JUNIOR PHILIPPINES INSTITUE OF ACCOUNTANTS BUSINESS TAXES MULTIPLE CHOICE 1.Royal Mining is a VAT-registered domestic mining entity. One of its products is silver being sold to Bangko Sentral ng Pilipinas. It filed a claim with the BIR for tax refund on the ground that under Section 106 of NICR, sales of precious metal to Bangko Sentral ng Pilipinas are considered export sales subject to zero-rated VAT. Is Royal Mining’s claim for refund meritorious? A) Yes, sale of precious metal to Bangko Sentral ng Pilipinas are deemed zerorated transactions. B) Yes, sale of precious metal to Bangko Sentral ng Pilipinas is deemed an exempt sale. C) No, sale of gold to Bangko Sentral ng Pilipinas is zero-rated transactions not silver. D) No, sale of precious metal to Bangko Sentral ng Pilipinas is creditable not refundable. 2. Congress enacts a law imposing a 55 tax on gross receipts of common carries. The law does not define the term “gross receipts”. Express Transport. Inc., Bus Company plying the Manila Baguio route, has time deposits with ABC Bank. In 2005, Express Transport earned P1 million interest deducting the 20% final withholding tax fro its time deposits with the bank. The BIR wants to collect a 5% gross receipts tax on the interest income of Express Transport deducting the 20% final withholding tax. Is BIR correct? A) Yes, gross receipts means cash collected whether actually or constructively without any deductions B) Yes, gross receipts means all cash collection actually received without any deductions. C) No, gross receipts means actual receipts after deducting of withholding tax. D) No, gross receipts means actual receipts after deducting tax credits. 3. Lily’s fashion Inc., is a garment manufacturer located and registered as a Subic bay Freeport Enterprise under Republic act no. 7227 and a non-VAT taxpayer. As such, it is exempt from payment of all local and national internal revenue taxes. During its operations, it purchased various supplies and materials necessary in the conduct of its manufacturing business. The suppliers of these goods shifted to Lily’s Fashion, Inc. the 10% Vat on the purchased items amounting to P500,000.00. What is the proper remedy of Lily’s Fashion, Inc? A) Lily’s Fashion Inc., may used the P500,000 as tax credit; B) Lily’s Fashion Inc., may ask for a refund of the P500,000; C) Lily’s Fashion Inc., may convert the P500,000 into tax warrants D) Lily’s Fashion Inc., may charge it to cost or expense. and payments on purchases from VAT-registered supplies.000 C) P 38. if A opted to be registered under the VAT scheme.400 B) P32.Then period to register as a VAT-entity with the appropriate Revenue District Officer shall be within ten (10) days from date of employment. True B) True.000 C) P 50. the VAT payable is A) P 15. C) Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter D) All of the above.000 D) P 27.000 Sales of non-food items ----------------------------------------.200 8. operates a convenience store. The commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for: A) Failure to issue receipts or invoices of a Vat – registered entity.100. had the following selected transactions in a month.000 The percentage tax (tax due) is (above amounts are net of taxes) A) P15. Using the preceding number.P 280.000 88.000 B) P32. C.000 Purchases of processed food items ---------------------------.000 Purchases of non-. A) True. False 6.000 Salaries of helpers ----------------------------------------------48. were as follows: Sales of processed food items ---------------------------------. B) Failure to file a Vat – return for Vat – registered person as required by the tax code. False C) False.000 . from which the gross receipts from sales.food items --------------------------------80. True D) False.000 220. A. taxes not included: Sales Purchase of packaging materials from VAT supplies of services from VAT contractors of machinery From VAT supplier from farmers: P880.000 D) P27.000 33. as a manufacturer of cooking oil.4. 2nd Statement. 1st Statement-Failure of any person to register as a VAT-entity shall result to his being temporarily closed for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever. Requirements prescribed by the Commissioner in the closure order. 5.200.200 7. Corn Coconut The VAT payable is A) P23. Which of the following transactions is exempt from value-added-tax? A) Sales of non-food agricultural products in their original state B) Sale of non-food marine and forest products in their original state C) Sale of cotton and cotton seeds D) Sale of agricultural food products in their original state 14. and any person who import goods shall be subject to: A) business tax C) Other percentage tax B) VAT D) Excise tax 12. exchanges. C) Sale of coal and natural gas D) Lending activities by credit cooperatives . Which of the following transactions is exempt from value-added-tax? A) Medical services such as dental and veterinary services render by professional B) Legal services C) Services arising from employee-employer relationship D) Services rendered by domestic air transport companies 13. The VAT on goods A) Is a selling expense of the trader B) Is imposed on goods for domestic consumption C) It is not based on net sales D) May be due even if there is no actual sales of the goods 10. lease goods or properties. in the course of trade or business.680 140.400 9. Any person who. value added tax is an example of A) Gradual tax B) Progressive tax C) Proportional tax D) Regressive tax 11. Which of the following transaction is exempt from value-added-tax? A) Sale of books. renders services. barters.000 160.900 B) P52.500 D) P49.000 C) P44. Which of the following transaction is subject to value-added-tax? A) Services subject to other percentage tax B) Educational services duly approved by the department of education CHED and TESDA or those operated by the government. newspaper and magazines B) Sale of work of art C) Sale of literary works D) Sale of musical composition 15. sells. 