Quiz 4_VAT

Saint Paul School of Business and Law Campetic Road, Palo, Leyte

Accounting 17 – TAXATION Quiz 4 1. Which of the following shall be subject to Value- Added Tax? a. Any person who, in the course of his trade or business, sells, barters, exchanges or leases goods or properties b. Any person who, in the course of his trade or business renders service c. Any person who imports goods d. All of the choices 2. In the case of importation of taxable goods, who shall be liable to VAT? a. Importer, whether an individual or corporation and whether or not made in the course of his trade or business b. Importer if made in the course of trade or business only c. Importer if corporation and only when made in the course of trade or business d. None of the choices 3. One of the following is not a major business internal revenue tax in the Tax Code. a. VAT c. Income tax b. Excise tax d. Percentage tax 4. The account title to best reflect the VAT on a purchase: a. Sales tax payable c. Input tax b. VAT payable d. Output tax 5. Georgia Baby is an operator of parking lots. What business tax is due on his income from the business? a. Broker’s tax c. Common carrier’s tax b. Caterer’s tax d. Value-added tax 6. First statement: For VAT purposes, a taxable person is any person liable to pay the VAT, whether registered or registrable in accordance with the Tax Code Second statement: The status of a “VAT-registered person” as a VAT-registered person shall not continue until cancellation of such registration. a. Both statements are correct b. Both statements are incorrect c. Only the first statement is correct d. Only the second statement is correct 7. Who shall be statutorily liable to pay for the tax on sale of goods or properties and sale of services and lease of properties? a. Buyer c. Consumer b. Seller d. None of the choices 8. Value- added tax is: a. A specific tax b. an indirect tax

c. A local tax d. privilege tax

9. Which of the following shall not be included in the term “goods or properties”? a. Real properties not held primarily for sale to customers or not held for lease in the ordinary course of trade or business. b. The right or privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right. c. The right or the privilege to use any industrial, commercial or scientific equipment d. The right or the privilege to use motion picture film, films, tapes and discs Page 1 of 6

10.Which of the following shall be subject to VAT? a. Sale of a residential house and lot b. Sale of an apartment house c. Sale of a private car by its owner d. all of the above 11.Three (3) of the following are exempt from the value-added tax. Which is the exception? a. Sales or importation of medical, dental and veterinary medicines b. Services rendered by persons subject to percentage tax c. Receipts from leasing of personal properties d. Export sales by persons who are not VAT registered 12.Mr. Lee Pong is a manufacturer of fermented liquors. In making sales, all taxes on the products and transactions are passed on to the buyers. For purposes of the valueadded tax, which of the three taxes mentioned here that he pays forms part of the gross selling price? a. Excise tax c. Percentage tax b. VAT d. None of the above 13.Mr. B is a dealer of liquors. On his sales in the Philippines, his tax is: a. Excise tax c. Percentage tax b. VAT d. None of the above 14.Sale of real property, the initial payments of which exceed twenty-five percent (25%) of the gross selling price in the year of sale. a. Sale of real property by a real estate dealer on a deferred payment basis, not on instalment b. Sale of real property on instalment plan c. Initial payment d. None of the choices 15.Which of the following is not subject to value-added tax? a. Transmission of property to a trustee if the property is to be merely held in trust for the trustor and/or beneficiary b. Property transferred is one for sale, lease or use in the ordinary course of trade or business and the transfer constitutes a completed gift c. A zero-rated sale of goods or properties by a VAT registered person d. None of the choices 16.In which of the following cases shall the selling price be deemed inclusive of VAT? I. If the gross selling price is based on the zonal value or market value of the property II. If the VAT is not billed separately a. I only b. II only

c. Both I and II d. Neither I nor II

17.Which of the following statements is incorrect? a. A zero-rated sale of goods or properties (by a VAT-registered person) is a taxable transaction for VAT purposes, but shall not result in any output tax b. The input tax on purchase of goods, properties or services, related to zerorated sales, shall be available as tax credit only in accordance with the Regulations. c. The input tax on purchases of goods, properties or services, related to such zero-rated sale, shall be available as tax credit or refund in accordance with the Regulations. d. Any enterprise whose export sales exceeds 70% of the total annual production of the preceding taxable year shall be considered an export-oriented enterprise. 18.Statement 1: A person subject to excise tax is also subject to value-added tax; Page 2 of 6

