Vat

Vat Exercises 1. A tax on business is a. Direct tax c. Property tax b. Indirect tax d. None of the above 2. One of the following is not a major business internal revenue taxes in the tax code a. Value added tax c. Income tax b. Excise tax d. Percentage tax 3. Value added tax is a (an) a. Indirect tax c. Progressive tax b. Direct tax d. Regressive tax 4. In value added taxation, this is not a requirement for taxability of service? a. In the course of business b. Performed within or outside the Philippines c. Consideration received actually or constructively d. Supply of service is not exempt from VAT 5. Charlene is an operator of parking lots. What business tax is due on his income tax from the business? a. Broker’s tax c. Common carrier’s tax b. Caterer’s tax d. Value added tax 6. Mr. F is a lessor of real property and personal property (cars). The tax that he pays is a. Excise tax c. Percentage tax b. Value added tax d. None of the above 7. Mr. S Magler imported cigarettes from the United States for sale in the Philippines. What business taxes in the Philippines are due? a. VAT, excise tax, other percentage tax b. VAT and excise tax c. Other percentage tax and excise tax d. VAT and percentage taxWhich of the following is not exempt from VAT a. Importation in their original state of agricultural and marine food products b. Importation of passenger or cargo vessel more than 5,000 tons to be used by the importer himself as operator thereof; c. Importation of personal and household effect belonging to residents of the Philippines returning from abroad; d. Importation of non-food agricultural products in their original state by a primary producer. 8. One of the following transactions by a VAT registered person does not result to output vAT a. Cash sales c. Sales and leaseback b. Sales on account d. Export sales Computation of VAT payable 9. Tsukuba Company, a VAT registered business, had the following data during the quarter; Export sales 1,815,0 00 Domestic sales (tax included) 1,232,0 00 Purchases of goods for export 672,00 0 Purchases of goods for domestic sales 323,12 0 Purchases of supplies on domestic sales, 124,85 exclusive of tax 0 Assuming that the input taxes paid on purchases of goods for export are claimed as tax credit, the VAT payable by Tsukuba Company is a. 12,895 c. 177,895 b. 10,398 d. 84,895 10.In question no. 14, assuming that the input taxes attributable to export sales are being claimed as refund, the amount refundable is a. 72,000 c. 84,895 b. 12,895 d. Zero 11.Joey, a non VAT taxpayer, purchased merchandise worth 11,200, VAT inclusive, from Willie, a VAT registered seller. The passed on VAT of 1,200 on the purchase is a. An expense c. A tax credit b. Part of the cost of purchase d. Ignored

12.Altura sold goods at an invoice value of 123,200 to Beltran on account. Beltran sold the same goods to Cantoria for 143,000 (exclusive of tax) cash. All of them are VAT registered taxpayers. The accounting entry to record the sales in the books of Beltran is a. Cash 160,160 Sales 143,000 Output Tax (143,000 x 12%) 17,160 b. Cash 143,000 Sales 143,000 c. Cash 160,160 Sales 160,160 d. Cash 143,000 Sales 125,840 Output Tax 17,160 13.The journal entry in the purchase books of Beltran in No. 17 is a. Purchases 110,000 Input Tax (123,200 x 3/28) 13,200 Accounts Payable 123,200 b. Purchases 96,800 Accounts Payable 96,800 c. Purchases 83,600 Input tax 13,200 Accounts Payable 96,800 d. Purchases 110,000 Accounts Payable 110,000 14.In question no. 17, assuming that Cantoria is not subject to VAT. In the sale of the goods by Beltran to Cantoriaa. Beltran should record debit Cash 125,840 b. Beltran should record debit Cash of 143,000 in his books. c. Cantoria should debit purchases of 125,840 and a debit Input tax of 17,160 d. Cantoria should debit Purchases of 143,000 15.Statement 1: in case tax exempt products are sold domestically to a VAT registered person, the VAT otherwise due on such product shall be considered as Input Tax creditable against his output tax payable Statement 2: export sales by a VAT registered person are subject to zero-rating and so he can claim and enjoy a crdit for the tax invoiced to him on his purchases. If he is not VAT registered, his export sales are exempt, but he is not entitled to tax credit for inputs. a. Both statements are true c. Both statements are false b. False, true d. True, false Number 21-23 are based on the following info: Transaction 1- an agricultural food producer sells his products in their original state to a food processor who also buys packaging materials and containers from a manufacturer/ supplier Transaction 2- the food processor transforms the food products into processed foods and sells to a wholesaler/ exporter Transaction 3- the exporter sells the goods to foreign buyers. Transaction 4- the wholesaler delivers the merchandise to retailers Transaction 5-the retailers sell the goods to households or ultimate consumers 16.Based on the information above, which transaction is VAT exempt? a. Transaction 1 c. Transaction 3 b. Transaction 2 d. Transaction 4 17.Which transaction is zero rated? a. Transaction 1 c. Transaction 3 b. Transaction 2 d. Transaction 4 18.Based on the information above, the Vat are absorbed by a. Food processor c. Retailer b. Wholesaler/exporter d. Households/ ultimate consumer 19.Buboy a government employee, ate in one fast food chain in Dipolog City. He was issued the following receipt; Greenwich-Dipolog City Branch (0369) Rizal Ave. Cor Lacaya St., Dipolog City TIN # 000-333-143-879 VAT

