University of Perpetual Help System laguna – Isabela Campus

Minante 1, Cauayan City, Isabela

College of Business and Accountancy

Business Taxation 20 copies
SUMMER A.Y. 2018 - 2019

Final Term Examination

Name: ________________________________________ Date: ___________

Course Year & Section: _____________________ Score: __________

(Erasure/alteration means wrong).

MULTIPLE CHOICE. Choose the best answer. Encircle the letter of your choice. Show your
solutions for questions number 20 to 50. (2 points each)

1. 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 course of 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
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 such
goods were consigned

2. 1st Statement – For VAT purposes, a taxable person is any person liable for the payment of
VAT, whether registrable in accordance with the tax code.

2nd Statement – The status of a “VAT – registered person” as a VAT – registered person shall
continue until the cancellation of such registration

A. Both statements are correct

B. c. Only the first statement is correct
C. Both statements are incorrect
D. d. Only the second statement is correct

3. 1st Statement – Any person who, in the course of his trade or business, sells, barters,
exchanges or leases goods or properties, or renders service, and any person who import
goods, shall be liable to VAT

2nd Statement - In the case of importation of taxable goods, the importer, whether an
individual corporation and whether or not made in the course of his trade or business, shall
be liable to VAT

A. Both statements are correct

B. Only the first statement is correct
C. Both statements are incorrect
D. Only the second statement is correct

4. 1st Statement: The term “in the course of trade or business” means the regular conduct of
pursuit of a commercial or economic activity, excluding transactions incidental thereto, by
person who operate business solely for profit

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 2nd Statement: Non – resident persons who perform services in the Philippines are deemed to
be making sales in the course of trade or business, even if the performance of service is not
regular

A. Both statements are correct

B. Only the first statement is correct
C. Both statements are incorrect
D. Only the second statement is correct

5. Which of the following shall be included in the term “goods or properties”?

I – Real properties whether or not held primarily for sale to customers or held for lease in the
ordinary course of trade or business

II – The right or the privilege to use patent, copyright, design or model, plan, secret formula
or process, goodwill, trademark, trade brand or other like property or right

III – The right or the privilege to use any industrial, commercial or scientific equipment

IV – The right or the privilege to use motion picture film, films, tapes and discs; and

V – Radio, television, satellite transmission and cable television time.

A. I, II, III, IV and V

B. II, III, IV and V only
C. I, III, and V only
D. I only

6. First statement: “VAT-exempt transactions” refer to the sale of goods or properties and/or
services and the use or lease of properties that is not subject to VAT (output tax) and the
seller is not allowed any tax credit of VAT (input tax) on purchases.

Second statement: The person making the exempt sale of goods, properties or services shall
not bill any output tax to his customers because the said transaction is not subject ot VAT.

A. Both statements are correct

B. Only the first statement is correct
C. Both statements are incorrect
D. Only the second statement is correct

7. Meat, fruit, fish, vegetables and other agricultural and marine food products shall be
considered in their original state even if they have undergone the simple process of
preparation or preservation for the market. Which of the following shall be considered as
simple processes of preparation or preservation for the market?

I – freezing
II – drying
III – salting
IV – broiling
V – roasting
VI – smoking
VII – stripping

A. all of the above

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 B. I, II, III, and IV only
C. None of the above
D. All of the above except IV and V

8. Meat, fruit, fish and vegetables and other agricultural and marine food products shall be
considered in their original state even if they have undergone advanced technological means
of packaging. Which of the following shall not be considered as advanced technological
means of packing?

A. shrink wrapping in plastics

B. tetra-pack
C. vacuum packing
D. freezing

9. Which of the following export sales require payment in acceptable foreign currency and
accounting in accordance with the rules and regulations of the Bangko ng Sentral ng Pilipinas
(BSP).