Statement 2: A person subject to percentage tax is also subject to value-added tax. a. Both statements are correct b. Both statements are correct c. The first statement is correct but the second statement is wrong d. The first statement is wrong but the second statement is correct 19.Which of the following is not a sale and therefore is not subject to the VAT? a. Transfer, use or consumption not in the ordinary course of business of goods or properties ordinarily intended for sale or use in the course of business. b. Distribution or transfer to shareholders or investors of shares in the profits of a VAT registered person c. Distribution or transfer to creditors in payment of debt; d. Consignment sales 20.Under the VAT law, which of the following sales may not be zero-rated? a. Export sales b. Foreign currency denominated sales c. Sale of goods to the Asian Development Bank d. Sale of goods to an export-oriented enterprise 21.Which of the following statements is wrong? The VAT is: a. not an expense b. a tax credit c. not a part of the gross selling price d. on purchases, is a part of the cost of inventory 22.Which of the following shall be considered “deemed sale” a. Distribution or transfer to shareholders or investors share in the profits of VAT registered person b. Distribution or transfer to creditors in payment of debt or obligation c. Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned d. All of the choices 23.For deemed sale transactions, other than retirement or cessation of business, the output tax shall be based on the: a. selling price of the goods deemed sold as of the time of the occurrence of the transactions b. market value of the goods deemed sold as of the time of the occurrence of the transactions c. acquisition cost of the goods deemed sold d. acquisition cost or the current market price of the goods whichever is lower 24.Which one is not included in the tax base of VAT on importation? a. value used by BOC in determining tariff and customs duties b. customs duties c. excise tax d. other charges after the release of imported goods from BOC 25.Ms. Consuelo Dimagulo receives a package of goods from her sister who lives in California, USA. Ms. Consuelo will use the goods for personal purposes. She is not VAT-registered. Which of the following statements is correct in connection with the receipt of a package? a. Ms. Consuelo shall be subject to VAT on importation b. Ms. Consuelo shall not be subject to VAT on importation because she is not VAT-registered c. Ms. Consuelo shall not be subject to VAT on importation but shall be subject to VAT on sales d. None of the choices 26.Bigay Gabay, Inc. enjoys tax exemption for its importations. During a particular month, it imported goods from Japan. After the release from customs custody, Bigay Page 3 of 6

Gabay, Inc. transferred the imported goods to Todo Bigay Trading, a VAT registered entity. For VAT pruposes, the VAT on importation shall be paid by: a. both Bigay Gabay, Inc. and Todo Bigay Trading b. neither Bigay Gabay, Inc, nor Todo Bigay Trading c. Bigay Gabay only d. Todo Bigay only 27.Statement 1: In the books of accounts of a VAT-registered taxpayer, purchases are recorded net of input taxes Statement 2: In the books of accounts of a VAT-registered taxpayer, sales are recorded net of output taxes. a. Both statements are correct b. Both statements are correct c. The first statement is correct but the second statement is wrong d. The first statement is wrong but the second statement is correct 28.One of the following statements is wrong. Identify. For a taxpayer who becomes liable for the first time to the VAT: a. There can be an input tax on purchases he made when not yet a VAT taxpayer b. He must use a VAT invoice on the sale of the goods purchased when not yet a VAT taxpayer c. He must still use the Non-VAT invoice in use when he was not yet a VAT taxpayer on the sale of goods on hand on the transition date d. There will be an adjustment on the inventory valuation on the transition date 29.Which is correct? The inventory balance in the financial statements at any given date of a VAT-registered person is: a. Balance, net of input taxes b. Balance, inclusive of input taxes c. Balance on which the transitional input tax is computed annually d. Balance where the value-added tax thereon may be calculated by multiplying it by 12% 30.Which statement is incorrect? VAT on importation of goods: a. is imposed on an importation for sale or for use in business b. is imposed on an importation for personal use c. shall be paid prior to removal from customs custody d. may not be available as input tax 31.Gaby, a Japanese residing in the Philippines, bought garments from ABC Corp, a domestic corporation, and exported the same to Japan. Total value of exports is P100,000. VAT (output tax) due on the transactions is: a. P10,000 c. None, because 0% applies b. P5,000 d. None, because the sale is exempt from VAT 32.All amounts given are VAT not included: A, Non-VAT taxpayer, sells to B, VAT taxpayer B, VAT taxpayer, sells to C, VAT taxpayer C, VAT taxpayer, sells to D, VAT taxpayer, an exporter 150,000 D, VAT taxpayer, exports The value added tax of B: a. payable of P10,000 b. payable of P9,200

