JUNIOR PHILIPPINES INSTITUE OF ACCOUNTANTS BUSINESS TAXES MULTIPLE CHOICE
1.
Roya Royall Mini Mining ng is is a VAT VAT-r -regi egist ster ered ed dom domes esti ticc mini mining ng ent entit ity. y. One One of of its its prod produc ucts ts is silver being sold to Bangko Sentral ng Pilipinas. It filed a claim with the BIR for tax refund on the ground that under Section 106 of NICR, sales of precious metal to Bangko Sentral ng Pilipinas are considered export sales sales subject to zero-rated VAT. Is Royal Mining’s claim for refund meritorious? A) Yes, sale of precious precious metal metal to Bangko Sentral ng Pilipinas Pilipinas are deemed deemed zerorated transactions. B) Yes, Yes, sale sale of prec precio ious us meta metall to Bang Bangko ko Sentr Sentral al ng Pili Pilipi pinas nas is deeme deemed d an exempt sale. C) No, sale of gold to Bangko Bangko Sentral Sentral ng Pilipinas Pilipinas is zero-rated zero-rated transactions transactions not silver. D) No, sale of precious precious metal metal to Bangko Sentral Sentral ng Pilipi Pilipinas nas is creditab creditable le not refundable. 2. Congre Congress ss enacts enacts a law imposi imposing ng a 55 tax on gross gross receipts receipts of common common carri carries. es. The law does not define the term “gross receipts”. receipts”. Express Express Transport. Transport. Inc., Bus Company plying the Manila Manila Baguio route, has time time deposits with with ABC Bank. In 2005, 200 5, Expres Expresss Transp Transport ort earned earned P1 millio million n intere interest st deducti deducting ng the 20% final final withholdin withholding g tax fro its time deposits deposits with the bank. The BIR wants to collect collect a 5% gross receipts tax on the interest interest income of Express Express Transport deducting deducting the 20% final withholding withholding tax. Is BIR correct? A) Yes, es, gross receipt ipts means cas cash coll ollected ted whethe ther actua tually lly or constructively without any deductions B) Yes, Yes, gross gross receipts receipts means all cash collec collectio tion n actual actually ly receiv received ed withou withoutt any deductions. C) No, gross receipts receipts means means actual receipts receipts after after deducting deducting of withholding withholding tax. D) No, gross receipts receipts means means actual receipts receipts after after deducting deducting tax credits. credits. 3. Lily’s Lily’s fashio fashion n Inc., is a garmen garmentt manufa manufactu cturer rer located located and registe registered red as a Subic Subic bay Freeport Enterprise under Republic act no. 7227 and a non-VAT taxpayer. As such, it is exempt from payment of all local and national internal revenue taxes. taxes. During During its operatio operations, ns, it purchas purchased ed variou variouss sup suppli plies es and materi materials als necessary necessary in the conduct of its manufacturing manufacturing business. business. The suppliers suppliers of these goods goods shif shifte ted d to Lily Lily’s ’s Fash Fashio ion, n, Inc. Inc. the the 10% 10% Vat Vat on the the purc purcha hase sed d item itemss amounting to P500,000.00. What is the proper remedy of Lily’s Fashion, Fashion, Inc? A) Lily’s Lily’s Fashion Inc., Inc., may used the P500,000 P500,000 as tax credit; credit; B) Lily’s Fashion Inc., may ask for a refund of the P500,000 ; C) Lily’s Lily’s Fashion Inc., Inc., may convert convert the P500,000 P500,000 into tax warrants warrants D) Lily’s Lily’s Fashion Inc., Inc., may charge charge it to to cost or expense. expense.
