Bustax Final Exam

Test I – Theories ( 1 point each) 1. 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. Maybe due even if there is no actual sale of goods 2. Value added tax is an example of a. Graduated tax b. Progressive tax c. Proportional tax d. Regressive tax 3. An person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to: a. Business tax b. VAT c. Other percentage tax d. Excise tax 4. Which of the following transactions are exempt from value added tax? a. Medical services such as dental and veterinary services rendered by professionals. b. Legal services. c. Services arising from employee-employer relationship. d. Services rendered by domestic air transport companies. 5. Which of the following is exempt from value added tax? a. Sale 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. 6. Which of the following are exempt from VAT? a. Sale of books, newspaper, and magazines. b. Sale of work of art. c. Sale of literary works. d. Sale musical composition. 7. Which of the following transactions is subject to VAT? a. Services subject to other percentage tax. b. Educational services duly approved by the Department of Education, CHED, TESDA or those operated by the government. c. Sale of coal and natural gas. 8. Which of the following transactions is subject to VAT? a. Sale of petroleum products. b. Sale of fertilizer, seeds including their ingredients. c. Sale by agricultural contract growers. d. Sale of goods, services, or importation, the annual gross receipts does not exceed P1,919,500. 9. Which of the following transactions is subject to zero-rated VAT? a. Services rendered to persons 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 professionals such as CPAs, Physicians and Lawyers. 10.Which of the following transactions is subject to zero-rated VAT? a. Services by regional or area headquarters of multi-national corporations. b. Sale to Philippine Economic Zone Authority. c. Sale to non-agricultural, non-electric, non-credit cooperatives. d. Importation of professional instruments and implements by settlers in the Philippines. 11.Which of the following businesses is allowed for a presumptive input VAT? a. Manufacturer of canned goods. b. Manufacturer of packed juices. c. Manufacturer of packed noodles. d. Manufacturer of dried fish. st 12.1 statement: The input VAT on purchases of capital goods valued at P1,000,000 shall be spread over 60 months if the life of the property is equivalent to 5 years or more. 2nd Statement: The input VAT on purchases of capital goods valued at P1,000,000 shall be spread over 60 months if the life of the property is equivalent to is less than 5 years. a. True, True b. False, True c. True, False d. False, False 13.A VAT-registered person whose total sales for the year did not exceed P1,919,500 is a. Exempt from VAT b. Subject to other percentage tax c. Subject to 0% VAT d. Subject to 12% VAT 14.A non-VAT registered whose total sales for the year exceeded P1,919,500 is a. Exempt from VAT b. Subject to other percentage tax c. Subject to 0% VAT d. Subject to 12% VAT 15.Export sales of a non-VAT registered person is a. Exempt from VAT b. Subject to other percentage tax c. Subject to 0% VAT d. Subject to 12% VAT 16.1st Statement: Excise tax imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as ad valorem tax. 2nd statement: Excise taxes imposed on selling price or other specified value of the goods shall be referred to as specific tax. a. True, True

b. False, True c. True, False d. False, False 17.Mr. Lash Ing 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 VAT, which of the three taxes mentioned here that pays forms part of the gross selling price? a. Excise tax b. VAT c. Percentage tax d. None of the choices. 18.One of the following is not a transaction deemed sale a. Transfer, use or consumption not in the ordinary course of business of goods or properties originally intended for sale or for use in the business. b. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT registered person or to creditors in payment of debt. c. Retirement from or cessation of business, with respect to inventories of taxable goods on the hand as of the date of such retirement or cessation. d. Consignment of goods if actual sale is made within 60 days following the date of such goods were consigned. 19.The allowable transitional input tax is a. The lower between 2% of the value of beginning inventory or actual VAT paid on such inventory. b. The higher between 2% of the value of beginning inventory or actual VAT paid on such inventory. c. Actual VAT paid on the beginning inventory. d. 2% of the value of beginning inventory. 20.Which of the following input taxes can be refunded, converted into tax credit certificates or carried over the next quarter at the option of the VAT registered person a. Input tax on purchases of raw materials. b. Input tax on importation of supplies. c. Input tax on zero-rated sales of goods or services. d. None of the choices. 21.Monthly VAT declaration is filed on or before the a. 10th day from the end of each month b. 20th day from the end of each month c. 25th day from the end of each month d. 30th day from the end of each month 22.Quarterly VAT return shall be filed on or before the a. 10th day from the end of each quarter b. 20th day from the end of each quarter c. 15th day from the end of each quarter d. 25th day from the end of each quarter 23.One of the following statement if not correct