2nd statement: The input value-added tax on purchase of capital goods valued at P1.000 shall be spread over 60 months if the life of property is equivalent to 5 years or more.000 shall be spread over the life of property if the life pf property is less then 5 years. 1st Statement: The input value-added-tax on purchase of capital goods valued at P 1. B) Sale to Philippine Economic Zone Authority. B) Sales of fertilizer. transmission and distribution of electricity D) Services rendered by professional such as CPAs. C) Manufacturer of packed noodles D) Manufacturer of dried fish 21. C) Sales by non-agricultural. non-electric.000 17.500. Which of the following transactions is subject to zero-rated value-added-tax? A) Services by regional or area headquarters of multi-national corporations. true C) True. the annual gross receipts do not exceed P1. 20. false F) False. seeds including their ingredients C) Sale by agricultural contact grower D) Sale of goods services or importation.16. Sale of raw materials or packing materials to export-oriented enterprises is considered export sales when export sales of such enterprise A) Exceed 50% of total annual production B) Exceed 33 1/3% of total annual production C) Exceed 66 2/3% of total annual production D) Exceed 70% of total annual production 19. E) True. B) Services rendered by banks. C) Generation.000. non-bank financial intermediaries. Which of the following businesses is allowed a presumptive input value-added-tax? A) Manufacturer of canned goods.000. true D) False. Which of the following transaction is subject to zero-rated value-added-tax? A) Services rendered to person engaged in international shipping or air transport operations. D) Importation of professional instruments and implements by settlers in the Philippines. Which of the following transactions is subject to value-added-tax? A) Sale of Petroleum products. false . Physicians and Lawyer 18. non-credit cooperatives. B) Manufacturer of packed juices. 500 C) P13.000 D) P30.364 B) P17.000.00 The following input taxes were passed on by its VAT supplier during the 23.000 5.000 B) 7.000 Arrastre charges 8. An importer wishes to withdraw its importation from the Bureau of Customs. XYZ Corporation had domestic sales amounting to P1.000.000 Postage 5. XYZ corporation’s VAT payable: A) (48.000.000 D) 16. VAT on importation is A) P0 C) P30. Total landed cost is P250.500 and other charges in the amount of P9. including customs duties of P50.640 D) P14.00) C) 60.000. For the month of May. The VAT due is A) P12.22.000.000.00 100.000.000 25. XYZ’s total purchases directly attributed to domestic sales amounted to P1.000 .700 26. ERA Corporation has the following sales during the month: Sale to private entities Sale to export-oriented enterprises Sale of exempt goods month: Input tax on taxable goods Input tax on zero-rated sales Input Tax on sale of exempt goods Input Tax on depreciable capital goods not attributable to any specific activity The VAT payable for the month: A) 1.000. The following were incurred in relation with the importation Insurance P15.680. During the same month.000 B) P20.00 224.00 3.00 B) 54. The invoice value of the imported article was $ 7.120.000.000.000.000 and export sales amounting P1.00 2.000 ($1 – P 50).000. During the month of May. The imported goods were subjected to 10% customs duty in the amount of P12.000 Wharfage 7.00 100. A imported an article from USA.000.000.500.00 24.000 and total purchases directly attributable to export sales P1.000.000 Freight 10.500. K imported a car from USA for her personal use.008.200 C) 9.00 20.00 D) 62. 2008 100.000 Installment Sales 100. The hotels are allowed credit based on the track record of the hotels. a VAT registered person.000 3.000 Office air conditioner.000 D) P24. A trader.000 customs duty and P30.000 Home appliances for residence.000 C) P16.000 Supplies.000 30.000 D) P9.000 Consignment made (net of VAT): June 15.000 Note: Receipt from installment sales 40. Assuming that the imported article above was sold for P600. The A Bakers sells cakes and pastry to well known hotels in Metro Manila area.000 for trucking from the customs warehouse to its warehouse in Quezon City.000 C) P9.400 C) P24. Seventy five 75% percent of the sales are normally on account. gross of VAT 17. total invoice amount 56.000 May 15.500 B) P20.000 The imported article is subject to P50. made the following purchases during the month of January 2008 Goods for sale.000 27. A .000 Open Account sales 100.000. VAT exclusive.600 Repair of store.200 28.400 Creditable input taxes are A) P26. 