4. The commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for: A) Failure to issue receipts or invoices of a Vat – registered entity. B) Failure to file a Vat – return for Vat – registered person as required by the tax code. C) Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter D) All of the above . 5. 1st Statement-Failure of any person to register as a VAT-entity shall result to his being temporarily closed for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever. Requirements prescribed by the Commissioner in the closure order. 2nd Statement- Then period to register as a VAT-entity with the appropriate Revenue District Officer shall be within ten (10) days from date of employment. A) True; False C) False; True B) True; True D) False; False 6. A, operates a convenience store, from which the gross receipts from sales, and payments on purchases from VAT-registered supplies, were as follows: Sales of processed food items ---------------------------------- P 280,000 Sales of non-food items ----------------------------------------- 200,000 Purchases of processed food items ---------------------------- 100,000 Purchases of non-- food items --------------------------------80,000 Salaries of helpers ----------------------------------------------48,000 The percentage tax (tax due) is (above amounts are net of taxes) C) P 50,000 A) P15,000 B) P32,000 D) P27,200 7. Using the preceding number, if A opted to be registered under the VAT scheme, the VAT payable is A) P 15,000 C) P 38,400 B) P32,000 D) P 27,200 8. C. as a manufacturer of cooking oil, had the following selected transactions in a month, taxes not included: Sales Purchase of packaging materials from VAT supplies of services from VAT contractors of machinery From VAT supplier from farmers:
P880,000 88,000 33,000 220,000
Corn Coconut The VAT payable is A) P23,900 B) P52,680
140,000 160,000 C) P44,500 D) P49,400
9. The VAT on goods A) Is a selling expense of the trader B) Is imposed on goods for domestic consumption C) It is not based on net sales D) May be due even if there is no actual sales of the goods 10. value added tax is an example of A) Gradual tax B) Progressive tax
C) Proportional tax D) Regressive tax
11. Any person who, in the course of trade or business, sells, barters, exchanges, lease goods or properties, renders services, and any person who import goods shall be subject to: A) business tax C) Other percentage tax B) VAT D) Excise tax 12. Which of the following transactions is exempt from value-added-tax? A) Medical services such as dental and veterinary services render by professional B) Legal services C) Services arising from employee-employer relationship D) Services rendered by domestic air transport companies 13. Which of the following transactions is exempt from value-added-tax? A) Sales of non-food agricultural products in their original state B) Sale of non-food marine and forest products in their original state C) Sale of cotton and cotton seeds D) Sale of agricultural food products in their original state 14. Which of the following transaction is exempt from value-added-tax? A) Sale of books, newspaper and magazines B) Sale of work of art C) Sale of literary works D) Sale of musical composition 15. Which of the following transaction is subject to value-added-tax? A) Services subject to other percentage tax B) Educational services duly approved by the department of education CHED and TESDA or those operated by the government. C) Sale of coal and natural gas D) Lending activities by credit cooperatives
16. Which of the following transactions is subject to value-added-tax? A) Sale of Petroleum products, B) Sales of fertilizer, seeds including their ingredients C) Sale by agricultural contact grower D) Sale of goods services or importation, the annual gross receipts do not exceed P1,500.000 17. Which of the following transaction is subject to zero-rated value-added-tax? A) Services rendered to person engaged in international shipping or air transport operations. B) Services rendered by banks, non-bank financial intermediaries. C) Generation, transmission and distribution of electricity D) Services rendered by professional such as CPAs. Physicians and Lawyer 18. Sale of raw materials or packing materials to export-oriented enterprises is considered export sales when export sales of such enterprise A) Exceed 50% of total annual production B) Exceed 33 1/3% of total annual production C) Exceed 66 2/3% of total annual production D) Exceed 70% of total annual production 19. Which of the following transactions is subject to zero-rated value-added-tax? A) Services by regional or area headquarters of multi-national corporations. B) Sale to Philippine Economic Zone Authority. C) Sales by non-agricultural, non-electric, non-credit cooperatives. D) Importation of professional instruments and implements by settlers in the Philippines. 