L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINALS EXAMINATION – CAE 18 Business Taxation

2nd Semester, AY 2020– 2021
Prepared by: Amie Jane R. Miranda, CPA

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

I. MULTIPLE CHOICES. Choose the best answer from the choices and encircle your answer. Strictly “NO
ERASURES”.

A, a VAT registered taxpayer-imported goods as follows:

Cost price of imported goods 900,000
As rteInsurance premiums 125,000
Freight charges 135,000
Customs duties 600,000
Wharfage fees 20,000
Arrastre fees 30,000
Internal processing fees 40,000
Customs broker fees 80,000
Documentary stamp tax 60,000
Interest and other bank charges 90,000
Warehouse and storage fees 100,000
Excise tax 120,000
Facilitation fees 50,000
1. The value to be used as the basis of assessment of the tariff or customs duties or the dutiable
value is
a. 1,280,000
b. 1,160,000
c. 1,760,000
d. 1,880,000
2. The landed cost is
a. 2,350,000
b. 1,760,000
c. 2,300,000
d. 1,880,000

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3. As regards use of VAT invoice or reciept:
First statement – A person may have two lines of business, one subject to VAT, and the other is
exempt from VAT.
Second Statement – As a consequence of No. 1 above, he must have two separate sets of invoices
and receipts.
a. Both statements are true
b. Both statements are false
c. Only the first statement is true
d. Only the second statement is true
4. Importation of which of the following if belonging to persons coming to settle in the Philippines
for their own use and not for sale barter or exchange is subject to VAT
a. Wearing apparel
b. Professional instrument and implements
c. Domestic animals
d. Vehicle

Use the following data on Numbers 5-6:

Century Park Hotel, VAT-registered, offers different services to its guests. The following data taken
from the books of the taxpayer are for the first month of the first quarter of 2016:
Revenues Collections
Hotel rooms (local guests) 800,000 700,000
Dining Hall:
Sale of food and 1,000,000 850,000
refreshments
Sale of wine, beer and liquor 700,000 600,000
Disco:
Sale of food and 600,000 550,000
refreshments
Sale of wine, beer amd 500,000 450,000
liquor

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5. How much is the output tax using 12% VAT rate?
a. 432,000
b. 378,000
c. 258,000
d. None of these
6. How much is the total amusement tax?
a. 300,000
b. 180,000
c. 150,000
d. None of these
7. The following information was gathered pertaining to the business of a VAT-registered person for
a taxable period:
Taxable sales 800,000
Zero-rated sales 400,000
Exempt sales 300,000
Input tax-taxable sales 45,000
Input tax-zero-rated sales 10,000
Input tax-exempt sales 15,000
Input tax that cannot be attributed to any transaction 20,000
Assuming all applicable input taxes are to be claimed as credits against output taxes, the VAT
payable is:
a. 51,000
b. 35,000
c. 25,000
d. 6,000
8. In 2018, Rommel paid the VAT on the importation of his merchandise inventory. In 2018, Rommel
was able to sell the imported merchandise and correspondingly paid the appropriate VAT on the
sale deducting the import VAT as his input tax. Which of the following statements is applicable to
the foregoing facts?
a. The tax benefit rule applies.
b. In the determination of taxable income, Rommel may deduct the import VAT he paid.
c. The import VAT may be claimed as a tax credit on his income tax payable.
d. The import VAT can not be deducted from Rommel’s gross income.
9. Sale of raw materials or packing materials to export-oriented enterprise is considered export sales
when the 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
10. International air and shipping carriers doing business in the Phils. shall pay a percentage tax, based
on their gross receipts of
a. 7.5%
b. 5%
c. 3%
d. 1%
11. Transactions deemed sale, except
a. Consignment of goods
b. Distribution or transfer to shareholders or investors of shares in the profits of a VAT registered
person
c. Distribution or transfer to creditors in payment of debt.
d. Retirement from or cessation of business, with respect to inventories of taxable goods existing
as of such retirement or cessation.
12. Which of the following transportation providers is not subject to percentage tax?
a. School bus operators
b. Cargo truck operators
c. Passenger jeepney operators
d. Car rental business
13. The Percentage tax on winnings is imposed on the winnings of bettors is:
a. Cockfighting
b. Horse race
c. Jai-alai
d. Bosing