POSO1 SN: 455686 BIR Permit No: 1776-897-67543-455 Serving # 01 ------------------------------------------------------------------------------10/27/2007 16:23 APP OR # 564567878 ------------------------------------------------------------------------------1 SOLO SPE ML 83.00 1 XCHANGE –LRG CK 12.00 I item (s) VATable VAT-exempt 12 % VAT TOTAL DUE CASH CHANGE DUE This serves as your OFFICIAL RECEIPT.

93.00 83.04 0.00 9.06 93.00 500.00 407.00

Based on the receipt issued above a. The amount of 83.04 represents the input tax of the fastfood chain b. The input tax deductible from the output tax of Buboy is 9.96 c. The total invoice price of 93 is inclusive of the 12% VAT d. Buboy has been subjected to VAT twice; first on th 93 and second, on the 9.96 Number 25-26 are based on the ff. info; 20.The pastry shop sells cakes and pastry items to well-known hotels around the Metro Manila area. The hotels are allowed credit based on the track record of the hotels. The total amounts received or receivable from sales by the Pastry shop in the 2 nd quarter of 2008 were 224,000, including the value added tax. Seventy five percent of the sales are normally on account. How much is the value added tax on the sales for the 2 nd quarter of 2008? a. 20,000 c. 26,880 b. 24,000 d. 15,000 21.The account title to best reflect the value added tax in the preceding number is a. Sales tax payable c. Input tax b. Value added tax payable d. Output tax 22.Cruz, a trader, made the following transactions of goods, exclusive of VAT, during the second quarter: Cash Sales 200,0 00 Open account sales 100,0 00 Consigned goods April 100,0 delivered: 15 00 May 100,0 15 00 June 100,0 15 00 The output tax for the second quarter isa. 40,000 b. 48,000

c. 60,000 d. 36,000

28-30 Mongolia Company, a VAT registered business has the following data in its books on July, 2008: Domestic 709,50 Sales 0 Sales returns 26,400 Goods shipped on consignment (net of tax): Units Unit Price July 5 25 22,000

June 5 May 5

20 12

22,000 22,000

Goods withdrawn for use by the company Goods taken as payment to creditor Freight and Insurance of goods Purchases: Raw Materials Supplies Capital goods Salaries of employees

38,50 0 26,95 0 4,675 484,0 00 61,60 0 60,50 0 235,0 00

During the month, one consignee remitted cash net of 20% commission representing the payment for five units delivered on June 5. Another consignee remitted cash of 220,000, gross of 20 % commission, representing payment for 10 units sold in July. Other than the commission, Mongolia Company gave 5 % discount/rebate to the consignee for selling ten units in a one month period. 23.The output tax in July is a. 124,450 b. 121,050 24.The input tax is a. 61,078 b. 73,293 25.The amount of VAT payable is a. 87,813 b. 69,350

c. 161,106 d. 134,255 c. 65,440 d. none of the above c. 66,525 d. 78,404.46

26.A creditable input tax allowed on one who becomes subject to VAT for the first time a. Presumptive input tax c. excess input tax b. transactional input tax d. total input tax 27.Isaac Company, a newly VAT registered business, has the following data in January (all amounts are inclusive of tax). Merchandise inventory