I – The sale an actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may influence or
determine the transfer of ownership of the goods exported

II – The sale of raw materials or packaging materials to a non-resident buyer for delivery to a
resident local export-oriented enterprise to be used in manufacturing, processing, packing or
repacking in the Philippines of the said buyer’s goods

III – The sale of raw materials or packaging materials to an export-oriented enterprise whose
export sales exceed 70% of the total annual production

IV – Sale of gold to the BSP

V – Transactions considered export sales under Executive Order No. 226, otherwise known
as Onmibus Investments Code of 1987, and other special laws

VI – The sales of goods, supplies, equipment and fuel to persons engaged in international
shipping or international air transport operations

A. I, II, III, IV, V, and VI

B. II, IV and V only
C. I and II only
D. V only

10. Which of the following shall be considered export sale?

I. Sales for locally manufactured and assembled goods for household and personal use
to Filipinos abroad and other non-residents of the Philippines as well as returning
Overseas Filipinos under the Internal Export Program of the government paid for in
convertible foreign currency and accounted for in accordance with the rules and
regulations of the BSP

II. Sales of goods, properties or services made by a VAT-registered supplier to BOI-

registered manufacturer or producer whose products are 100% exported

A. Neither I nor II
B. I only
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 C. Both I and II
D. II only

11. 1st statement – The term “effectively zero-rated sale of goods and properties” shall refer to
the export sale of goods and properties by a VAT-registered person to a person or entity who
was granted indirect tax exemption under special laws or international agreement

2nd statement – Except for export sales and foreign currency denominated sale, other cases of
zero-rated sales shall require prior application with the appropriate BIR office for effective
zero-rating and without and approved application for effective zero-rating, the transaction
otherwise entitled to zero-rating shall be considered exempt

A. Both statements are correct

B. Only the first statement is correct
C. Both statements are incorrect
D. Only the second statement is correct

12. Which of the following shall not be considered “deemed sale” pursuant to the Tax Code?

A. Transfer use or consumption not in the course of business of goods or properties

originally intended for sale or for use in the course of business
B. Distribution or transfer to shareholders or investors in the profits of VAT-registered
person or creditors in payment of debt or obligation
C. Consignment of goods if actual sale is made within 60 days following the date such
goods were consigned
D. Retirement from or cessation of business with respect to all goods on hand, whether
capital goods, stock-in-trade, supplies or materials as of the date of such retirement or
cessation whether or not the business is continued by the new owner or successor

13. Where a VAT-registered person purchases or imports capital goods, which are depreciable
assets for income tax purposes, the aggregate acquisition costs of which (exclusive of VAT)
in a calendar month exceeds 1,000,000 regardless of the acquisition cost of each capital
good, shall claimed as credit:

A. over a period of 60 months in all cases

B. over a period of 60 months unless the estimated life is not less than 5 years in which case
over the actual number of months comprising the estimated life
C. in full in the month acquired
D. in full in the quarter acquired

14. 1st statement: Presumptive input tax is equivalent to 4% of the gross value in money of the
purchases of primary agricultural products used as inputs to the production.

2nd statement: The term processing shall mean pasteurization, canning and activities which
through physical or chemical process alter the exterior texture or form of inner substance of a
product in such a manner as to prepare it for special use to which it could not have been put it
its original form or condition

A. Both statements are correct

B. c. Only the first statement is correct
C. Both statements are incorrect
D. d. Only the second statement is correct

15. 1st statement: The transitional input tax shall be 2% of the value of the beginning inventory
on hand or actual VAT paid on such goods, materials and supplies, whichever is higher,
which amount shall be creditable against the output tax of VAT-registered person
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 2nd statement: The value allowed for income tax purposes on inventories shall be basis for
computation of the 2% transitional input tax, excluding goods that are exempt from VAT
under Sec 109 of the tax code

A. Both statements are correct

B. Only the first statement is correct
C. Both statements are incorrect
D. Only the second statement is correct

16. Admission fees to cockpits and race tracks are subject to

A. Tax on paid admission

B. Tax on winnings
C. Tax on gross receipts
D. None of the above

17. One of the following is subject to percentage tax

A. Long distance call by a son from Sta. Cruz, Manila to his father in Ilo Ilo City
B. Monthly telephone bill from PLDT
C. Telephone bill on a call by a mother in the Philippines to her son in the United States.
D. Telephone call by Magda in Hong Kong to her friend in Manila.

18. A radio station with an annual gross receipts of 2,000,000 but voluntarily subjects itself to
VAT can never cancel its registration and revert back to Franchise Tax even if it later on
decides to abandon VAT.

A. True
B. False

19. Taxpayers which are subject to other percentage taxes are generally required to file its tax
return within 20 days after the end of each month.

A. True
B. False

20. A, a VAT – registered, made the following purchased during the month of January 2007

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
B. P29,400
C. P24,000
D. P32,400

21. 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

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 was P224,000, including the VAT. 75% of the sales are normally account. How much is the
output tax for the month of April 2007?

