Business Tax

By: mjc
Reviewer

1. The VAT is a tax on D

a. consummation
b. commission
c. compensation
d. consumption

2. The VAT is a tax on consumption levied on C

I. any barter, lease, exchange or sale of goods and properties in the course of
trade or business
II. any sale or barter of service in the course of trade or business
III. any sale of service in the course of trade or business
IV. any importation of goods and services in the course of trade or business
V. any exportation of goods and services in the course of trade or business
VI. any importation of goods in the course of trade or business

a. I, II, IV, V
b. I, IV, V
c. I, III, VI
d. I to VI

3. The phrase “in the course of trade or business” includes transactions incidental to the regular A
conduct of a commercial or an economic activity
a. True
b. False

4. A _________ is an individual deriving gross sales or receipts of not exceeding P100,000 during C
any 12-month period
a. Rank and file employee
b. Minimum wage earner
c. Marginal income earner
d. Minimum income earner

5. cAny business or businesses pursued by an individual where the aggregate gross sales or E
receipts do not exceed P100,000 during any 12-month period shall be considered
a. principally for subsistence or livelihood
b. in the trade course of trade or business
c. not in the trade course of trade or business
d. A and B
e. A and C

6. _________ who perform service in the Philippines are deemed to be making sales in the course D
of trade or business even if the performance of services is not regular.
a. Resident citizens
b. Non-resident citizens
c. Residents
d. Non-residents

7. The following persons or entities are subject to VAT E

a. Those whose AGS or AGR during any year or in any 12-month period exceed
P3,000,000
b. Those whose AGS or AGR do not exceed P3,000,000, but opted to register in VAT
Business Tax
By: mjc
Reviewer

system
c. A person commencing a new business if he expects to realize an AGS or AGR in
excess of P3,000,000 from taxable transaction for the next 12-months
d. Government entities and instrumentalities, including government-owned or
controlled corporations
e. All of the above

8. For the purposes of the new threshold of P3,000,000, the husband and wife shall not be B
considered as separate taxpayers
a. True
b. False

9. There is no provision in the VAT law that expressly exempts certain persons from payment of A
the VAT because indirect taxes are levied on objects or transactions.
a. True
b. False

10. Products classified in this paragraph shall be considered in their original state even if they have G
undergone the simple processes of preparation or preservation, such as
a. Broiling
b. Drying
c. Freezing
d. Salting
e. Smoking
f. Stripping
g. All of the above
h. None of the above

11. Sale of cotton and cotton seeds in their original state is subject to VAT A
a. True
b. False

12. Importation of raw materials for use in the production of fertilizers are subject to VAT a
a. True
b. False

13. Importation of vehicles, vessels, aircrafts, machineries, and other similar goods for use in B
manufacture shall also be exempt from the VAT.
a. True
b. False

14. ______ subject to percentage tax under Title V are exempt from the VAT B
a. Goods
b. Services
c. Goods and services

15. ___________ refer to those persons producing for others poultry, livestock or other agricultural D
and marine food products in their original state.
a. Marginal income earner
b. Minimum wage earner
c. Farmers and fishermen
d. Agricultural contract growers
Business Tax
By: mjc
Reviewer

16. The following are services exempt from the VAT, except C
I. Medical
II. Dental
III. Hospital
IV. Veterinary
V. Laboratory
VI. Sales of drugs and medicine to out-patients (the hospital or clinic operates
a drug store)
VII. Sales of drugs and medicine to in-patients (the hospital or clinic operates a
drug store)

a. IV
b. V, VI
c. VI
d. VI, VII

17. In case of credit cooperatives duly registered with the CDA, exemption is only limited to the B
gross receipts on loans extended to its members.
a. True
b. False

18. S1: Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with CDA c
are generally exempt from the VAT
S2: Importation by non-agricultural, non-electric and non-credit cooperatives duly registered
with CDA of machineries and equipment to be used by them are subject to VAT.
a. Only S1 is true
b. Only S2 is true
c. Both statements are true
d. Neither are true

19. If a person is a non-VAT registered person who has export sales during the year, such D
exportation is ______
a. Vatable at 0%
b. Vatable at 12%
c. Subject to 3% OPT
d. Exempt from the VAT

20. Senior citizen or elderly refers to any Filipino citizen who is a resident of the Philippines and who C
is
a. 70 years old and above
b. 65 years old and above
c. 60 years old and above
d. 65 years old

21. Transactions of senior citizens with the sale of certain goods and services exempt them from B
the VAT and subject them to a 20% discount.
a. True
b. False

22. The 12% value-added tax is applied on the ____________ of the goods or properties sold, E
bartered or exchanged.
a. Cost of sales
b. Gross value in money
Business Tax
By: mjc
Reviewer

c. Gross selling price

d. Amount of inventory at year end
e. B and C

23. The value-added tax should be paid by the seller. A

a. True
b. False
24. The value-added tax should be paid by the transferor. A
a. True
b. False