204,0 00 Actual VAT paid on the 16,00 inventory 0 Sales, total invoice 469,0 amount 00 Purchases 57,40 0 Fifty percent (50%) of the merchandise inventory on Jnauary 1 were purchased from nonVAT registered sellers. The VAT payable by Isaac Company is a. 30,100 c. 3,960 b. 28,100 d. 4,950 28.An owner of heavy equipment is engaged in equipment rental. It used to be VAT exempt because its annual receipts never exceeded 1,500,000. On January 2, 2008 it decided to register under the VAT system. The following data were from the first quarter ending March 31, 2008. Rental from heavy equipment of 12% VAT Purchases of supplies (February) gross of VAT Inventory of supplies:

336,0 00 112,0 00

Subject to VAT Jan 1, 2008 Not subject to VAT VAT paid on the inventory of supplies, Jan 1, 2008

50,40 0 60,00 0 5,400

The VAT payable for the quarter ending March 2008 isa. 12,171 c. 18,600 b. 33,792 d. 22,992 29.Statement 1: Transport of passengers and cargo by domestic air or sea vessels from the Philippines to a foreign country is subject to VAT at a rate of 0 %. Statement 2: transport of passengers and cargo by domestic air or sea vessels from Mindanao to Luzon and Visayas, vice versa, is subject to VAT at a rate of 12%. a. true, false c. false, false b. false, true d. true, true 30.Beth had the following receipts during the month (exclusive of tax): passen Cargo ger Jeepney 1 20,000 Jeepney 2 30,000 Bus 15,000 8,500 Sea vessel 1,500,0 800,0 00 00 Cessna plane for 800,00 560,0 hire 0 00 The output tax during the period is a. 164,220 c. 283,800 b. 441,000 d. 440,220 31.Inside Job Security Agency is engaged in the selling of security services to various clients. During the month of December, it billed on of its clients of the following Monthly salary 6,00 0 13 th month 6,00 pay 0 Agency fee at 1,80 15 % 0 SSS/Philhealth 300 Leave with pay 450 Total 14,5 50 Based on the following data, how much is the Output VAT payable of Inside Job Security Agency a. 1,746.00 c. 1,440.00 b. 1,558.93 d. 1,478.57 32.Bonnevie is a real estate dealer. During the month of November 2008, he sold three (3) lots under the following terms: Lot 1 Lot 2 Lot 3 Selling price 250,0 200,0 300,0 00 00 00 Cost 150,0 130,0 175,0 00 00 00 Gain/loss 100,0 70,00 125,0 00 0 00 Terms: Downpayment, 25,00 50,00 40,00 Nov 5 0 0 0 DueDec 5 25,00 20,00 20,00 0 0 0 Jan to Dec 2009 200,0 130,0 240,0 00 00 00 All amounts indicated above do not include the tax.

The VAT in November is a. 26,500 c. 34,800 b. 31,800 d. 90,000 33.Based on the information given in no. 37, the VAT for the month of December is a. 5,400 c. 10,000 b. 4,500 d. None 34.Dimagiba Construction Company entered into a contract with the government to construct an edifice for a total contract price of 25,000,000. During the month, the government paid 10,000,000 of which it withheld 5 % final withholding tax. How much is the VAT payable by the company on the government contract? a. 150,000 c. 0 b. 850,000 d. 1,000,000 35.Which of the following statements is not correct? a. transitional input tax is 2% of the value of the inventory or the actual VAT paid, whichever is higher b. amounts received from services performed by an individual pursuant to an employeeemployer relationship are exempt from VAT c. export sales by VAT registered persons are not subject to VAT d. Export sales by persons who are not VAT registered are VAT exempt 36.Transaction by a VAT registered taxpayer which is not subject to VAT: a. Foreign currency denominated sale b. export sale c. transaction deemed sale d. sale of service rendered in foreign countries. 37.Statement 1: There is a VAT in an importation by an importer-merchant even if he does not intend to sell the imported article. Statement 2: a person who is exempt from VAT may register under the VAT system a. false, false b. false, true c. true, false d. true, true 38.-- VAT is imposed on goods brought into the Philippines, whether for use in business or not -- In the case of goods imported into the Philippines by a VAT exempt person which are subsequently sold to taxable persons, the latter shall be considered the importer thereof and shall be liable for VAT due on such importation a. true, true b. false, false c. false, true d. true,false 39.Celebrado, VAT registered taxpayer, has the following data on importation in 2008: For Own sale use Invoice cost (Exchange rate $1:Php 46) $ $ 850 5,650 Custom duties 12% 10% Freight 20,00 4,000 0 Insurance 28,00 4,250 0 Other charges before release from custom 7,000 2,500 house Facilitation fee 10,00 5,000 0 Freight from custom house to warehouse 12,00 1,200 (net of VAT) 0 Assuming the custom duties are determined on the basis of the quantity of volume of the goods, the VAT on the importation is a. 31,260 c. 47,981.76 b. 37,285 d. 44,742 40.In no. 44, how much is the VAT payable if the imported goods for sale were sold for 665,000 (inclusive of tax) 10 days after its delivery to the warehousea. 28,279.44 c. 17,540 b. 32,298 d. 25,068