A. P22,000
B. b. P20,000
C. c. P16,500
D. d. P24,000

22. KATRINA invested P500, 000 in the shares of stock of Manila Trading Corp. Later she sold
the said shares for only P350, 000. The corporation’s shares are listed and are traded in the
local stock exchange. The percentage tax on the sale is:

A. None
B. P 1, 750
C. P 2, 500
D. P 50, 000

23. The following accounting records reveal:

Accounts Receivable, Beginning P 100,000

Accounts Receivable, Ending 110,000
Inventory, Beginning 50,000
Inventory, Ending 65,000
Purchases 90,000
Sales 250,000
Purchase Discount 5,000
Sales Return 10,000
Collections 200,000
Cost of Sales 70,000
How much is the vatable sales?

A. P 250,000
B. P 230,000
C. P 240,000
D. P 200,000

24. How much is the outout VAT?

A. P 27,600
B. P 30,000
C. P 28,800
D. P 24,000

25. How much is the input VAT?

A. P 10,200
B. P 8,400
C. P 10,800
D. d. None

26. A Refining Company manufactures refined sugar. It had the following data during the first
quarter of 2007

Sale of refined sugar, net of VAT

P2,000,000
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 Purchases from farmers of sugar cane used in
the manufacture of refined sugar 500,000
Purchases of packaging materials, gross of VAT 784,000
Purchase of labels gross of VAT 112,000

The VAT payable is

A. P124,000
B. P112,500
C. P70,000
D. P62,000

27. M, building contractor showed to you the following data

Contract price net P5,000,000

Cash received (VAT included) 2,240,000
Receivables 3,000,000
Advances on other contracts still unearned (w/o VAT) 1,000,000
Payments (VAT excluded):
For materials 500,000
For supplies 100,000
For operating expenses (depreciation and salaries) 200,000
For services of sub – contractors (VAT included) 1,680,000

The VAT payable is

A. P108,000
B. P348,000
C. P350,000
D. P12,000

28. A, a VAT taxpayer billed his customer:

Selling Price P500,000

Value Added Tax 70,000
Total P570,000

The output tax is

A. P70,000
B. P60,000
C. P61,071
D. P68,400

29. Madulag Insurance Company had the following data on collections of premiums and
disbursements during the month:

Life insurance Non life insurance

Cash collections 150,000 145,700
Checks 45,000 34,600
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 Accounts receivable 25,200 58,900

Payments of expenses to VAT businesses 43,000

Payments of expenses to nonVAT 35,000
businesses

The amounts indicated pertaining to VAT transactions do not include the VAT.

The VAT payable is

A. 16, 476
B. 9,750
C. 28,704
D. 63,730

30-32
Makasalanan Corporation had the following data during the month of February:
Net income during the month 40,000
Collections during the month
From services rendered in Jan 50,000
From services rendered in Feb 300,000
From services to be performed in march 10,000
(advances)

30. The business tax payable if Makasalanan is a bus company:

A. 12,000
B. 22,800
C. 10,800
D. 21,000

31. The business tax payable if Makasalanan is a cabaret:

A. 64,000
B. 64,800
C. 72,000
D. 36,800

32. The business tax payable if Makasalanan is a race track:

A. 120,000
B. 228,000
C. 210,000
D. 108,000

33-36
Rose Tear operates a cockpit in Zamboanga City. Inside the cockpit is a restaurant which
she operates. The data during the month are as follows:
Gross receipts from the gates 390,000

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 Receipts from advertisements inside the cockpit 15,000
arena
Gross receipts from restaurant:
Sale of food and softdrinks 21,000
Sale of liquor 33,000
Disbursements (subject to VAT) 24,200
Disbursements (not subject to VAT) 12,000

33. The amusement tax due is

A. 82,620
B. 81,828
C. 72,900
D. 19,980

34. Suppose the restaurant is owned and operated by Mon, a non VAT registered person, the
business tax payable by Mon is

A. 1,260
B. 534
C. 4,909.09
D. 1,620

35. Suppose the restaurant is operated by Mon, the percentage tax due on Rose is

A. 3,300
B. 12,150
C. 92,700
D. 72,900

36. Assume that Mon, a VAT registered taxpayer is operating the restaurant. The business tax
payable by Mon is

A. 81,600
B. 3,576
C. 4,909.09
D. 2,709.09

37. Carlos operates the El Combo Nightclub along Malate Avenue, Palayan City. His gross
receipts in February 2008 amounted to 126,700. The foods and drinks being served inside the
nightclub are being delivered by Tiberio, a nonVAT taxpayer. During the month, Tiberio
sold 32,400 worth of goods and drinks to Carlos.