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 14. Rentals of property, real or personal, received by bank and non-bank financial intermadiaries
performing quasi-banking functions are:
a. Subject to 12% VAT
b. Subject to gross receipts of 5%
c. Subject to gross receipts tax of 7%
d. Subject to 3% OPT if annual gross receipts do not exceed the VAT threshold
15. For value-added tax purposes, which of the following transactions of VAT-registered may not be
zero-rated?
a. Export sales
b. Foreign currency denominated sales
c. Sale of goods to the Asian Development Bank
d. Sale of goods to an export oriented enterprise
16. Construction by Stonerich of concrete barrier for the Asian Development Bank (ADB) in Ortigas
Center to prevent car bombs from ramming to ADB gates along ADB Avenue in Mandaluyong City
is subject to what business tax?
a. 12% VAT
b. 0% VAT
c. Exempt from VAT
d. 3% OPT
17. Who are allowed to withdraw VAT from its suppliers?
a. Entities, organization, business or corporation duly registered with Philippine Economic Zone
Authority (PEZA)
b. Nonresident individual and corporations
c. Government or any of its instrumentalities including government owned and controlled
corporation
d. Resident foreign corporation doing business in the Philippines
Using the following data for the next two questions:
Alpha Corporations (VAT registered) has the following data for the month:
Sales – Private entities 2,000,000
Sales – VAT exempt goods 1,000,000
Sales – government 1,000,000
The following input taxes were passed-on by VAT suppliers to Alpha Corporation during the month:
Input VAT on taxable goods 80,000
Input VAT on sale of exempt goods 20,000
Input VAT on sale to the government 40,000
Input VAT on depreciable capital
Goods not directly attributable
To any specific activity (monthly
Amortization for 60 months) 160,000
18. The VAT payable for the month is
a. 40,000
b. 80,000
c. 160,000
d. Nil
19. Gerald distribution Inc., a VAT taxpayer, had the following data in a month:
Cash sales 200,000
Open account sales 500,000
Consignment:
0-30 dayas old on which there were remittances
From consignees of 200,000) 600,000
31 to 60 days old 700,000
61 days old and above 900,000
How much is the output tax?
a. 348,000
b. 216,000
c. 264,000
d. 108,000
20. The financial records of Benz Corp., a VAT-registered taxpayer, for the taxable year 2013 disclosed
the following:
Local sales to private entities 1,500,000
Export sales 500,000
Local sales to government 800,000
How much is the sales subject to value-added tax?
a. 2,800,000

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 b. 2,300,000
c. 2,000,000
d. 1,500,000
21. Villar inc., is a real estate dealer. Details of its sales during the year showed the following:
Date of sale June 2, 2014
Cosideration on the deed of sale 5,000,000
Fair market value in the assessment rolls 4,800,000
Zonal value 5,200,000
Schedule of payments:
June 2, 2014 1,000,000
June 2, 2015 2,000,000
June 2, 2016 2,000,000
How much is the output tax to be recognized of the June 2, 2016 payment?
a. 0
b. 124,800
c. 249,600
d. 624,000
22. A Vat registered drugstore selles ten (10) pieces of prescription medicine to a Senior Citizen who is
also PWD at an undiscounted selling price of 5.00 per piece. It issues the following reciept:
Selling price (VAT-exempt) of 10 pcs. 5.00 each 50
Less:20% discount 10
Amount payable by the Senior Citizen 40
What is the treatment of the discountfor income tax purposes?
a. Deducted from gross income
b. Deducted from gross sales
c. Deducted from either gross sales from gross income upon the discretion of the taxpater.
d. Deducted from the tax due.
23. In which of the following cases shall the selling price be deemed inclusive of VAT?
I. – if the gross selling priced is based on the zonal value or market value of the property
II. – if the VAT is not billed separately.
a. I only
b. II only
c. Both I and II
d. Neither I and II
24. Ms. Feliciana Batungbakal receives a package of goods from her sister who lives in California,
United States of America. Ms. Batungbakal will use the goods for personal purposes. She is not
VAT-registered. Which of the following statements is correct in connection with the receipt of a
package?
a. Ms. Batungbakal shall be subject to VAT on importation.
b. Ms. Batungbakal shall not be subject to VAT on importation because she is not VAT-registered.
c. Ms. Batungbakal shall not be subject to VAT on importation but sjall be subject to VAT sales.
d. None of choices.
25. Luciana foods products which include fish and crustaceans are exempt from VAT. Which of the
following is not exempt from VAT?
a. Eels
b. Trout
c. Prawns
d. Aquarium fish
26. Any person who elects to optionally register under the VAT system, other than franchise grantees
of radio and/or television broadcasting, shall not be allowed to cancel his registration for the next:
a. 5 years
b. 3 years
c. 2 years
d. 1 year
27. Which of the following transactions in the course of trade of business requires actual payment of
VAT before an inout tax is allowed as tax credit from the output tax?
a. Purchased of services
b. Transactions deemed sale
c. Domestic purchase of goods for use as raw materials supplied on the sale of services.
d. Domestic purchase of goods for use in trade or business for which deduction for depreciation
or amortization is allowed under the Tax Code.
28. A VAT-registered domestic carrier operating air, land and sea transport equipment acquired
vehicles for use in its operation to transport goods and cargoes. The domestic carrier:
a. Can claim input taxes on the said acquisitions.