20. Which of the following businesses is allowed a presumptive input value-added-tax? A) Manufacturer of canned goods. B) Manufacturer of packed juices. C) Manufacturer of packed noodles D) Manufacturer of dried fish 21. 1st Statement: The input value-added-tax on purchase of capital goods valued at P 1,000,000 shall be spread over 60 months if the life of property is equivalent to 5 years or more. 2nd statement: The input value-added tax on purchase of capital goods valued at P1,000,000 shall be spread over the life of property if the life pf property is less then 5 years. E) True, true C) True, false F) False, true D) False, false
22. ERA Corporation has the following sales during the month: Sale to private entities Sale to export-oriented enterprises Sale of exempt goods
224,000.00 100,000.00 100,000.00
The following input taxes were passed on by its VAT supplier during the month: Input tax on taxable goods Input tax on zero-rated sales Input Tax on sale of exempt goods Input Tax on depreciable capital goods not attributable to any specific activity The VAT payable for the month: A) 1,000 B) 7,200
5,000.00 3,000.00 2,000.00 20,000.00
C) 9,000 D) 16,000
23. During the month of May, XYZ Corporation had domestic sales amounting to P1,680,000 and export sales amounting P1,500,000. During the same month, XYZ’s total purchases directly attributed to domestic sales amounted to P1,120,000 and total purchases directly attributable to export sales P1,008,000. For the month of May, XYZ corporation’s VAT payable: A) (48,000.00) C) 60,000.00 B) 54,000.00 D) 62,000.00 24. K imported a car from USA for her personal use. Total landed cost is P250,000, including customs duties of P50,000. VAT on importation is A) P0 C) P30,000 B) P20,000 D) P30,000 25. An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods were subjected to 10% customs duty in the amount of P12,500 and other charges in the amount of P9,500. The VAT due is A) P12,500 C) P13,364 B) P17,640 D) P14,700 26. A imported an article from USA. The invoice value of the imported article was $ 7,000 ($1 – P 50). The following were incurred in relation with the importation Insurance P15,000 Freight 10,000 Postage 5,000 Wharfage 7,000 Arrastre charges 8,000
Bokerage fee Facilitation fee
25,000 3,000
The imported article is subject to P50,000 customs duty and P30,000 excise tax. A spent P5,000 for trucking from the customs warehouse to its warehouse in Quezon City. The VAT on importation is A) P50,000 C) P50,500 B) P35,000 D) P60,000
27. Assuming that the imported article above was sold for P600,000, VAT exclusive. The Vat payable is A) P60,000 C) P9,500 D) P9,200 B) P12,000 28. The A Bakers sells cakes and pastry to well known hotels in Metro Manila area. The hotels are allowed credit based on the track record of the hotels. The sale by the store in April 2007 was P224,000, including the VAT. Seventy five 75% percent of the sales are normally on account. How much is the output tax for the month of April 2007? A) P22,000 C) P16,500 B) P20,000 D) P24,000 29. A trader, made the following sales of goods during the month of June 2008, exclusive of VAT: Cash sales P 200,000 Open Account sales 100,000 Installment Sales 100,000 Note: Receipt from installment sales 40,000 Consignment made (net of VAT): June 15, 2008 100,000 May 15, 2008 100,000 April 15, 2008 100,000 Output tax is A) P50,000 C) P60,000 B) P34,000 D) P72,000 30. A , a VAT registered person, made the following purchases during the month of January 2008 Goods for sale, inclusive of VAT P 224,000 Supplies, exclusive of VAT 20,000 Office air conditioner, total invoice amount 56,000 Home appliances for residence, gross of VAT 17,600 Repair of store, total invoice amount evidenced by Ordinary receipt of the contractor 4,400 Creditable input taxes are A) P26,400 C) P24,000
B) P29,400
D) P32,400
