
29
Compute the total amount subject to business tax.
000
PO
c. P5,000
B. P 2,000 inom d. P 8,000 izvodo
7. Mr. Kim Jong, a security dealer, sold the following during the month:
Sale of securities for own account
Commission income on sale of securities of clients
Sale of vacant lot held as investment
P 400,000
36,000
1,000,000
What is the amount subject to business tax?
a. PO
c. P 436,000
b. P36,000
d. P 1,436,000
8.
A non-stock charitable organization realized the following during the
month:
Membership contributions
Donation from various donors
Sale of souvenirs
300,000
400,000
200,000
Compute the amount subject to business tax.
a. PO
c. P 500,000
b. P200,000
d. P 900,000
9. JDC Corporation, a merchandiser, had the following sales during the month
Sale of merchandise
Commission income from consignors
Sales of stocks investments

200,000
50,000
180,000
a. P200,000
c. P 380,000
b. P250,000
d. P 430,000
10. Mang Indio has a sari-sari store with P500,000 annual sales. He had the
following sales during the month:
Sale of various merchandise
Cash donated by his brother
Cash from proceeds of bank loan
30,000
200,000
300,000
a. P0
c. P 230,000
b. P30,000
d. P 530,000
11. Mr. McCullot is a consultant. During the month, he had only one client from
which he derived the following receipt:
Professional fees
Less: Withholding tax
Net amount received
150,000
7,500
142.500
a, PO
c. P 142,500
b. P7,500
d. P 150,000
12. Mang Pandong is a farmer. He sold his agricultural land costing P200,000
for P1,000,000 to start a palay trading business. What is the amount
subject to business tax?
a. PO
c. P 800,000
b. P200,000
d. P1,000,000
13. Ms. Cumacaliua is concurrently employed at Cumanan Corporation and
Paatras Company. She received the following during the month:
Cumanan Paatras
Professional fees
P 50,000 P 40,000
Less:
Creditable withholding tax

7,000 6,000
Loan repayment
12,000
SSS, PhilHealth, HDMF
3,000
Net pay
P 40.000 P 22.000
a. PO
c. P 77,000
b. P62,000
d. P 90,000
14. Effective 2019, Kanlaon Corporation, a VAT-taxpayer, changed its
accounting period to a fiscal year ending every August 30. What is the
deadline for the first quarter VAT return under the new accounting period?
a. September 25, 2019 C. November 25, 2019
b. January 25, 2020 d. December 25, 2019
15. In the immediately preceding problem, the third quarterly VAT return shall
be filed on or before
a. May 20, 2020.
c. June 20, 2020.
b. May 25, 2020.
d. June 25, 2020.
Multiple-Choice - Problems 2
Jackpruit, a seller of goods, had the following transactions in January 2020:

Cash sales
Credit/Installment sales (40% collected)
Sales returns and allowances
Freight-out charged to customers
200,000
300,000
40,000
20,000
a. PO
c. P 480,000
b. P 460,000
d. P 500,000
2. Atty. Saturday Sabado and Atty. Sunday Domingo formed a general
professional partnership for the exercise of their legal profession. Their
partnership Sabado-Domingo Law Office started operation on July 1, 2020
as a VAT taxpayer. The partnership adopted the calendar year basis.
The professional partnership shall file its first monthly VAT return on
a. July 20, 2020
c. August 20, 2020
b. July 10, 2020
d. August 30, 2020
3. In the immediately preceding problem, what is the deadline of the first
quarterly VAT return?