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 b. Cannot claim input taxes on the said acquisitions.
c. Can claim input taxes only on the acquisitions of air and sea transport vehicles.
d. Can claim input taxes on the acquisition of land transport vehicles.
29. If the input tax, exclusive of input tax carried over from the previous quarter, exceeds the output
tax, the excees input tax shall be:
a. Credited in every quarter but not to exceed seventy percent (70%) of the output tax.
b. Carried over in the suceeding quarter or quarters.
c. Disregarded because carry over is no longer allowed under the new regulations.
d. Deducted from income tax due.
30. Which of the following is incorrect? The percenatge tax is:
a. A tax on asale of services
b. Imposed on sale of goods
c. Imposed together with the value-added tax
d. Imposed together with the excise tax
31. It shall be the duty of every stock broker who effected the sale subject to the tax imposed under
section 127 (A) to collect the tax and remit the same within:
a. Twenty (20) days after the end of the quarter.
b. Ten (10) working days after the end of the month.
c. Five (5) days from the date of the collection.
d. Five (5) banking days from the date of collection.
32. Colt, a delaer in securities, sells 1,500,000 worth of sahres she holds as investment. The shares sold
are acquired for 1,400,000 are listed and traded in the local stock exchange. How much is the
busines stax due in the sale?
a. 12,000
b. 7,500
c. 9,000
d. None
Items 33 to 37 are based on the following:
The following data are taken from the records of Ms. Inday Duterte, not VAT-registered, who has various
business for the current year 2018:
Gross sale from sale of shoes and clothes 300,000
Gross sales from her boutique 400,000
Gross receipts from her parlor 500,000
During the month of January, the following data are presented:
Gross sales from sale of shoes and clothes 30,000
Gross sales from her boutique 40,000
Gross receipts from her parlor 50,000
33. Is Inday subject to VAT?
a. Yes, because all her transactions are VAT-subject
b. No, because she is not VAT-registered and her aggregate gross sales and receipts do not exceed
the VAT threshold amount.
c. Yes, because once a taxpayer has several business, she is automatically subject to VAT
d. No, all her transactions are not VAT-registered
34. To what percentage tax, if any, will she be subject?
a. Percentage tax on VAT-exempt persons
b. Percentage tax on domestic common carriers
c. Percentage tax on franchise grantees
d. None of the choices
35. How much is the percentage tax due for the month of January?
a. 2,400
b. 2,700
c. 3,600
d. 6,000
36. When shall the Percentage Tax Return be filed?
a. February 25, 2018
b. February 24, 2018
c. February 21, 2018
d. February 20, 2018
37. Can Inday register her transactions under the VAT-system?
a. Yes. Any persons who is VAT-exempt under Section 109 (w) not required to register for VAT
may elect to be VAT-registered by registering optionally under the VAT system.

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 b. No. Any person who is VAT exempt cannot optionally register his/her transactions which would
have been exempt from VAT under the VAT system.
c. Yes. As a rule, it ismandatory for all taxpayers with several Vat-subject transactions to register
them under VAT system.
d. No. It is unwise to register because the taxpayer cannot claim input tax credits.
38. A building contractor has three (3) building contracts (all figures are net of VAT):
Contract Price (Services & Materials):
With private property owner, Building No. 1 6,000,000
With private property owner, Building No. 2 5,000,000
With national Government 10,000,000
Billings on the contract price:
On contracts with private property owner, Building No. 1 6,000,000
On contracts with the National Governmnent 5,000,000
Collections on the billings:
On contracts with private property owner, Building No. 1 4,100,000
On contracts with National Government 5,000,000
Advances received, Building No. 2 500,000
Purchases:
Materials for use on buildings of private property owners 600,000
Materials for use on buildings of the National Government 550,000
Payment for services:
For services related to buildings of private property owners 500,000
For services related to buildings of the National Government 520,000
How much if the VAT payable?
a. 891,600
b. 420,000
c. 588,000
d. 1,059,600
39. How much input tax will be closed to expense?
a. 221,600
b. 121,600
c. (221,600)
d. (121,600)
40. How much is the final withholding VAT?
a. 600,000
b. 150,000
c. 350,000
d. 250,000

