Vat Exercises
1. A tax on business is
c. Property tax
a. Direct 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
c. Income tax
a. Value added tax
d. Percentage tax
b. Excise tax
3. Value added tax is a (an)
c. Progressive tax
a. Indirect 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
c. Percentage tax
a. Excise tax
d. None of the above
b. Value added tax
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
d. Export sales
b. Sales on account
Computation of VAT payable
9. Tsukuba Company, a VAT registered business, had the following data during the quarter;
Export sales
1,815,000
Domestic sales (tax included)
1,232,000
Purchases of goods for export
672,000
Purchases of goods for domestic sales
323,120
Purchases of supplies on domestic sales, exclusive of tax 124,850
Assuming that the input taxes paid on purchases of goods for export are claimed as tax credit, the VAT payable
by Tsukuba Company is
c. 177,895
a. 12,895
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
Sales
160,160
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?
c. Transaction 3
a. Transaction 1
d. Transaction 4
b. Transaction 2
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
93.00
83.04
0.00
9.06
93.00
CASH
CHANGE DUE
This serves as your OFFICIAL RECEIPT.
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 2nd 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?
c. 26,880
a. 20,000
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
d. Output tax
b. Value added tax payable
22. Cruz, a trader, made the following transactions of goods, exclusive of VAT, during the second quarter:
Cash Sales
200,000
Open account sales
100,000
Consigned goods delivered: April 15 100,000
May 15 100,000
June 15 100,000
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 Sales
709,500
Sales returns
26,400
Goods shipped on consignment (net of tax):
Units
Unit Price
July 5
25
22,000
June 5
20
22,000
May 5
12
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
38,500
26,950
4,675
484,000
61,600
60,500
235,000
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
204,000
Actual VAT paid on the inventory 16,000
Sales, total invoice amount
469,000
Purchases
57,400
Fifty percent (50%) of the merchandise inventory on Jnauary 1 were purchased from non-VAT 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:
Subject to VAT Jan 1, 2008
Not subject to VAT
VAT paid on the inventory of supplies, Jan 1, 2008
336,000
112,000
50,400
60,000
5,400
The VAT payable for the quarter ending March 2008 isc. 18,600
a. 12,171
d. 22,992
b. 33,792
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):
passenger Cargo
Jeepney 1
20,000
Jeepney 2
30,000
Bus
15,000
8,500
Sea vessel
1,500,000 800,000
Cessna plane for hire 800,000
560,000
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
6,000
13 th month pay
6,000
Agency fee at 15 % 1,800
SSS/Philhealth
300
Leave with pay
450
Total
14,550
Based on the following data, how much is the Output VAT payable of Inside Job Security Agency
c. 1,440.00
a. 1,746.00
d. 1,478.57
b. 1,558.93
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
250,000 200,000 300,000
Cost
150,000 130,000 175,000
Gain/loss
100,000 70,000 125,000
Terms:
Downpayment, Nov 5 25,000 50,000 40,000
DueDec 5
25,000 20,000 20,000
Jan to Dec 2009
200,000 130,000 240,000
All amounts indicated above do not include the tax.
33.
34.
35.
36.
37.
The VAT in November is
a. 26,500
c. 34,800
b. 31,800
d. 90,000
Based on the information given in no. 37, the VAT for the month of December is
c. 10,000
a. 5,400
b. 4,500
d. None
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?
c. 0
a. 150,000
d. 1,000,000
b. 850,000
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 employee-employer 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
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.
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 sale Own use
Invoice cost (Exchange rate $1:Php 46)
$ 5,650 $ 850
Custom duties
12%
10%
Freight
20,000 4,000
Insurance
28,000 4,250
Other charges before release from custom house
7,000
2,500
Facilitation fee
10,000 5,000
Freight from custom house to warehouse (net of VAT) 12,000 1,200
Assuming the custom duties are determined on the basis of the quantity of volume of the goods, the VAT on the
importation is
c. 47,981.76
a. 31,260
d. 44,742
b. 37,285
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 P., imported a car from the USA for his personal use. Total landed cost is Php 250,000 (about $5,000)
including custom duties of Php 50,000. VAT payable is
a. 25,000
d. none, because importation is for personal
b. 30,000
use.
c. 10,000
42. Lavadena Construction Corporation, is a VAT registered general construction company. Its data for the quarter
are revealed below:
Contract 1- Residential house
Contract Price
1,200,000 Php
Collection during the month
616,000 Php
Contract 2- Warehouse
Contract Price
1,000,000 Php
Percentage of completion
70%
Collection during the month
220,080
Importation of construction equipments from Japan:
Invoice cost, Japan (1$: Php 44)
$7,500
Value per Bureau of customs
Php 340,000
Customs duties
35,000
Freight and insurance
17,000
Purchases of materials:
From VAT registered persons
From non-VAT registered persons
226,240
126,500
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
P 600,000
100,000
The VAT on importation is
a. 82,560
b. 145,920
c. 135,360
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
P5,800,000
2,820,000
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
P266,000
215,000
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