41.Robin a. 25,000 P., imported a car from the USA for his personal d. use. none, Total because landed importation cost is Phpis for 250,000 b. 30,000(about $5,000) including custom duties of Php personal 50,000. use. VAT payable is c. 10,000 42.Lavadena Construction Corporation, is a VAT registered general construction company. Its data for the quarter are revealed below: Contract Residential house 1Contract Price 1,200,000 Php Collection during the 616,000 month Php Contract Warehouse 2Contract Price 1,000,000 Php Percentage of 70% completion Collection during the 220,080 month Importation of construction equipments from Japan: Invoice cost, Japan (1$: $7,500 Php 44) Value per Bureau of Php customs 340,000 Customs duties 35,000 Freight and insurance 17,000 Purchases of materials: From VAT registered persons From non-VAT registered persons

226,2 40 126,5 00

Revenue from rent of equipment to another contractor: 17,920. Assuming the custom duties were based on the quantity of the goods imported, the VAT due on the importation isa. 46,860 b. 52,260 c. 45,840 d. 46,050 43.The VAT payable by Lavadena Company during the quarter is a. 21,420 b. 19,200 c. 6,450 d. 20,400 44.Bata, a VAT registered person had the following data: Price actually paid for the period Price actually paid for the goods bought from Japan Related insurance premiums and freight from Japan Custom duties amount to 40% of dutiable amount Other import charges and expenses amount to 120% of custom duties The VAT on importation is a. 82,560 b. 145,920 c. 135,360

P 600,00 0 100,00 0

d. 157,920 45.Patogrok Company contracted with Sapotize Construction Corporation to Construct the former’s building where only the labor will be supplied by the latter. The data on the construction (inclusive of tax) during the month are as follows: Progress billings by Sapotize Company Payment to Sapotize Company Purchase of materials by Patogrok Co.

P600,000 504,000 442,400

Which of he following is false? a. construction in progress is not depreciated until the asset is placed in service. b. for purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billings. c. the input tax credit on the labor contracted shall be recognized on the month the payment was made based on the progress billings d. once the input tax has already been claimed while the construction is still in progress, no additional input tax can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated. 46.Aileen, a Japanese residing in the Philippines bought garments from Cua Corporation, a domestic corporation, and exported the same to Japan. Total value of export is 100,000. VAT (output tax) due on the transaction is a. 10,000 b. 5,000 c. none, because 0% applies d. none, because the sale is exempt from VAT 47.Offspring Corporation is a VAT registered dealer of appliances. The following data are for the month of October: Sales, total invoice value Purchases, net of input taxes Sales return Purchases return, net of input tax Deferred input taxes (carried over from third quarter

P5,800,0 00 2,820,00 0 200,000 300,000 9,500

The VAT payable for the month of Oct by company is a. 320,000 c. 80,000 b. 285,500 d. 288,100 48.The following are the data of City Appliances Marketing Company for October, 2008: Sales upto Oct 15, total invoice value Purchases upto Oct 15, net of input taxes

P266,0 00 215,00 0

Additional info: On October 16, 2008, City Appliances company retired from its business and the inventory valued at 190,000, net of input taxes, was taken and transferred to New City Appliances Company. There is deferred input taxes from the third quarter of P3,500. How much is the total value added taxes due and payable by City Appliances Marketing Company in its operations in October and its retirement from business? a. 22,500 b. 22,000

c. 6,350 d. 25,350

54-55 Gabriel Panga Auto Repair Shop, VAT registered, had the following data in its books during the period: Receipts:

From Auto repair From washing and greasing Reimbursement by customer on payments made to VAT machine shops Payments received for lubricants, oils and fluid provided by the shop to cars undergoing repair Disbursements: Electric bill

