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CHAPTER 1- Introduction to Consumption Taxes
MULTIPLE CHOICE- Theory Part 1
1. Which type of consumption will pay consumption tax?
a. Domestic consumption
b. Foreign consumption
c. Both domestic and foreign consumption
d. Neither domestic nor foreign consumption
2. Which is a tax upon the usage of income?
a. Savings tax
b. Investment tax
c. Consumption tax
d. Business tax
3. Which is subject to the VAT on importation?
a. Foreign consumption from resident sellers.
b. Foreign consumption from foreign sellers.
c. Domestic consumption from resident sellers.
d. Domestic consumption from foreign sellers.
4. Which is subject to business tax?
a. Foreign consumption from resident sellers.
b. Foreign consumption from foreign sellers.
c. Domestic consumption from resident sellers.
d. Domestic consumption from foreign sellers.
5. Which is an incorrect statement regarding consumption taxes?
a. They are always indirect in nature.
b. They effectively tax everyone in the state.
c. Apply only when the goods or services are destined for consumption within the Philippines.
d. Consumption taxes may encourage savings formation.
6. Which is correct regarding consumption tax?
a. It may help in the redistribution of wealth in the society.
b. It is entirely based upon the ability to pay of consumers.
c. It applies to both domestic and foreign consumption.
d. It applies only when the seller is non-resident.
7. Domestic consumption is taxable when the seller is
a. A non-resident
b. A resident
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c. Either resident or non-resident
d. Neither resident nor non-resident
8. Foreign consumption shall
a. Pay consumption tax if the seller is a resident.
b. Pay consumption tax if the seller is non-resident.
c. Not pay consumption tax if the seller is non-resident.
d. Not pay consumption tax regardless of the residency of the seller.
9. The tax on domestic consumption is referred to as
a. VAT on importation
b. Business tax
c. Either A or B
d. Neither A or B
10. The tax on domestic consumption from foreign suppliers is
a. VAT on importation
b. Business tax
c. Either A or B
d. Neither A or B
11. The tax on domestic consumption from resident suppliers is
a. VAT on importation
b. Business tax
c. Either A or B
d. Neither A or B
12. Which is not a business tax?
a. VAT on importation
b. VAT on sales
c. Percentage tax
d. Excise tax
13. The percentage tax is generallya.
b. 3% of purchases
c. 3% of mark-up
d. 12% of mark-up
14. The VAT as a business tax is
a. 12% of sales or receipts
b. 12% of purchases
c. 12% of mark-up
3% of sales or receipts
d. 3% of mark-up
15. The VAT on importation is
a. 12% of sales
b. 12% of purchases
c. 12% of mark-up
d. 3% of mark-up
16. Which form of consumption is tax-free?
a. Sales to a resident.
b. Sales to non-resident.
c. Importation by an importer engaged in business
d. Importation by an importer not engaged in business
17. As to incidence of tax, the VAT on importation is a form of
a. Direct tax
b. Indirect tax
c. Ad valorem tax
d. Specific tax
18. Which of these import consumption is tax free?
a. Importation from seller not engaged in trade or business
b. Importation from seller engaged in trade or business
c. Both A and B
d. Neither A nor B
19. Which importation is subject to the VAT on importation?
a. Importation by a person engaged in business
b. Importation by a person not engaged in business
c. Both A or B
d. Neither A nor B
20. Who is the statutory taxpayer to the VAT on importation?
a. Foreign seller
b. Domestic buyer
c. Both A and B
d. None of these
MULTIPLE CHOICE- Theory Part 2
1. Generally, the tax basis of business tax is
a. Sales or receipts
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b. Purchase cost
c. Either A or B
d. Both A and B
2. Who is the statutory taxpayer of business taxes?
a. The seller who must be engaged in trade or business.
b. The seller, whether or not engaged in trade or business.
c. The buyer, who must be engaged in trade or business.
d. The buyer, whether or not engaged in trade or business.
3. The economic taxpayers of consumption taxes are
a. Sellers who are engaged in trade or business.
b. Sellers, whether or not engaged in trade or business.
c. Buyers who are engaged in trade or business.
d. Buyers, whether or not engaged in trade or business.
4. What is the method used to determine the VAT due and payable?
a. Direct method
b. Indirect method
c. Tax credit method
d. Withholding method
5. Which statement is conceptually incorrect?
a. The buyer pays the consumption tax with its purchase to the seller.
b. The buyer pays the consumption tax to the government.
c. The seller pays the consumption tax to the government.
d. The seller collects consumption tax for the government.