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 Number 41-46 are based on the following information:
A taxpayer sold the following dhares of stock in Domestic Corporation during the year:
Listed and traded Not listed and traded Listed and traded
Selling price 1,500,000 750,000 1,000,000
Cost (par value) 1,230,000 520,000 750,000
Date sold 1/20/15 6/15/15 12/2015

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41. Shares of stock held as investment when sold through the local stock exchange shall be subject to:
a. 5% on first 100,000 capital gain; 10% on excees of 100,000.
b. 6/10 of 1% based on gross selling price or gross value in money.
c. 4%; 2%; 1% based on gross selling price or gross value in money.
d. 12% VAT based on gross income.
42. Shares of stock held as investment when sold not through the local stock exchange shall be subject
to:
a. 15% of the capital gain.
b. ½ of 1% based on gross selling price or gross value in money.
c. 4%; 2%; 1% based on gross selling price or gross value in money.
d. 12% VAT based on gross income
43. The capital gains tax payable is:
a. 3,750
b. 34,500
c. 18,000
d. 23,000
44. The stock transition tax (percentage tax) due on sales of shares in 2015 is:
a. 15,000
b. 7,500
c. 12,500
d. 16,250
45. Assuming now that the taxpayer in the problem is a dealer in securiries and all the shares (which
were held as inventory) were sold to direct buyer, the transactions shall be subject to:
a. 5% on first 100,000 capital gain; 10% on excees of 100,000.
b. 6/10 of 1% based on gross selling price or gross value in money.
c. 4%; 2%; 1% based on gross selling price or gross value in money.
d. 12% VAT based on gross income.
46. Ignoring No. 45 and assuming, instead, that the taxpayer in the original problem is a closely held
corporation selling its unissued shares of stock through the local stock exchange in the initial public
offering (IPO), the sale transation (depending on the proportion of the shares of stock sold to the
total outstanding shares of stock after the listing) shall be subject to:
a. 5% on first 100,000 capital gain; 10% on excees of 100,000.
b. 6/10 of 1% based on gross selling price or gross value in money.
c. 4%; 2%; 1% based on gross selling price or gross value in money.
d. 12% VAT based on gross income.
47. Oceans Canney is a VAT-registered processor of canned seafoods. Data for the month of April 2016,
value-added tax excluded, are as follows:
Sales, caned sardines 1,760,000
Sales, canned squid 1,320,000
Sales, canned milkfish 1,584,000
Cost of fresh sardines purchased 800,000
Cost of fresh squid purchased 600,000
Cost of fresh milkfish purchased 360,000
Cost of templates converted into tincans is 10% of the selling price. Cost of agricultural products
used as ingredients which were purchased is 8% of the cost of seafood purchased.
The VAT payable for the month of April 2016 is:
a. 512,346
b. 501,152
c. 500,512
d. 496,928
48. The China Bank, a domestic bank, shows the following data for January 2010:
Rentals from safety deposit boxes and real property
acquired through foreclosure proceeding for bad loans P 880,000
Net foreign exchange gains (difference between the
value of foreign currency sold and purchased) 220,000
Net trading gains from trading of securities,
commercial papers and other financial instruments
(difference between the yield or selling price
and the cost of obtaining the same) 660,000
Trust fees 110,000
Dividend from domestic corporation 30,000
Other service fees 220,000
Interest income from lending activities
from instrument with remaining term of:

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 Five years and less 700,000
More than five years 800,000
The percentage or gross receipt tax for the month is
a. P0
b. P43,000
c. P189,300
d. P104,500
49. Big bank has the following income/loss for the months of March and April:
March April
Interest income maturity of less than 5 years P50,000 P100,000
Rentals 50,000 50,000
Net trading gain/loss (10,000) 20,000
The gross receipts taxes payable for March and April, respectively –
a. P500,000; P8,500
b. P6,000; P9,200
c. P6,000; P9,900
d. P5,300; P9,200
50. Johnny executed on December 1, 2005 a long-term 10% loan from BPI amounting to P5,000,000
payable in 10 years with the first installment due on or before December 1, 2006. On December 1,
2009, the loan was preterminated. Assuming that all previous percentage taxes were correctly
withheld by BPI, compute the percentage tax on pretermination.
a. P80,000
b. P85,000
c. P100,000
d. P125,000
ajmiranda
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Goodluck and Godbless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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