P60,000 90,000 300,000

c. payable of P10,800 d. payable of P7,200

33.Which of the following non-life insurance companies shall not be subject to VAT? a. crop insurance companies c. fidelity companies b. surety companies d. bonding companies 34.Which of the following milling jobs shall not be exempt from VAT? a. palay into rice b. corn into corn grits Page 4 of 6

c. wheat into flour d. sugar cane into raw sugar 35.Which of the following is not subject to VAT? a. Non-life reinsurance premiums b. Insurance and reinsurance commissions, whether life or non-life c. Life insurance premiums d. Reinsurance premiums 36.A VAT subject real estate dealer sold a residential lot on January 15, 2007. The following information was made available on the terms of the sale: Gross selling price P3,000,000 Initial payments on January 15, 2007 (consisting of down payment and instalment in the year of sale) 900,000 Balance to be paid in equal instalment, instalments starting February 15, 2007 2,100,000 The zonal value of the residual lot was P2,800,000 How much was the output tax on January 15 2007 using 12% VAT rate? a. P360,000 c. P108,000 b. P300,000 d. None 37.Using the data in the preceding number, how much was the output tax on February 15, 2007 using 12% VAT rate? a. P360,000 c. P108,000 b. P300,000 d. None 38.JP Corporation is a merchandising concern and has an inventory of goods for sale amounting to P1,000,000. Ria Corporation, a real estate developer, exchanged its real estate properties for shares of JP Corporation resulting to the acquisition of corporate control. How much was the output tax using 12% VAT rate? a. P120,000 c. P80,000 b. P100,000 d. None 39.Using the same data in the preceding number, how much was the output VAT on the exchange of real properties held for sale for shares of stock using 12% VAT rate? a. P120,000 c. P80,000 b. P100,000 d. None 40.The following information taken from the books of a VAT registered enterprise was provided to you: Domestic sales of goods P3,000,000 Sales of packaging materials to an export-oriented enterprise whose export sales exceeds 70% of the total annual production 2,000,000 Local sales of goods to Asian Development Bank 500,000 Consignment of goods (not returned within 60 days following the date of consignment) 200,000 Goods transferred for the personal use of the owner 100,000 How much was the total taxable sales? a. P3,000,000 b. P3,300,000

c. P3,800,000 d. P5,800,000

41.using the same data in the preceding number, how much was the output tax using 12% VAT rate? a. P360,000 c. P456,000 b. P396,000 d. P696,000 42.Serap Products is a processor of refined sugar. It purchases sugarcane from farmers for processing into intermediate stages until it becomes refined sugar. In a month it had the following sales and purchases, no tax include: Page 5 of 6

Sales Purchases of sugarcane Purchases of containers and paper labels The value-added tax payable is: a. P66,000 b. P88,000

P880,000 220,000 100,000 c. P74,700 d. P84,800

43.Mr. C is a VAT registered person, with the following data for a taxable month, VAT not included: Sales, domestic, to consumers – P600,000; Sales, direct exports – P300,000; Purchases, total invoice cost, from VAT registered persons: Of goods of P550,000 and of services of P330,000.The services subject to the value added tax is: a. P600,000 c. P300,000 b. P400,000 d. P900,000 44.Mr. Abnoy, a VAT taxpayer, on August 1, 2011, made the following purchases from VAT sellers, for use in his business. The amounts stated not including VAT: Machine 1, with a useful life of 19 years P3,000,000 Machine 2, with a useful life of 3 years 1,800,000 Patent, with usefulness of 2 years 600,000 The input tax from the purchases, available to Mr. Abnoy, for the month of August 2011: a. P84,000 c. P51,000 b. P15,000 d. P62,000 45.Puss , VAT registered, made the following purchases during the month of January , 2007: Goods for sale, inclusive of VAT P246,400 Supplies, exclusive of VAT 20,000 Office air-conditioner, total invoice price (estimated life is 3 years) 56,000 Home appliance for residence, gross of VAT 17,920 Service for store repair, contractor not VAT registered, total invoice amount 33,000 Service for repainting of store, total invoice amount evidenced by ordinary receipt issued by contractor 4,480 How much was the total allowable input taxes of Puss for the month using 12% VAT rate? a. P38,688 c. P34,800 b. P35,337.60 d. P34,542.86

Page 6 of 6