6. Which is correct?
a. The sales to foreigners must include a business tax.
b. The sales to residents must include a business tax.
c. The purchases from abroad must include a business tax.
d. All of these.
7. The deduction from output VAT is called
a. Percentage tax
b. VAT due and payable
c. Input VAT
d. VAT on importation
8. Which is pure form of a sales of tax?
a. Percentage of tax
b. Value added tax
c. Both A and B
d. Neither A nor B
9. Statement 1: A business which pays VAT normally does not pay percentage tax.
Statement 2: A business which pays percentage tax also pays VAT.
Which statement is correct?
a. Statement 1
b. Statement 2
c. Both statements.
d. Neither statement.
10. Which of the following business taxes applies only for domestic consumption?
a. VAT on sales
b. Percentage tax
c. Excise tax
d. All of these
11. Excise tax is paid by
a. Sellers
b. Buyers
c. Importers or manufacturers.
d. Seller or buyer depending on who is agreed to pay the excise tax.
12. Export sale is (select the incorrect one)
a. Exempt to percentage tax
b. Exempt from VAT
c. Exempt form excise tax
d. All of these.
13. Statement 1: Excise tax is always paid together with VAT or percentage tax.
Statement 2: Excise tax is paid at the point of sale.
Which statement is false?
a. Statement 1
b. Statement 2
c. Both statements.
d. Neither statement.
14. Which is imposed with a tax of zero percent (0%)?
a. All export sales.
b. Export sales of VAT-registered taxpayers.
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c. Import sales of VAT-registered taxpayers.
d. Export sales of non-VAT registered taxpayers only.
15. Which is not subject to excise tax?
a. Sin products.
b. Non-essential commodities.
c. Food products.
d. Mineral products.
16. The tax basis of consumption tax on foreign purchase is
a. Sales or receipts.
b. Purchase costs
c. Either A or B
d. Both A and B
17. The consumption tax on domestic purchases is imposed upon the
a. Sales or receipts
b. Purchase costs
c. Either A or B
d. Both A and B
18. Technically, the excise tax on the manufacture of certain articles is payable only when the articles
isintended for
a. Domestic consumption
b. Foreign consumption
c. Both A and B
d. Neither A nor B
19. Which is correct with the VAT on importation?
a. Payable only when the importer is engaged in business
b. Payable only when the foreign seller is engaged in business.
c. Payable regardless of the purpose of the importation.
d. Payable only when the resident seller is not engaged in business.
20. The VAT on domestic sales is an example of
a. A direct tax
b. An indirect tax
c. A regulatory tax
d. A specific tax
MULTIPLE CHOICE- Problem Part 1
1. Free Company, a resident business, renders services to Mr. Erlwin, a resident person who is not engaged
in business.
Which of the following is subject to consumption tax?
a. Free Company
b. Mr. Erlwin
c. Both A and B
d. Neither A nor B
2. Baliwag Company, a non-resident business, purchased P200,000 from Cauayan Company, a
residentbusiness. Which will pay the consumption tax on this transaction?
a. Cauayan Company
b. Baliwag Company
c. Both A and B
d. Neither A nor B
3. Heidenberg Corporation, a resident business, purchased P100,000 goods from Kiwi Company, a
nonresident business. Which will pay the consumption tax on this transaction?
a. Heidenberg Corporation
b. Kiwi Company
c. Both A and B
d. Neither A nor B
4. Mr. Cedric, an employee, sold his residential lot to Mrs. Corneto, a real property dealer. Which issubject
to consumption tax with respect to this transaction?
a. Mr. Cedric
b. Mrs. Corneto
c. A and B
d. Neither A nor B
5. Mr. Bangus made a casual sale involving a car to Mrs. Tulya, a resident buyer. Mr. Bangus is not a
cardealer. Which is subject to consumption tax?
a. Mr. Bangus
b. Mrs. Tulya
c. Both Mr. Bangus and Mrs. Tulya
d. Neither Mr. Bangus nor Mrs. Tulya
6. Mr. Cavite produces an excisable article for sale in the Philippines market. Which is incorrect
withrespect to Mr. Cavite's business taxation?
a. Mr. Cavite is subject to either VAT or percentage tax.
b. Mr. Cavite pays excise tax in addition to VAT or percentage tax.
c. Mr. Cavite pays excise tax in addition to VAT and percentage tax
d. Mr. Cavite will pay excise tax without regard to whether he is VAT or non-VAT taxpayer.