25. Which of the following items does not belong to the group? D
a. Inclusive of tax
b. Total invoice price
c. VAT inclusive
d. Gross selling price

26. The term “goods or services” shall mean all tangible objects which are capable of pecuniary B
estimation.
a. True
b. False

27. The excise tax on goods or properties, if applicable, shall from part of the gross selling price A
a. True
b. False

28. The term “gross selling price” is VAT inclusive. B

a. True
b. False

29. In case of sale, barter or exchange of real property subject to VAT, gross selling price shall B
mean the consideration stated in the sales document or zonal value, whichever is lower.
a. True
b. False

30. The following are allowable deductions from gross selling price, except D
a. Sales returns
b. Sales allowances
c. Sales discount
d. Sales on account
e. All are allowable deductions from the GSP

31. Gross selling price includes all sales made during the period, excluding on account sales. B
a. True
b. False

32. Output tax in the VAT due on the sale or lease of taxable goods or properties or services by any A
person registered or required to register under the Tax Code.
a. True
b. False

33. Input vat refers to the VAT tax from or paid by an VAT or non-VAT registered person in the B
course of his trade or business on importation of goods or local purchase of goods or services,
Business Tax
By: mjc
Reviewer

including lease or use of property, from a VAT registered person.

a. True
b. False

34. In transactions deemed sale, no actual sale of goods took place but such transactions are A
subject to VAT.
a. True
b. False

35. In transactions deemed sale, goods or properties are disposed of or transferred _______ C
a. through the sale of the same
b. through a sale with a selling price higher than its cost
c. for purposes other than sale
d. all of the above

36. Telephone bill on domestic calls is part of the computation for ______ C
a. Expenses for the year
b. Output tax
c. Input tax
d. None of the above

37. The tax rate imposed in taxable sales of goods or properties is 12, except on some transactions A
that are zero-rated (0%).
a. True
b. False

38. Zero rated transactions are exempt transactions. B

a. True
b. False

39. S1: The transaction such as export sales and foreign currency denominated sales must be C
transacted by a VAT registered taxpayer.
S2: If the statement in S1 is done by non-VAT registered, the sale is exempt from tax.
a. Only S1 is true
b. Only S2 is true
c. Both statements are true
d. Neither are true

40. The difference between zero-rated transactions and VAT exempt transactions is that __ D
a. there is no output and input taxes in zero-rated
b. there is no difference between the two
c. the non-VAT registered taxpayer in the former can claim input taxes for the VAT his
suppliers charged him
d. the VAT registered taxpayer in the former can claim input taxes for the VAT his
suppliers charged him

41. The value allowed for income tax purposes on inventories shall be the basis for the computation A
of the 2% transitional input tax excluding goods that are exempt from VAT.
a. True
b. False
42. The tax base for the transitional input VAT is the beginning inventory balance, whether or not A
such goods were purchased from a VAT or non-VAT registered entity.
a. True
Business Tax
By: mjc
Reviewer

b. False

43. Only VAT registered persons shall be entitled to the transitional and presumptive input tax A
credits.
a. True
b. False

44. __________ shall mean pasteurization, canning and activities which through physical or C
chemical process alter the exterior texture or form or inner substance of a product in such a
manner as to prepare it for special use to which it could not have been put in its original form
or condition.
a. Operations
b. Manufacturing
c. Processing
d. Production

45. Which among the following statements on sale of real properties is the only subject to VAT E
a. Real properties not primarily held for sale to costumers or held for lease in the
ordinary course of trade or business
b. Sale of real properties utilized for low-cost housing
c. Sale of real properties utilized for socialized housing
d. Sale of residential lot valued at P1,500,000 and below and house and lot and other
residential dwellings valued at P2,000,000 and below
e. Real properties primarily held for sale to costumers or held for lease in the ordinary
course of trade or business
f. None of the above
g. All of the above

46. To be subject to VAT, the following requirements must be satisfied D

I. The service must be performed in the course of trade or business
II. It must be performed in the Philippines
III. Consideration must be received actually or constructively
IV. The transaction is not exempt under the Code, special laws or international
agreements

a. I, II, IV
b. I, IV
c. I, III
d. All must be satisfied

47. The place of payment is immaterial in determining whether the transaction is subject to VAT or A
not.
a. True
b. False

48. The following services of franchise grantees are subject to VAT E

a. On telephone and telegraph
b. On toll road operations
c. On radio and TV broadcasting whose annual gross receipts of the preceding year
exceed P10 million
d. All other franchise grantees (except gas and water utilities)
e. All of the above
Business Tax
By: mjc
Reviewer

49. Franchise grantees of radio and TV broadcasting whose annual gross receipts of the preceding C
year do not exceed P10 million are subject to which tax?
a. 12% VAT
b. 0% VAT
c. 3% Franchise Tax
d. VAT Exempt

50.