The amusement tax payable is

A. 19,005
B. 22,806
C. 28,638
D. 5,832

38-39
Sogo Hotel offers the following services to its guests and from which revenues were
derived for the month, as follows:

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 Revenues Collections
Hotel rooms 1,250,000 984,000
Dining Hall:
Sale of foods and 940,000 860,000
refreshments
Sale of wine, beer and liquors 780,000 620,000
Disco:
Admission fee 25,000 15,000
Sale of foods and drinks 250,000 115,000
Sale of wines , beer and liquor 650,000 540,000

38. The amusement tax due is

A. 110,700
B. 120,600
C. 552,240
D. 386,640

39. If Sogo Hotel is subject to VAT, the output tax thereon is (assume that the amounts are tax
inclusive)

A. 295,680
B. 264,000
C. 218,000
D. 120,600

40. Boy Cali is the operator of Cali Coliseum. During the month, it had the following gross
receipts from various activities, to wit:
Concert by Chabel Balyeno 85,000
Professional basketball 120,000
Amateur basketball 36,700
Billiard 45,000

The percentage tax payable by Boy Cali on the Coliseum is

A. 18,000
B. 23,505
C. 43,005
D. 24,750

41. In number 39, assuming that other than the enumerated events therein a world championship
boxing fight between Namacquiao and Nakoto, American and Mexican, respectively, in light
weight division was held in Cali Coliseum during the month and the total gross receipts was
780,000, the total amusement tax payable is

A. 135,000
B. 96,000
C. 43,005
D. 160,005

42-43
Makasalanan Corporation had the following data during the month of February:

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 Net income during the month 40,000
Collections during the month
From services rendered in Jan 50,000
From services rendered in Feb 300,000
From services to be performed in march 10,000
(advances)

42. The business tax payable if Makasalanan is a bus company:

A. 12,000
B. 22,800
C. 10,800
D. 21,000

43. The business tax payable if Makasalanan is a cabaret:

A. 64,000
B. 64,800
C. 72,000
D. 136,800

44. The business tax payable if Makasalanan is a race track:

A. 120,000
B. 228,000
C. 210,000
D. 108,000

45-46
Radio Station DWLAA has an annual gross receipts ranging from 4,000,000 to 5,000,000.
During the month, it had a gross receipts from advertisements of 330,000 (net of tax), while the
disbursements subject to VAT amounted to 224,000, inclusive of tax

45. The franchise tax payable by DWLAA is

A. 30,000
B. 9,900
C. 50,000
D. 10,000

46. How much s the VAT payable if it is registered under the VAT system?

A. 10,000
B. 9,900
C. 11,357
D. 15,600

47-49

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Too Big Company, a public service company, is a holder of a franchise to engage in the business
of supplying water to several towns and cities in Luzon. As recorded in its books during the
month, its total gross receipts from the sale of water amounted to 2,550,000, while the receipts
from rental of equipments and other services was 280,000. The operating expenses amounted to
2,000,000; 11% of which was paid to VAT registered persons.

47. The percentage tax due is

A. 51,000
B. 5,000
C. 16,500
D. 56,500

48. The VAT payable for the month is

A. 33,600
B. 5,000
C. 16,500
D. 7,200

49. Balatan Telephone Company (BATELCO) had the following collections from its customers
during the quarter:
Regular monthly bills 770,000
Domestic calls 501,600
Overseas calls 533,500
(outgoing)

The percentage tax to be remitted by BATELCO during the quarter is

A. 73,600
B. 48,500
C. 53,350
D. 80,960

50. Carlos operates the El Combo Nightclub along Malate Avenue, Palayan City. His gross
receipts in February 2008 amounted to 126,700. The foods and drinks being served inside the
nightclub are being delivered by Tiberio, a nonVAT taxpayer. During the month, Tiberio
sold 32,400 worth of goods and drinks to Carlos.

The amusement tax payable is

A. 19,005
B. 22,806
C. 28,638
D. 5,832

Prepared by: Approved by:

Acct. SAMUEL UY ITCHON, JR. Acct. JONATHAN B. DE VEYRA, MBA

Instructor Dean – CBA

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