a. Imported goods which are subject to excise tax are no longer subject to VAT. b. VAT on importation is paid to the Bureau of Customs before the imported goods are released from its custody. c. Expenses incurred after the goods are released from Customs custody are disregarded in computing the VAT on importation. d. None of the choices. 24.The following statements are not correct, except a. Zero-rated sales are exempt from the VAT. b. A person whose sales or receipts do not exceed P250,000 is exempt from VAT and OPT. c. A person who issued a VAT invoice on a VAT exempt transaction in nevertheless subject to VAT on the said transactions. d. Entities which are exempt from income tax are also exempt from VAT. 25.Which of the following importation is subject to VAT? a. Importation of frozen meat b. Importation of bamboo poles c. Importation of apples d. Importation of grapes 26.One of the following is subject to common carrier’s tax a. Owners of banca 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 27.Franchise tax of grantees of radio and television broadcasting whose annual gross receipts of the preceding year do not exceed P10,000,000 shall be a. 2% b. 3% c. 4% d. 5% 28.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. 29.Amount received for overseas dispatch, message or conversations originating from the Philippines are subject to the tax rate of a. 3% b. 5% c. 10% d. 12% 30.One of the following is not subject to amusement tax on gross receipts a. Disco houses b. Cockpits c. Professional basketball d. Bowling alleys 31.All of the following are liable to ½ of 1% stock transaction tax, except a. Individual taxpayers, whether citizen or alien

b. Corporate taxpayers, whether citizens or alien c. Estates and trust d. Dealers in securities 32.It refers to a mode of transferring and acquiring properties left by the decedent. a. Estate transfer b. Succession c. Donation d. Execution of a will 33.The estate tax accrues from the moment of a. The fixing of notice of death b. Expiration of a months after death c. The death of the decedent d. The filing of estate tax return 34.The gift tax paid on a donation mortis causa, if any a. Exempts the property from estate tax b. Has no effect since the gift will still be subject to another gift tax c. Shall form as a tax credit to be deducted from the estate tax due d. Is invalid and the tax will not be credited at all 35.All of the following are considered intangible personal properties situated in the Philippines, except a. Franchise which must be exercised in the Philippines b. Shares, obligations or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with it laws c. Shares, obligations or bonds issued by any foreign corporation doing business in the Philippines d. Shares or rights in any partnership, business or industry established in the Philippines 36.Which of the following is false about vanishing deduction a. It pertains to a property presently found in the gross estate. b. The property must be previously subjected to a transfer tax or income tax. c. The property was received by the decedent within 5 years prior to his death. d. The property must be located in the Philippines. 37.Which of the following statements is incorrect about claims against insolvent persons? a. They must be included in the gross estate even if uncollectible. b. They must be duly notarized. c. The deduction is only the uncollectible portion. d. The insolvency of the debtor must be established. 38.The taxpayer in estate tax is a. The decedent b. The deceased person’s estate c. Heirs of successors d. The administrator or executor

39.1st statement: Mr. A died giving B power to appoint a person who will inherit Mr. A’s house and lot. B however can only choose among C, D, E and F. B decided to transfer the property to C, in B’s. The transfer from B to C is subject to estate tax. 2nd statement: During Mr. A’s lifetime, he decided to give to B as gift his (A) car subject to the condition that if B does not become a CPA within three years. A shall revoke the transfer. In the second year however, A died. The car can no longer form part of A’s gross estate. a. True, True b. True, False c. False, True d. False, False 40.A privilege tax imposed on onerous transfer inter vivos a. Gift tax b. Estate tax c. Donor’s tax d. Income tax 41.Donor’s tax as distinguished from estate tax in all cases: 1st distinction: The rates of donor’s tax are lower than those of the estate tax. 2nd distinction: in donor’s tax, the exemption is P100,000 while estate tax is P200,000. a. Only 1st is true b. Only 2nd is true c. Both are true d. Both are false 42.1st statement: Gifts in favor of an educational or religious organization are exempt from donor’s tax. 2nd statement: Transfers to educational or religious organization are exempt from income tax. a. True, True b. True, False c. False, True d. False, False 43.All of the following statements are correct, except a. Contracts of donation between husband and wife are void in all cases. b. The donation in writing of a real property is void. c. Donations between persons guilty of adultery or concubinage are void. d. Donations to conceived or unborn children are valid. st 44.1 statement: A person can donate all his present property unconditionally. 2nd statement: No person may receive or give by way of donation more than he may give or receive. a. True, True b. True, False c. False, True d. False, False 45.1st statement: The renunciation of one’s share in the legitime is a taxable gift.