31. One of the following is subject to common carriers’ tax A) Owners of bancas B) Owners of animal-drawn two wheeled vehicles C) Common carriers by land for transport of goods or cargoes D) Common carriers by land for transport of passengers 32. A person whose business is to keep automobile for hire or keep them stored for use or order A) Keepers of garage B) Common Carrier C) Taxicab operators D) Tourist bus operator 33. The franchise tax grantees of radio and television broadcasting whose annual gross receipts of the preceding year do not exceed P10,000,000 shall be A) 2% of the gross receipts B) 3% of the gross receipts C) 4% of the gross receipts D) 5% of the gross receipts 34. In the third quarter of 2007, a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P1,500,000 has the following data Accounts receivable, beginning of the quarter P 50,000 Sales during the quarter 100,000 Accounts receivable, end of the quarter 75,000 Purchase of supplies, total invoice amount 11,200 The percentage tax due for the quarter is C) P7,500 A) P2,250 B) P3,000 D) P6,500 35. One of the following is not subject to the 3% percentage tax A) International air carrier doing business in the Philippines B) International shipping carrier doing business in the Philippines C) Domestic carriers and keepers of garage D) Franchise grantee of electric utilities 36. Franchise grantees of city gas and water utilities are subject to franchise tax of B) 3% C) 4% D) 5% A) 2% 37. Amounts received for overseas dispatch, message or conversations originating from the Philippines are subject to A) 3% franchise tax B) 10% overseas communication tax
C) 2% franchise tax D) 10% VAT 38. A tax on the right or privilege to enter places of amusement A) VAT B) Franchise tax C) Amusement tax D) Income tax 39. One of the following is not subject to amusement tax on gross receipts A) Disco houses B) Cockpits C) Professional basketball D) Bowling alleys 40. All of the following except one are liable to ½ of 1% stock transaction tax. Which one is not? A) Individual taxpayers, whether citizens or alien B) Corporate taxpayers, whether domestic or foreign C) Estates and trusts D) Dealers in securities 41. One of the following statements is incorrect A) The ½ of 1% tax shall be collected by the brokers who made the sale and shall be remitted within 5 banking days from the date of collection B) The tax paid on sale of shares through local stock exchange and initial public offering and secondary offering shall not be allowed deduction for income tax purposes C) The ½ of 1% tax stock transaction is a final withholding tax on income D) The ½ of 1% tax stock transaction is collected whether there is an income or loss and is a percentage tax 42. A, operates a ferryboat. During a particular quarter, its receipts consist of the following Gross receipts (without VAT) P 1,000,000 Transport of goods 1,500,000 Transport of cargoes 500,000 The common carrier’s tax payable is A) P30,000 C) P100,000 B) P90,000 D) None 43. Using the data above, the output VAT is C) P100,000 A) P360,000 B) P90,000 D) P240,000
44. A is the owner of a small variety store. His gross sales in any one year do not exceed P1,500,000. He is not vat-registered. The following data are taken from the books of the variety store for the quarter ending March 31, 2007 Merchandise inventory, December 31, 2006 P 100,000 Gross sales 450,000 Purchase from VAT-registered supplies 350,000 The percentage tax due is A) P10,000 C) P16,500 D) None B) P13,500 45. A, is a holder of franchise to sell electricity. In a particular quarter, its gross receipts amounted to P2,000,000 from sale of electricity. It has also receipts from the lease of its auditorium and theater amounting to P600,000. The percentage tax due for the quarter is A) P40,000 C) P100,000 B) P60,000 D) None 46. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow Gross receipts: Cockpit operations P500,000 Restaurant operations: Sale of foods 100,000 Sale of liquor 150,000 The amusement tax due from A is A) P90,000 C) P225,000 D) P75,000 B) P135,000 47. Using the above data, except that the restaurant is not owned by A but is owned by another person, B, not VAT registered and whose annual gross sales never exceeded P1,500,000. The amusement tax due from A is C) P225,000 A) P90,000 B) P135,000 D) P75,000 48. Continuing the preceding number, the percentage tax due from B is A) P90,000 C) P225,000 B) P135,000 D) P7,500 49. A promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate receipts amounted to P3,000,000 and additional receipts from television coverage was P2,000,000. The amusement tax due is C) P300,000 A) None B) P500,000 D) P900,000
50. Assuming that the above data is not a world championship but a Philippine national boxing championship, how much is the amusement tax? A) None C) P300,000 D) P900,000 B) P500,000
