ADAMSON UNIVERSITY

COLLEGE OF BUSINESS ADMINISTRATION

BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

I – True or False
_________ 1. The VAT on importation is called the “Value Added Tax” and computed
as 12% of the contract price of the service.
_________ 2. Business tax is a form of consumption tax.
_________ 3. Business taxes are usually included in the price of goods and services of
the seller but are remitted by the seller to the government.
_________ 4. The importation of any agricultural or marine products is VAT exempt.
_________ 5. The final withholding VAT on services is paid to the Bureau of Internal
Revenue.
_________ 6. Businesses pay an annual registration fees of P1,000.00.
_________ 7. A business which is not registered is exempt from business taxes.
_________ 8. Businesses are required to register in the revenue district office (RDO)
which has jurisdiction over their principal place of business.
_________ 9. Consumption tax is a tax on consumption, utilization or purchase of goods,
properties or services.
10. Common carriers are vatable on their transport of cargoes or baggages.
11. The 3% general percentage tax applies to non-VAT registered taxpayers.
12. For purposes of the VAT, fair value of real property means the higher of
independent appraisal value and zonal value.
13. The installment reporting of output VAT on services is as allowed so long
the initial payments do not exceed 25% of the agreed contract price.
_________ 14. Gross estates consists of all properties of the decedent, tangible or
intangible, real or personal, and wherever situated at the point of death.
_________ 15. Proceed of GSIS Policy or benefits from GSIS owned by the decedent at
the point of death which naturally forms part of the hereditary estate are
not exempted from estate tax by law.

II – Multiple Choice Question

16. It refers to the person who make casual sale of goods or properties
a. Non-dealers b Business
c. Commercial activity d. Marginal income earners

17. It is a habitual engagement in a commercial activity involving the sale of goods or services
to customer or clients.
a Non-dealers b Business
c Commercial activity d Marginal income earners

18. By revenue regulations, which of the items below is not considered in original state?
a. Marinated Fish b. Froze Meat c Dried Fish d. Smoked fish
.

19. The tax on domestic consumption is referred to as

a Vat on importation b Business Tax
c Either A or B d Neither A nor B

20. The percentage tax is generally

a 3% of sales or receipts b 3% of purchases
c 3% of mark up d 12% of mark-up

21. A VAT-registered seller of goods shall be subject to

 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

a. 3% percentage tax on gross receipts b 12% Output VAT on sales

c. 3% percentage tax on sales d. 12% Output VAT on gross receipts

22. What is the business tax payable by a person who is VAT-registrable?

a. The Output Vat b. The Input VAT
c. Output VAT less Input VAT d. Output VAT plus 3% percentage tax

23. The percentage tax specifically imposed on certain domestic transporters is called
a. Common carrier’s tax b. Skipper’s tax
c. Transporter’s tax d. Gross receipts tax

24. The overseas communication tax is

a. 10% of revenue b. 10% of gross receipts
c. 3% of revenue d. 3% of gross receipts

25. A large taxpayer shall file the application for effective-zero rating with the
a. Regional director where the taxpayer is registered
b. Revenue district officer having jurisdiction over their principal place of business
c. Audit Information, Tax Exemption and Incentive Division
d. International Tax Affairs Division

26. An approved application for effective zero-rating is given

a. a retrospective effect b. A prospective effect
c. A and B d. No effect

27. Which is not specifically subject to common carrier’s tax?

a Bus b. Taxi c. Jeepney d. Truck
.

28. The proceeds of life insurance designated by the decedent to his/her estate is included in
gross estate
a. If the designation is revocable
b. If the designation is irrevocable
c. Without regard to the designation as revocable or irrevocable
d. Under no circumstances

29. Gross estate means

a. Properties, whether or not owned by the decedent, existing at the point of death.
b. Properties owned by the decedent at the point of death.
c. Present properties in the possession of the decedent at the point of death
d. Any of these

30. Which is not a property regime?

a. Absolute separation of property b. Conjugal Partnership of Gains
c. Absolute Community of property d. Pooling of interest

31. In the absence of an agreement or when the regime agreed by the spouses is void, marriages
celebrated before August 3, 1988 shall be governed by the ?
a. Absolute separation of property b. Conjugal Partnership of Gains
c. Absolute Community of property d. Pooling of interest

32. In the absence of an agreement or when the regime agreed by the spouses is void, marriages
celebrated starting August 3, 1988 shall be governed by the
a. Absolute separation of property b. Conjugal Partnership of Gains
c. Absolute Community of property d. Pooling of interest

33. Fruits accruing before the marriage are

a. Common under the Absolute Community b. Common under the Conjugal Partnership
of Properties of Gains
 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

c. Exclusive under the Absolute d. A and C

Community of property

34. Properties received by the spouses by way of gratuitous acquisition such as donation or
inheritance during marriage are
a. Common under the Absolute Community b. Exclusive under the Absolute
of Properties Community of property and Conjugal
Partnership of Gains
c. Common under the Conjugal Partnership d. A and C
of Gains

35. Which is excluded in gross estate

a. Separate property of the decedent b. Common property of the spouses
c. Separate property of the surviving spouses d. A and C

36. The amount of Standard Deduction to be deducted in the Gross Estate of the decedent under
the Tax Reform for Acceleration and Inclusion (TRAIN) Law is
a 1,000,000.00 b. 1,500,000.00 c. 500,000.00 d. 5,000,000.00
.