2nd statement: The donor’s tax return is filed within 6 months from the date of donation. a. True, True b. True, False c. False, True d. False, False 46.The following statements are not correct, except a. The exercise of taxation power by the local government is not provided in the Constitution. b. The power of taxation of the local government units is not subject to constitutional limitations. c. The local government tax ordinances enacted shall be approved and signed by the local chief executive concerned. d. Cities have the broadest local taxation power. 47.Which of the following are not liable to community tax? a. Domestic corporation doing business in and outside the Philippines. b. Foreign corporation doing business in the Philippines. c. Individual doing business in the Philippines. d. Individuals permanently residing and working abroad. 48.Which of the following statements is not correct? a. Real property shall be appraised at its current and fair market value. b. Real property shall be classified for assessment purposes on the basis of its actual use. c. The appraisal, assessment and levy of real property tax shall not be let to any private person. d. The real property tax rate should be applied to the present market value. 49.The following properties are exempt from documentary stamp tax, except a. Certificate of oaths administered to any government official in his official capacity. b. Certificates of acknowledgement by any government official in the performance of his official duties. c. Affidavits of poor persons for the purpose of proving poverty. d. Ordinary bill of sale of personal property and sales of real property with a consideration that does not exceed P500. 50.The tax return for documentary stamp tax shall be filed a. Within 10 days after the close of the month when the taxable document was made. b. Within 15 days after the close of the month when the taxable document was made. c. Within 20 days after the close of the month when the taxable document was made. d. Within 25 days after the close of the month when the taxable document was made. Test II – Problems (2 pts each) 51.Hope Company, a VAT registered, has the following vat sales for the month:

Sale to private Sale to export-oriented enterprise Sale of exempt good

224,000 100,000 100,000

The following input taxes were passed on by its vat suppliers 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 good not attributable to any specific activity

5,000 3,000 2,000 20,000

The VAT payable for the month: a. P1,000 b. P7,200 c. P9,000 d. P16,000 52.During the month of May, Courage Company, a VAT registered company, had domestic invoice price sales amounting to P1,680,000 and export sales amounting to P1,500,000. During the same month, Courage Company had total invoice price purchases of P1,120,000 attributable to domestic sales and P1,008,000 attributable to export sales. For the month of May, what is the VAT payable? a. P(48,000) b. P54,000 c. P60,000 d. P62,000 53.Which of the following lessors of residential units is/are subject to VAT? A B C D No. OF UNITS 20 15 10 10 MONTHLY RENT 10,000 12,800 14,000 16,000 a. B and D b. C and D c. B, C, and D d. D only 54.Faith Company imported and article from USA. The invoice value of the imported article was $7,000 ($1:50). The following were incurred in the relation with the importation: Insurance – P15,000; Freight – P10,000; Postage – P5,000; Wharfage – P7,000; Arrastre charges – 8,000; Brokerage fee – P25,000; Facilitation – P3,000. The imported article is subject to P50,000 excise tax and P30,000 custom duties. Faith Company spent P5,000 for trucking from the customs to its warehouse in Angeles, Pampanga. The VAT on importation is: a. P60,000 b. P50,500 c. P50,000

d. P35,000 55.Assuming the above article was sold for a sales price of P600,000. What is the VAT payable? a. P37,000 b. P22,000 c. P12,000 d. P9,500 56.Confidence Company, trader company, made the following sales of goods during the month of June 2013, net of VAT: Cash sales Open account sales Installment sales (P40,000 cash were already received)

P200,00 100,000 100,000

Consignment made during the year: June 15, 2013 100,000 May 15, 2013 100,000 April 15, 2013 100,000 What is the output tax for June? a. P34,000 b. P50,000 c. P60,000 d. P72,000 57.The following are the data of Accomplishment Company for the last quarter of 2013: Sales up to December 15, invoice price 336,000 Purchases up to December 15, net of vat 215,000 Additional information: On December 16, 2008, Accomplishment Company retired from its business and the inventory valued at P190,000 was taken and transferred to Brilliant Company. There is a deferred tax from the third quarter of P3,500. How much is the total VAT due and payable by Accomplishment Company in its operations in the last quarter and its retirement from business? a. P10,200 b. P22,800 c. P29,500 d. P32,800 58.Assuming that Brilliant Company has the following data for the first quarter of 2014: Sales, total invoice price Purchases, total invoice price How much is the VAT payable of Brilliant Company for the first quarter of 2014? a. P30,000 b. P28,000 c. P24,000

448,000 224,000

d. P1,200 59.Delighted Company, a building contractor, showed you the following data: Contract price, net of vat Cash received, gross vat Receivables, gross vat Advances from other contracts still unearned, net of vat Payments, vat excluded For materials, net of vat For supplies, net of vat For operating expenses, net of vat For service of sub-contracts, gross vat

