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TitleVat
TagsDebits And Credits Taxes Invoice Value Added Tax Receipt
File Size231.7 KB
Total Pages16
Document Text Contents
Page 1

Vat Exercises

1. A tax on business is
a. Direct tax
b. Indirect tax

c. Property 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
b. Excise tax

c. Income tax
d. Percentage tax

3. Value added tax is a (an)
a. Indirect tax
b. Direct tax

c. Progressive 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
b. Caterer’s tax

c. Common carrier’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
b. Value added tax

c. Percentage 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
b. Sales on account

c. Sales and leaseback
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,
exclusive of tax

124,85
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
b. 10,398

c. 177,895
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
b. 12,895

c. 84,895
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
b. Part of the cost of purchase

c. A tax credit
d. Ignored

Page 2

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 Cantoria-
a. 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
b. False, true

c. Both statements are false
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
b. Transaction 2

c. Transaction 3
d. Transaction 4

17.Which transaction is zero rated?
a. Transaction 1
b. Transaction 2

c. Transaction 3
d. Transaction 4

18.Based on the information above, the Vat are absorbed by
a. Food processor
b. Wholesaler/exporter

c. Retailer
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

Page 8

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 P600,000
Payment to Sapotize Company 504,000
Purchase of materials by Patogrok Co. 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 P5,800,0
00

Purchases, net of input taxes 2,820,00
0

Sales return 200,000
Purchases return, net of input tax 300,000
Deferred input taxes (carried over from
third quarter

9,500

The VAT payable for the month of Oct by company is
a. 320,000
b. 285,500

c. 80,000
d. 288,100

48.The following are the data of City Appliances Marketing Company for October, 2008:

Sales upto Oct 15, total invoice
value

P266,0
00

Purchases upto Oct 15, net of
input taxes

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:

Page 15

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) 11,200
Purchase of services from Daman Services, Inc 56,000

79.The amount payable to Sina after withholding taxes of VAT and income tax is
a. 11,200
b. 10,600

c. 9,400
d. 10,500

80.The amount payable to Daman Services Inc. after withholding taxes of VAT and income tax
is
a. 56,000
b. 50,000

c. 52,500
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.

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