a. July 30, 2020.
c. August 25, 2020.
b. August 30, 2020. d. October 25, 2020.
4: A service provider had the following income during the month:
Fees, paid in cash and checks
Fees, paid in notes
Advances by clients for future services
Reimbursement for out-of-pocket expenses
Reimbursement for client expenses
Total
80,000
150,000
20,000
40,000
20,000
330,000
a. P 350,000
c. P 160,000
b. P250,000
d. P 140,000
5. A taxpayer had the following sales or receipts in the past twelve months:
Exempt sales
Services subject to percentage tax
Other sales
Total
P 1,500,000
400,000
800,000
P 2.700,000
Which is correct?
a. The taxpayer is subject to VAT on all sales.
b. The taxpayer is subject to VAT on taxable sales other than exempt sales
C. The taxpayer is subject to percentage tax on taxable sales other than
exempt sales.
d. The taxpayer is subject to percentage tax on all sales.
6. Kudarat Company had the following sales and receipts data in the past
twelve months:
Exempt sales
Services subject to percentage tax
Other sales
Total
200,000
400,000
2,000,000
P_2.600,000
Which is correct?
a. The taxpayer is subject to VAT on other sales.
b. The taxpayer is subject to VAT on taxable sales other than exempt sales.
c. The taxpayer is subject to percentage tax on taxable sales other than
exempt sales.
d. The taxpayer is subject to percentage tax on all sales.
7. The following data pertain to a business taxpayer during a quarter:
Revenue (Sales)
Cash collections
January February
200,000 P 240,000 P
180,000 240,000
March
230,000
220,000
Which of these properly reflect the reporting of a non-VAT service
provider?
January
February March
a. P 170,000 P 240,000 P 640,000
b. POP OP 640,000
C. P180,000 P240,000 P 220,000
d. P0 Р о P 670,000
8. Which of these properly reflect the reporting of a non-VAT seller of goods?
January February March

a.
Po ро P 670,000
b. P200,000 P 250,000 P 220,000
C. P 170,000 P 240,000 P640,000
d. P 200,000 P 240,000 P 230,000
9. Which of these properly reflect the reporting of a VAT service provider?
a. P 180,000 P 240,000 P 640,000
b. P 200,000 P 250,000 P 220,000
c. P 170,000 P 240,000 P 640,000
d. P 200,000 P250,000 P 670,000
10. Which of these properly reflect the reporting of a VAT seller of goods?
a. P 170,000 P 240,000 P230,000
b. P 200,000 P 240,000 P 670,000
C. P 170,000 P250,000 P640,000
d. P 200,000 P250,000 P 230,000
11. Mrs. Bote sells cakes to jeepney drivers who patronize her hot and sweet
cakes. During the month, Mrs. Bote sold P 300,000 worth of cakes and
collected P280,000. What is the amount to be reported for business tax
purposes?
a. None
c. P 300,000
b. P280,000
d. Indeterminable
12. The No-Taste is a restaurant offering local cuisine. Which is correct?
a. No-Taste is engaged in the sale of service.
b. No-Taste is engaged in the sale of goods.
No-Taste is engaged both in the sale of goods and service.
d. No-Taste is not engaged in business.
13. Marilyn is a beautician operating a beauty parlor. She is indebted to Zeus
for P30,000. Unable to pay her debt, Marilyn agreed to render services to
Zeus. In return, Zeus cancelled Marilyn's indebtedness. Which is correct?
a. The cancellation of the P30,000 indebtedness is a gratuity subject to
donor's tax.
The cancellation of the P30,000 indebtedness is exempt from income
tax.
C. The cancellation of the P30,000 indebtedness is a constructive receipt
of Marilyn subject to business tax.
d. The cancellation of the P30,000 indebtedness is a constructive receipt
of Zeus subject to business tax.
14. A is a VAT-registered seller with annual sales of P1M. During the month, he
recorded only P10,000 in sales and sustained an operating loss of P40,000
Which is correct?
a. The taxpayer is exempt from business tax during the month since there
is an operating loss.
b. The taxpayer shall pay VAT.
C. The taxpayer shall pay percentage tax.
d. The taxpayer shall pay VAT if his/her annual sales exceeds P3,000,000
during the year. Otherwise, he shall pay percentage tax.