7. A person engaged in business is subject to 3% business tax. He has inventories if goods in hispossession
which costs P77,600 which he intends to sell to earn a mark-up of 25% of cost net of the 3% business
tax.
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He shall invoice the sale of the P77,600 goods at
a. P100,000
b. P103,000
c. P97,000
d. P110,000
8. A business wants to make a P10,000 profit from the sale of an inventory costing
business is subject to 3% percentage tax.
P30,000.
The
At what amount shall the business invoice the sale?
a. P41.237
b. P41,200
c. P40,000
d. P38,800
9. A person who imports goods or properties will more likely to pay
a. A 3% percentage tax on the importation
b. A 12% VAT on the importation
c. Either 3% or 12% tax on the importation
d. No consumption tax
10. A person who is not regularly engaged trade or business sells made a casual sale of property
forP100,000. What will be the invoice price of the sale?
a. P100,000
b. P103,000
c. P112.000
d. Either B or C
11. Alison is regularly engaged in the sales of goods. He will pay
a. Value added tax only.
b. Percentage tax only
c. Either A or B
d. Neither A nor B
12. Mr. Venturais subject to 3% percentage tax. He made a total collection of P206,000 during a monthand
paid P103,000 in purchases. Compute his percentage tax.
a. P0
b. P3,000
c. P6,180
d. P12,000
13. A business taxpayer purchased P120,000 from non-residents and sold goods worth P140,000
forP180,000.
What is the concept of value added for VAT purposes?
a. P200,000
b. P140,000
c. P80,000
d. P60,000
14. In the immediately preceding problem, what is the basis of percentage tax?
a. P200,000
b. P140,000
c. P120,000
d. P180,000
15. Assuming the same data in the above problem, what is the basis of VAT on importation?
a. P200,000
b. P140,000
c. P120,000
d. P80,000
16. Mr. Coroneti imported P300,000 equipment for business use and a P1,200,000 car for personal
use.What is the amount subject to the VAT on importation?
a. P0
b. P300,000
c. P1,200,000
d. P1,500,000
MULTIPLE CHOICE- Problem Part 2
Basic Case 1
1. A business taxpayer had the following purchase and receipts:
Import goods or services
P190,000
Domestic purchase of goods or services
P100,000
Domestic sales of goods and services
P150,000
Export sales of good or services
P50,000
Determine the total amount of which will be subject to consumption tax to the business taxpayer.
a.
P500,000
b. P400,000
c. P350,000
d. P340,000
2. In the immediately preceding problem, determine the amount subject to the consumption tax if
thetaxpayer is not engaged in business.
a. P490,000
b. P390,000
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c. P200,000
d. P190,000
Basic Case 2
3. A VAT-registered taxpayer recorded the following sales and purchases during the month:
Sales
P300,000
P200,000
Purchases
All amounts above are exclusive of any VAT.
What would be the output VAT?
a. P48,000
b. P36,000
c. P24,000
d. P12,000
4. What is the input VAT?
a. P48,000
b. P36,000
c. P24,000
d. P12,000
5. What is the VAT payable?
a. P36,000
c. P12,000
b. P24,000
d. P0
6. Assuming the taxpayer is a non-VAT taxpayer paying 3% percentage tax, the percentage tax shall be
a. P12,000
c.
P6,000
b. P9,000
d.
P3,000
Basic Case 3
A business taxpayer recorded the following transactions during the month:
Philippines
Abroad Total
Sales
P350,000
P200,000
P550,000
Purchases
P150,000
P100,000
P250,000
Total
P500,000
P300,000
P800,000
Assuming the taxpayer is a VAT-registered taxpayer
7. Compute the output VAT.
a. P0
c. P36,000
b. P24,000
d. P42,000
8. Compute the VAT on importation.
a. P0
c. P18,000
b. P12,000
d. P32,000
Assuming the taxpayer is a non-VAT taxpayer.
9. Compute the percentage tax.
a. P0
c. P9,000
b. P6,000
d. P10,500
10. Compute the VAT on importation
a. P0
b. P3,000
Basic Case 4
c. P12,000
d. P18,000
Sindangan Company, a VAT registered taxpayer, purchased P400,000 worth goods and sold the same for
P800,000.
11.
Assuming that the business operation of Sindangan Company is limited to Philippine residents.
Whatis the total business tax it will report on its sales?
a. P96,000
c. P24,000
b. P48,000
d. P0
12.
Assuming that the purchases were import and the sales were exports, compute the business tax
andtotal consumption tax, respectively:
a. P96,000: P144,000
c. P24,000: P72,000
P24,000:
b.
P144,000
d. P0:
P48,000