85,6 20 45,4 25 4,35 0 5,78 0 3,55 0 2,38 0 15,0 00 4,35 0 3,00 0 24,0 00

Water bill Salaries of employees Payments made to machine shops, non VAT Purchase of lubricants, oils and fluids Purchase of capital goods (life-10 years) 49.The output tax amount toa. 16,419 b. 16,941

c. 14,660 d. 15,126

50.The VAT payable is a. 9,404 b. 12,753

c. 9,459 d. 6,979

51.Taxpayers who became VAT registered persons upon exceeding the minimum turn-over of 1.5million in any 12-month period, or who voluntarily register even if their turnover does not exceed 1.5 million shall be entitled to a transitional input tax on the inventory on hand as of the effectivity of their VAT registration on the following, except: a. Supplies for use in the course of taxpayer’s trade or business b. Goods which have been manufactured by the taxpayer c. Goods in process for sale d. Capital goods being used in the operation of the business 57 to 60 Sumilco, a manufacturer of refined sugar, became subject to VAT effective December 1, 2008. During the month, the following are its data: Refined sugar withdrawn from refinery, inclusive of VAT Purchases ofSupplies from VAT registered suppliers Packaging materials, VAT inclusive Sugar cane from planters Water bill Salaries of officials and employees Inventory per balance sheet, Dec 1, 2008 Packaging materials Supplies purchased from VAT registered persons Supplies purchased from non VAT registered suppliers

924,0 00 38,50 0 27,06 0 350,0 00 12,00 0 150,0 00 17,87 5 14,85 0 4,750

52.The presumptive input tax isa. 35,000 c. 13,860 b. 5,250 d. 14,000 53.The transitional input tax is a. 3,506.25 c. 654.50 b. 2,975 d. 2,998.00 54.The total creditable input taxes is a. 24,530.54 c. 92,935.00 b. 13,828.00 d. 22,935.00 55.The VAT payable is a. 61,065.00 c. 74,469.46 b. 70,172.00 d. 69,815.00 56.An importer wishes to withdraw its importation from the Bureau of Customs. The imported goods were subjected to a 10% customs duty in the amount of 12,500 and to other charges in the amount of 9,500. The value added tax due is a. 12,500 c. 13,364 b. 17,640 d. 14,700 57.Kaka is a contractor. She entered into a contract o March 1, 2008 which was completed on March 31, 2008. She received the total value of the contract amounting to 550,000 on March 31, 2007. Kaka spent for the materials used in the contract which she acquired from the VAT registered suppliers costing 150,000. All amounts are exclusive of VAT. The VAT payable by KAKA for the month of March is a. 15,000 c. 48,000 b. 40,000 d. 59,500 58.Archie, a newly VAT registered taxpayer is a lessor of poles to telephone and cable companies. During the month of January 2008, Archie had the following receipts from customers: Security deposit from customer C Ret income in January from various customers Prepaid rentals received from customer C (feb to June) Loan to Archie from customer B

110,0 00 88,00 0 132,0 00 82,50 0

During the month, a portion of the security deposit for the faithful compliance by customer C of its obligations to the lessor was applied to rental for January in the amount of 11,000. At the beginning of the year, Archie had 252,000 worth of inventory of supplies and materials for use in the business. VAT paid on the beginning inventory is 3,500. The output tax of Archie in January is a. 24,750 b. 21,000 59.In no. 63, the input tax on Archie is a. 5,040 b. None c. 21,000 d. 4,160

c. 28,500 d. 39,500

60.Marinda is a VAT registered grocery owner and sugar dealer. She submitted lists of inventory as of December 31, 2007 to the Revenue District Officer as follows: Grocery items, total value Raw cane sugar, total value

325,000 255,000

In January 2008, she had the following sales and purchases Sales Grocery (total invoice value)

1,042,5 25

Purchas es 650,100

Sugar (excluding VAT)

480,00 0

420,000

The VAT due for January, 2008 is a. 35,675.00 b. 42,045.54 c. 41,675.31 d. 6,675.26 67-68 Goodbooks Educational supply, VAT registered, is engaged in the business of selling books, school supplies and gift items. The following are the record of its purchases and sales during the month of October (inclusive of tax): Sale of school supplies Sale of books Sale of gift items Purchases of school supplies and gift items Purchases of books Purchase of computer used in taxable and exempt transactions

