Value Added Tax (CPAR)

Theories

1. One of the following statement is incorrect

a. Imported goods which are subject to excise tax are no longer subject to VAT.
b. VAT on importation is paid to the Bureau of Custom before imported goods
are released from custody.
c. Expenses incurred after the goods are released from Customs custody are
disregarded in computing the VAT on importation.
d. When a person who enjoys a tax-exemption on his importation subsequently
sells in the Philippine such imported articles to a non-exempt person, the
purchaser-non-exempt person shall pay the VAT on such importation.

2. Which of the following input taxes can be refunded, converted into tax credit

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certificates or carried over to the next quarter at the option of the VAT registered

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taxpayer?

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a. Input tax on raw materials

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b. Input tax on importation of supplies

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c. Input tax on zero-rated sales of goods and services
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d. Input tax on purchase of services
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3. Value Added Tax is a/an
a. Indirect tax
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b. Direct tax
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c. Local tax
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d. Personal tax

4. Statement 1- A taxpayer whose gross sales or receipts exceeded the amount of

P1,919,500 shall pay VAT even if he is not VAT registered; consequently, he is
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also entitled to input taxes.

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Statement 2- Importer of goods for personal use is not subject to VAT is he is not
VAT registered.
a. Both statement are true
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b. Both statement are false

c. Only statement 1 is true
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d. Only statement 2 is true

5. Which statement is correct?

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a. Zero rated sales are exempt from the VAT.

b. A person whose sales or receipts do not exceed P250,000 is exempt from
VAT and OPT.
c. A person who issues a VAT invoice on a VAT exempt transaction is
nevertheless subject to VAT on the said transaction.
d. Entities which are exempt from income tax are also exempt from VAT.

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 6. Which of the following importation is subject to VAT?
a. Importation of frozen meat
b. Importation of bamboo poles
c. Importation of apples for personal consumption
d. Importation of grapes for sale

7. Which of the following is subject to VAT?

a. Sale of smoked fish
b. Sale of lechon
c. Sale of shells and coral products by a dealer
d. Sale of newspaper

8. One of the following is not a major business internal revenue tax in the Tax Code
a. VAT
b. Excise Tax

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c. Income Tax
d. Percentage Tax

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9. The allowable transitional input tax is

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a. The lower between 2% of the value of beginning inventory or actual VAT paid
on such inventory rs e
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b. The higher between 2% of the value of beginning inventory or actual VAT paid
on such inventory
c. The actual VAT paid on the beginning inventory
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d. 2% of the value of beginning inventory

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10. The VAT due on the sale of taxable goods, property and services by any person
whether or not he has taken the necessary steps to be registered
a. Input tax
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b. Output tax
c. Excise tax
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d. Sales tax

11. One of the following is not a transaction deemed sale

is

a. Transfer, use or consumption not in the ordinary course of business of goods

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or properties originally intended for sale or for use in the course of business
b. Distribution or transfer to shareholders or investor of goods or properties as
share in the profit of a VAT-registered person or to creditors in payment of
debt
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c. Retirement from or cessation of business, with respect to inventories of

taxable goods on hand as of the date of such retirement or cessation
d. Consignment of goods if actual sale is made within 60 days following the date
such goods were consigned

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 12. One of the following is not an activity subject to VAT
a. Sale in retail of goods by a dealer
b. Sale of bamboo poles by a dealer
c. Sublease of real property in the course of business
d. Importation of ordinary feeds for poultry chicken

13. Which of the following is not correct?

I. Any person who is not subject to mandatory registration because his actual or
expected gross sales/receipts from non-exempt business for the past 12
months do not exceed P1,919,500, may opt to register under the VAT system,
but shall not be allowed to cancel his VAT registration for the next three years.
II. Any person who is VAT registered but entries into transaction which are
exempt from VAT may opt that the VAT apply to his transaction which would
have been exempt but shall not be allowed to cancel his VAT registration for
the next three years.