5,000,00 0 2,240,00 0 3,000,00 0 1,000,00 0 500,000 100,000 200,000 1,680,00 0

The VAT payable is a. P12,000 b. P108,000 c. P348,000 d. P669,430 60.Grateful Company, a sugar refining company, had the following data for the year: Sales of refined sugar, net of VAT

P2,000,00 0 500,000 784,000 112,000

Purchases from farmers of sugar cane Purchases of packaging materials, gross of VAT Purchases of labels, gross of VAT What is VAT payable? a. P124,000 b. P112,500 c. P70,000 d. P62,000 61.Thankful Company operates a ferryboat. During a particular quarter, its receipts consist of the following: Gross receipts, gross of vat Transport of passengers Transport of goods Transport of cargoes The common carrier’s tax payable is a. P30,000 b. P90,000 c. P100,000 d. None of the choices. 62.Using the preceding number, what is the output tax?

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

a. P360,000 b. P240,000 c. P100,000 d. None of the choices. 63.Appreciated Company operates a cockpit and also operates a restaurant inside the cockpit arena. The following data are for the quarter of 2013: Cockpit operations P500,000 Restaurant operations Sale of goods 100,000 Sale of liquor 150,000 The amusement tax due from Appreciated Company is a. P75,000 b. P90,000 c. P135,000 d. P225,000 64.Using the preceding number, assuming that the said restaurant is not owned by Appreciated Company but by Blissful Company. Blissful Company is not a VAT registered company and annual gross never exceeded P1,919,500. The amusement tax due from Appreciated is a. P75,000 b. P90,000 c. P135,000 d. P225,000 65.A domestic Corporation paid P40,000 stock transaction tax on IPO (Initial Public Offering) of 500,000 shares. After the IPO, there were 800,000 shares outstanding. The selling price of IPO per share was a. P10 b. P8 c. P4 d. P2 66.In the third quarter of 2013, a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P1,919,500 has the following data: Account receivable, beginning of the quarter P50,000 Sales during the quarter 100,000 Accounts receivable, end of the quarter 75,000 Purchases of supplies, total invoice price 11,200 What is the percentage tax due? a. P2,250 b. P3,000 c. P6,500 d. P7,500 67.Mr. and Mrs. Natuto donated the following community properties to their children on May 30, 2013: Amount 125,000

Donee Dean

For graduating Magna Cum Laude in Systems Plus

Quito Virgen Cath

College Foundation of Angeles City, Pampanga. 200,000 On account of marriage celebrated on April 30, 2012. ? For placing 10th place in the recent October 2012 board exam. If the donor’s tax payable by Mr. Natuto is P10,500, the amount of the donation given by the spouse to Cath is (Assuming that the tax rate on donation over P200,000 is P2,000 + 4% of the excess) a. P250,000 b. P490,000 c. P500,000 d. Cannot be determined. 68.The following properties at fair value relate to Imba Ko on November 1, 2013, the date of his death: Gross estate P14,000,000 Land acquired from his late father 3 ½ years ago with market 300,000 value of P200,000 at the time of transfer. Funeral expenses 35,000 Judicial expenses 15,000 Unpaid taxes 10,000 Unpaid mortgage from the land acquired from his father (60% 40,000 is paid by Imba Ko) Losses 25,000 Transfer for public use 35,000 Medical expenses 45,000 Assuming Imba Ko was under conjugal partnership of gains, the total ordinary deductions from exclusive property is a. P49,600 b. P89,600 c. P124,600 d. None of the choices. 69.Dina Buhay, married, leaving the following properties: Real properties (excluding family home) P3,000,000 Family home (P400,000 is exclusive property) 1,400,000 Other real properties, exclusive to the decedent 2,000,000 Funeral expenses 275,000 Medical expenses 650,000 Taxes and losses 1,300,000 What is the net estate? a. P2,450,000 b. P2,250,000 c. P1,250,000 d. P1,150,000 70.Nao Ded, died on July 5, 2013 leaving the following data on deducitions: Unpaid 2012 real property taxes Unpaid 2013 real property taxes

40,000 40,000

Income tax on income up to the date of death 35,000 Losses from the fire that occurred on July 3, 2013 (60% is 800,000 compensated by insurance) Casualty loss on September 2013 450,000 Building destroyed by earthquake on February 2013 1,300,000 Based on the given information, what is the deduction from gross estate? a. P1,365,000 b. P845,000 c. P565,000 d. P525,000