560,0 00 200,0 00 336,0 00 406,0 00 176,0 00 21,11 2

61.The creditable input tax on the purchase of computer is a. 2,400.20 c. 26,400.65 b. 1,920.50 d. 1,809.60 62.The VAT payable is a. 50,690.40 c. 36,500.00 b. 34,100.50 d. 43,280.25 63.Tala company had the following data for the 1 st quarter of 2008 (VAT exclusive) Taxable sales Exempted sales Zero rated sales Input tax which cannot be directly attributed to any of the above sales

600,0 00 300,0 00 100,0 00 50,00 0

The VAT payable for the quarter is a. 42,000 c. 32,000 b. 37,000 d. 22,000 64.Combined Company operates a VAT business and a non VAT business during the month, its books revealed the following record of sales and purchases Sales (VAT business) Sales (non-VAT business) Purchases (VAT business) Purchases (non VAT business) Purchases (VAT and non VAT businesses The VAT payable by Company is a. 7,660 b. 6,060

600,0 00 200,0 00 401,5 00 80,00 0 64,00 0 c. 13,500 d. 18,060

65.Excel company operates two lines of business. Business A is subject to VAT, while Business B is not. Data for the month are as follows: SalesVAT business, VAT included Non-VAT business PurchasesMerchandise, VAT business, VAT included Merchandise, non VAT business, VAT included Capital goods, VAT business, VAT included Capital goods, non VAT business, VAT included Capital goods, for use in both business, VAT included Rent of store, VAT business, VAT included Rent of warehouse, VAT & non-VAT business, VAT excluded Freight of goods, (VAT and non VAT business), VAT included Telephone bills, VAT and non-VAT, VAT included The input tax on Business A isa. 27,281 b. 23,747 66.In no. 71, the VAT payable by Excel company isa. 19,035 b. 20,733

560,0 00 100,0 00 154,0 00 67,10 0 34,77 6 27,50 0 56,00 0 14,56 0 6,200 2,576 1,624 c. 23,267 d. 18,875 c. 20,253 d. 32,219

73-75 Mildred enterprises, a VAT registered trader had the following data during the last quarter of the year:

October Novemb er Decemb er

Purchas es 627,20 0 599,20 0 959,61 6

Sales 392,0 00 862,4 00 789,6 00

All of the amounts indicated above are VAT inclusive. 67.The amount of VAT payable by Mildred for the month of October is a. 25,200 c. 2,000 b. 16,500 d. None 68.The VAT payable for the month of November is a. 203,500 b. 28,200

c. 3,000 d. None

69.The VAT payable/(excess) tax for the last quarter is a. (18,216) c. 60,900 b. 18,216 d. none 76-78

The books of accounts of Franklin Corporation, VAT registered , revealed the following data in 2007: Deferred input taxes, June 2007 Sales: July August September Purchases: July

6,200 620,0 00 430,0 00 540,0 00 508,0 00 432,0 00 314,5 00

August September 70.VAT payable for July is a. 13,440 b. 7,240

c. 11,200 d. 5,000

71.The VAT payable for August is a. (6,440) b. (240)

c. None d. 7,000

72.The VAT payable for September is a. 26,580 b. 27,060

c. 20,860 d. 34,090

73.Felicisima had the following data: Case 1 1,900,0 00 1,260,0 00 1,440,0 00 6 years

Sales, net of VAT Purchases of goods for sale, exclusive of VAT Purchases of machines (VAT not included) Machine life

Case 2 1,800,0 00 1,600,0 00 900,00 0 3 years

The amounts of VAT payable/excess tax are as follows: Case 1 Case 2

(a) 54,00 0 (84,00 0)

(b) 73,92 0 (84,00 0)

(c) 73,9 20 20,0 00

(d) Non e non e

74.Lavinia had the following data in July: Sales of goods (excluding VAT) Purchases of goods (net of VAT) Purchases of capital goods (invoice amount) Machine 1 (useful life of 6 years) Machine 2 (useful life of 3 years) The VAT payable in July is a. 120,860 b. 19,200

2,540,0 00 1,450,0 00 974,40 0 67,200 c. 33,600 d. (40,800)

81 to 82 The following data (net of tax) of Christine company are as follows: 1st quarter Sales Purchases Purchase of machinery (Feb) Unutilized input tax as of end of 1st quarter 2nd quarter Sales purchases