15. Chemrex Company, a non-VAT taxpayer paying 3% percentage tax
exceeded the VAT threshold on September 2019. Chremrex generated
P300,000 and P400,000 sales in October and November and paid
respectively P 12,000 and P28,000 input VAT in these months. Chemres
immediately registered to the VAT system at the start of November 2019.
Compute the business tax payable in October, assuming no claim for tax
credit was filed.
a. P 9,000
c. P 27,000
b. P 24,000
d. P 36,000
16. Compute the business tax payable in October, assuming Chemrex claimed
for tax credit and was approved by the BIR.
a. P9,000
c. P 27,000
b. P 24,000
d. P 36,000
17. Compute the business tax payable in October, assuming Chemrex filed a
claim for tax refund.
a. P9,000
c. P 27,000
b. P 24,000
d. P 36,000
18. Compute the business tax payable in November.
a. P 12,000
c. P 36,000
b. P20,000
d. P 48,000
19. A non-VAT taxpayer paying 3% percentage tax received P104,000 cash and
P6,000 CWT from the sale of services. Compute the percentage tax.
a. P 3,000
c. P 3,204
b. P 3,120
d. P 3,300
20. AVAT-taxpayer received a P52,000 plus P4,000 creditable withholding tax
certificate. What is the output VAT?
a. P 5,571
c. P 5,820
b. P 5,760
d. P 6,000

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True or False 1

1. Consumption tax is a tax levied upon businesses.

2. A purchase is a form of consumption.

4. Consumption is the acquisition or utilization of goods and services.

than the "benefit received” theory.

7. A tax on consumption would support savings initiative.

8. Consumption taxes should not apply to basic necessities.

9. Both domestic consumption and foreign consumption are subject to

11. Resident sellers shall pay consumption tax on foreign consumption.

12. The sale by non-resident persons abroad is subject to Philippine

13. The utilization or consumption of goods or services shall be taxable in their

14. The sale by non-resident persons in the Philippines is exempt from

15. The sale by resident in the Philippines is subject to consumption tax.

sources shall be payable by the buyer.

2. Business tax is a form of consumption tax.

3. Consumption tax is a form of business tax.

5. The VAT on importation is payable only by those regularly engaged in trade

seller but are remitted by the seller to the government.

9. In business taxes, the statutory taxpayer is not the economic taxpayer.

tax is an indirect tax.

12. Domestic pay consumption tax to domestic sellers.

13. Importers pay consumption tax to non-resident sellers.

14. Domestic sellers pay consumption tax to the government.

15. Exporters pay consumption tax to the government.

Multiple Choice - Theory: Part 1

1. Which type of consumption will pay consumption tax?

c. Both domestic and foreign consumption

d. Neither domestic nor foreign consumption

2. Which is a tax upon the usage of income?

3. Which is subject to the VAT on importation?

a. Foreign consumption from resident sellers

b. Foreign consumption from foreign sellers

C. Domestic consumption from resident sellers

d. Domestic consumption from foreign sellers

4. Which is subject to business tax?

a. Foreign consumption from resident sellers

b. Foreign consumption from foreign sellers

C. Domestic consumption from resident sellers

d. Domestic consumption from foreign sellers

5. Which is an incorrect statement regarding consumption taxes?

a. They are always indirect in nature.

b. They effectively tax everyone in the state.

consumption within the Philippines.

d. Consumption taxes may encourage savings formation.

a. It may help in the redistribution of wealth to society.

b. It is entirely based upon the consumers' ability to pay.

c. It applies to both domestic and foreign consumption.

d. It applies only when the seller is non-resident

7. Domestic consumption is taxable when the seller is

C. either a resident or a non-resident.

d. both a resident and a non-resident.

Foreign consumption shall

a. pay consumption tax if the seller is a resident.

b. pay consumption tax if the seller is a non-resident

C. not pay consumption tax if the seller is a non-resident.

d. not pay consumption tax regardless of the residency of the seller.

The tax on domestic consumption is referred to as

a. VAT on importation. c. Either A or B

10. The tax on domestic consumption from foreign suppliers is

a VAT on importation. c. Either A or B