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III. Franchise grantees of radio and/or television broadcasting whose annual

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gross receipts of the preceding year do not exceed P10M may opt for VAT

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registration, but shall not be allowed to cancel his VAT registration for the next
three years.

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a. III only
b. II only rs e
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c. I only
d. I, II and III
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14. Cantor is a VAT-registered dealer of liquors. On his sale in the Philippine, his tax
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is:
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a. Excise tax
b. Value Added Tax
c. Percentage tax
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d. None of these
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15. Receipts of the following are subject to the VAT, except:

a. Professional Basketball players
b. Film directors
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c. Lawyers
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d. Stage actor

16. Refund or Tax credits of Input tax are not allowed under:
a. Purchases on zero-rated or effectively zero-rated sales.
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b. Purchases of capital goods

c. Purchases of entities whose VAT registration was cancelled
d. Put chases related to VAT exempt transaction.

17. When there is purchases from a VAT-registered supplier, the input VAT allowed
as tax credit against output VAT would be based on

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 a. Sale
b. Purchases
c. Cost of sales
d. Expenses

18. The following transaction are VAT taxable, except

a. Importations
b. Sale of goods from the Philippines to foreign country
c. P2,000,000 domestic sales for the year of a non-VAT business
d. Sale of scrap materials by a VAT registered business

19. Statement 1- Annual gross receipts of P5,000,000 received by radio and TV

broadcast franchise holder, which registered as VAT is subject to 12% VAT
Statement 2- The gross receipts of P20,000,000 for the year reported by non-
VAT TV broadcast franchise are subject to VAT
a. Only statement 1 is correct

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b. Only statement 2 is correct

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c. Both statements are correct

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d. Both statement are incorrect

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Problem Solving
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Felicisima had the following data during the month of February:

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Case A Case B
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Sales, net of VAT 1,900,000 2,800,000

Purchases of goods for sale, exclusive of VAT 1,260,000 1,600,000
Purchases of machines (VAT not included) 1,440,000 900,000
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Machine life 6 years 3 years

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20. The VAT payable in Case A:

a. P76,800
b. P78,920
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c. P74,400
d. P154,080
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21. The VAT payable in Case B:

a. P36,000
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b. P141,000
c. P142,200
d. P300,000

22. The VAT payable in Case A if the life of machine is 4 years only:
a. P73,920

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 b. P154,800
c. P73,200
d. P74,400

23. Bunga Inc., a VAT taxpayer, is engage in the business of processing of fruits. Its
data on sales and purchases for the month of August are provided below:

Sales P200,000
Purchases:
Fresh Fruits 30,000
Raw sugarcane 12,000
Tin Can, gross of VAT 12,320
Paper Labels, net of VAT 5,000
Cardboard for boxes, net of VAT 8,000
Freight, gross of VAT (50% still unpaid) 10,080

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How much is the value-added tax payable?
a. P20,580

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b. P18,900
c. P19,380

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d. P20,100
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24. The financial records of Benz Corp., a VAT-registered taxpayer, for the taxable
year 2016 disclosed the following:
Local sales to private entities 1,500,000
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Export Sales 500,000

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Local sales to government 800,000

vi y re

How much is the total sales subject to value-added tax?

a. P2,800,000
ed d

b. P2,300,000
c. P2,000,000
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d. P1,500,000

25. Mantika Corp., a VAT-registered Corp., is a producer of cooking oil from coconut
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and corn. It had the following data for the month of January 2017:
Sales, gross of VAT P 784,000
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Corn & Coconut, Dec. 31, 2016 50,000

Purchases of Corn & Coconut 330,000
Corn & Coconut, Jan. 1, 2017 20,000
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Purchases from VAT suppliers, VAT included:

Packaging Materials 56,000
Supplies 16,800

The value-added tax payable for the month:

a. P56,060

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 b. P54,900
c. P60,650
d. P63,000

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aC s
vi y re
ed d
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