700,00 0 500,00 0 1,500,0 00 40,000 1,500,0 00 200,00 0

75.For the first quarter, Angel Company will result to a/ana. VAT payable of 72,000 c. Excess tax of 196,000 b. Excess tax of 22,000 d. VAT payabe of 22,000 76.The VAT payable for the 2nd quarter isa. 156,000 b. 134,000

c. 125,000 d. None

77.The data during the second quarter: Output Tax 35,0 00 Input Tax 19,0 00 VAT paid: April 3,00 0 May 4,50 0 st Excess input tax, 1 2,40 quarter 0 The VAT payable (or excess tax to be carried over) is a. 6,100 c. 8,500 b. 16,000 d. None 78.A new businessman consulted you relative to the filing of tax return and payment of his business tax. The business is VAT registered although he is expecting to earn an annual gross receipts ranging from 900,000 to 1,200,000 only. These are his questions: 1. what business tax should be paid by him? 2. when is the deadline for filing the tax return for the month of May? 3. when is the deadline for the payment of the business tax for the month of June (or second quarter)? Which of the following choices would be the correct advice?

a . b . c . d .

1 VAT VAT Non VAT Non VAT

Questions 2 June 20 June 25 June 20 June 20

3 July 25 July 25 July 25 July 20

85-86 The City Government of Inga has the following purchases for the month of August 2009 from VAT suppliers of goods and/or services: Purchase of goods from Sina store an merchandise (inclusive of VAT) Purchase of services from Daman Services, Inc

11,200 56,000

79.The amount payable to Sina after withholding taxes of VAT and income tax is a. 11,200 c. 9,400 b. 10,600 d. 10,500 80.The amount payable to Daman Services Inc. after withholding taxes of VAT and income tax is a. 56,000 c. 52,500 b. 50,000 d. 53,500 VAT Exercises True or false 1. A VAT registered person who issues a VAT invoice for a VAT exempt sale but fails to display on the invoice the term VAT Exempt shall be subject to VAT on that sale. 2. The input tax of a VAT purchaser is the output tax of the VAT seller 3. Services rendered to persons engaged in International shipping or air transport operations are subject to 12% VAT. 4. The excess of output VAT over the input VAT is a current asset of the taxpayer 5. The input VAT on purchase of capital goods valued at 2,000,000 shall be spread over 60 months ,or the life of the asset, whichever is shorter, subject to 70% cap. 6. Persons engaged in sale of services may also be allowed to claim tax credit on presumptive input tax. 7. Gross receipts on services rendered by all franchise grantees are subject to franchise tax. 8. . 9. . 10.A physician is not subject to VAT because in exercising his professional services he is not engaging himself in business. 11.There is no creditable input tax on sales to government or any of its political subdivisions, instrumentalities or agencies, including government-owned or controlled corporations. 12.If the invoice price is inclusive of VAT, the amount given is multiplied by 3/28 to get the VAT component thereon. 13.A taxpayer who operates a VAT and a non-VAT business cannot claim input tax credit on purchases of goods to be used in his VAT business. 14.Any input tax attributable to zero-rated sales by a VAT –registered person may at his option be refunded or applied for a tax credit certificate which may be used in the payment of internal revenue taxes. 15.Banks and other banking institutions are subject to VAT. 16.Importation of goods are subject to VAT even if the intention of the importer is to use the imported goods for personal purposes. 17.The gross receipts derived from exercise of a profession and from other lines of vatable business shall be combined for purposes of determining the threshold of 1,500,000 18.The account Output Tax must appear in the current liability section of the balance sheet. 19. Lease of copyright on taxation books are subject to VAT. 20.Input tax, being a tax, is an expense on the part of purchaser and is deductible from gross income for purposes of computing the net income. 21.VAT is a regressive tax. 22.System loss on electricity that are being charged by electric cooperatives to consumers are subject to 12% VAT. 23.Printing of invoices and receipts (including delivery receipts) requires the approval of BIR 24.Purchases and sales are recorded in the books of non-VAT taxpayer at an amount which is net of input/output taxes 25.A sale of power or fuel which is generated from solid waste is subject to 0% VAT.

1. true 2. true 3.f 4.f 5.f 6.f 7.f 8. 9. 10.f 11. true 12. true 13. true 14. true 15.f 16. true 17. true 18.f 19. true 20.f 21.f 22. true 23. true 24.f 25. true