2008 100. How much is the output tax for the month of April 2007? A) P22. exclusive of VAT 20.000 excise tax.500 B) P35.000 .000 B) P34.000 D) P60.000 C) P50.000 April 15. The VAT on importation is A) P50.000 29. made the following sales of goods during the month of June 2008. including the VAT. A spent P5.Bokerage fee Facilitation fee 25. The Vat payable is A) P60. exclusive of VAT: Cash sales P 200. total invoice amount evidenced by Ordinary receipt of the contractor 4. inclusive of VAT P 224.000 D) P72. 2008 100.000.000 C) P60.500 B) P12. The sale by the store in April 2007 was P224.000 Output tax is A) P50. Amounts received for overseas dispatch. A person whose business is to keep automobile for hire or keep them stored for use or order A) Keepers of garage B) Common Carrier C) Taxicab operators D) Tourist bus operator 33. end of the quarter 75.500 B) P3.400 D) P32.400 31.500 35.000 has the following data Accounts receivable.000 Purchase of supplies. One of the following is not subject to the 3% percentage tax A) International air carrier doing business in the Philippines B) International shipping carrier doing business in the Philippines C) Domestic carriers and keepers of garage D) Franchise grantee of electric utilities 36. message or conversations originating from the Philippines are subject to A) 3% franchise tax B) 10% overseas communication tax .250 C) P7.000 shall be A) 2% of the gross receipts B) 3% of the gross receipts C) 4% of the gross receipts D) 5% of the gross receipts 34.000 Accounts receivable.500. In the third quarter of 2007.200 The percentage tax due for the quarter is A) P2.B) P29.000. beginning of the quarter P 50. total invoice amount 11. The franchise tax grantees of radio and television broadcasting whose annual gross receipts of the preceding year do not exceed P10.000 Sales during the quarter 100. One of the following is subject to common carriers’ tax A) Owners of bancas B) Owners of animal-drawn two wheeled vehicles C) Common carriers by land for transport of goods or cargoes D) Common carriers by land for transport of passengers 32. a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P1.000 D) P6. Franchise grantees of city gas and water utilities are subject to franchise tax of A) 2% B) 3% C) 4% D) 5% 37. Which one is not? A) Individual taxpayers. whether citizens or alien B) Corporate taxpayers.000 B) P90.000 D) P240.000 The common carrier’s tax payable is A) P30.000 Transport of goods 1. whether domestic or foreign C) Estates and trusts D) Dealers in securities 41. A tax on the right or privilege to enter places of amusement A) VAT B) Franchise tax C) Amusement tax D) Income tax 39. During a particular quarter.000 C) P100. A.500.000 D) None 43. One of the following statements is incorrect A) The ½ of 1% tax shall be collected by the brokers who made the sale and shall be remitted within 5 banking days from the date of collection B) The tax paid on sale of shares through local stock exchange and initial public offering and secondary offering shall not be allowed deduction for income tax purposes C) The ½ of 1% tax stock transaction is a final withholding tax on income D) The ½ of 1% tax stock transaction is collected whether there is an income or loss and is a percentage tax 42. Using the data above.000 B) P90.C) 2% franchise tax D) 10% VAT 38.000 Transport of cargoes 500. its receipts consist of the following Gross receipts (without VAT) P 1. operates a ferryboat.000 .000 C) P100.000. All of the following except one are liable to ½ of 1% stock transaction tax. the output VAT is A) P360. One of the following is not subject to amusement tax on gross receipts A) Disco houses B) Cockpits C) Professional basketball D) Bowling alleys 40. 500 B) P13. A.000 from sale of electricity.000 .000 Gross sales 450.000 C) P225. A promoted a world boxing championship in Manila featuring B.000. The following data are taken from the books of the variety store for the quarter ending March 31.000.000. December 31. Gate receipts amounted to P3. Inside the cockpit. its gross receipts amounted to P2.000 Restaurant operations: Sale of foods 100.000 Purchase from VAT-registered supplies 350. the percentage tax due from B is A) P90.000 The amusement tax due from A is A) P90.500.000 47. The amusement tax due from A is A) P90.000 B) P500.000 D) None 46.500 D) None 45.000.500.000 48.000 B) P135. is a holder of franchise to sell electricity.500 49. 2006 P 100.000 C) P16. he also operates a restaurant. a Filipino champion.000 C) P100. The amusement tax due is A) None C) P300.44. It has also receipts from the lease of its auditorium and theater amounting to P600.000 D) P75.000 and additional receipts from television coverage was P2. except that the restaurant is not owned by A but is owned by another person. B.000 B) P60.000. not VAT registered and whose annual gross sales never exceeded P1. The percentage tax due for the quarter is A) P40.000 D) P75. A operates a cockpit. 2007 Merchandise inventory. In a particular quarter. His gross sales in any one year do not exceed P1. Using the above data.000 The percentage tax due is A) P10. He is not vat-registered.000 B) P135.000 C) P225.000 D) P7.000.000 D) P900. Data for the particular quarter follow Gross receipts: Cockpit operations P500.000 C) P225.000.000 B) P135. A is the owner of a small variety store. Continuing the preceding number.000 Sale of liquor 150. 000 .000 D) P900.000 B) P500. Assuming that the above data is not a world championship but a Philippine national boxing championship. how much is the amusement tax? A) None C) P300.50.