37. The maximum amount of Family Home to be deducted in the Gross Estate of the decedent
under the Tax Reform for Acceleration and Inclusion (TRAIN) Law is
a 11,000,000.00 b. 10,000,000.00 c. 5,000,000.00 d 4,000,000.00
. .

38. The maximum amount of Funeral Expenses to be deducted in the Gross Estate of the
decedent under the Tax Reform for Acceleration and Inclusion (TRAIN) Law is
a 200,000.00 b. 500,000.00 c. 0.00 d. 100,000.00
.

39. It is the gratuitous transfer of property from one person to another.

a. Donor b. Donee c. A and B d. Donation

40. It is a tax upon the gratuitous transfer of property between two or more living persons at the
time of transfer whether the transfer is direct or in trust and without regard to the type of
property transferred.
a Percentage tax b. Estate Tax c. Donors Tax d Income Tax
. .

III-Problem Solving

A VAT taxpayer prepared the following summary of sales and purchases for the purpose of
filing his BIR Form 2550M /2550Q for the 1st quarter of 2017:
Particulars January February March
Sales to VAT Taxpayers (Inclusive of 224,000.00 336,000.00 280,000.00
VAT)
Sales to non-VAT Taxpayers 392,000.00 224,000.00 280,000.00
(Inclusive of VAT)
Purchases from Non-Vat Taxpayers 100,000.00 165,000.00 150,000.00
Purchase from Vat Taxpayers 207,200.00 280,000.00 336,000.00
(Inclusive of VAT)
For the month of January and February, the total VAT Payment was P73,800.00
41. The Output Vat for the month of January and February is
a. 66,000.00 b. 60,000.00 c. 186,000.00 d. 126,000.00

42. The total Input Vat for the 1st quarter is

a. 22,200.00 b. 30,000.00 c. 36,000.00 d. 88,200.00

43. How much is the Value Added Tax Still Payable for the 1stquarter of 2017.
 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

a. 22,200.00 b. 30,000.00 c. 36,000.00 d. 24,000.00

General Merchandise Inc. exceeded the VAT threshold in January 2017. It had the
following inventory of goods at the start of February 2017.
Frozen meat, eggs and dried fish 60,000.00
Fruits and vegetables 50,000.00
Grocery items (all from VAT suppliers) 66,000.00
Appliances (from non-VAT suppliers) 100,000.00

44. The transitional input VAT for the month of February 2017 is
a 9,600.00 b. 3,792.00 c. 5,992.00 d 4,992.00
. .

Indoy, non-VAT registered taxpayer is an operation of five jeepneys, two buses and car for
hire. The receipts for the month of January 2017 of his vehicles were summarized below:

Particulars Passengers Cargoes Total

Jeepneys 250,000.00 30,000.00 280,000.00
Buses 360,000.00 280,000.00 640,000.00
Taxis 285,000.00 285,000.00
Total 895,000.00 310,000.00 1,205,000.00

45. Assuming Indoy is a non-VAT-registered business, the percentage tax due for the month of
January 2017 is
a 26,850.00 b. 9,300.00 c. 36,150.00 d 0.00
. .

Pagong Telecommunications Company had the following receipts for the second quarter of
2017:
Call Origin Call Destination Amount
Collected
Philippines Abroad 8,000,000.00
Abroad Philippines 5,000,000.00
Philippines Philippines 25,000,000.00
46. The overseas communication tax for the second quarter of 2017 is

a 500,000.00 b. 3,300,000.00 c. 800,000.00 d 2,000,000.00

. .

Ano Na Hotel, Inc. operates a hotel with a disco and restaurant. The total sales and receipts
during the first quarter of 2017 were as follows:

Particulars Amount
Room rentals 3,500,000.00
Sales from hotel restaurants 650,000.00
Sale of foods and beverages from disco 2,000,000.00
Gate receipts from disco 150,000.00
47. The Amusement tax for the first quarter of 2017 is
a 387,000.00 b. 747,000.00 c. 360,000.00 d. 1,134,000.00
.

On April 1, 2016, a VAT registered realty developer sold a residential dwellings at a selling price
of P5,600,000.00. The assessed and zonal value of the said dwelling is P5,800,000.00 and
6,000,000.00, respectively. A downpayment was of P600,000.00 was made on April 1, 2016 and
the balance payable in monthly installment of P83,333.33 starting May 1, 2016.
48. The Output Vat for the month of April 2016 is
 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

a 77,142.86 b. 10,714.29 c. 87,857.14 d. 720,000.00

.

Mr. Andor, a VAT-registered taxpayer, ceased business operation in May 2015. His business
properties upon termination of business operation include:

Cash 200,000.00
Accounts Receivable 180,000.00
Investments 200,000.00
Inventories 300,000.00
Property Plant and Equipment 1,000,000.00

49. The output vat on the deemed sale is

a 225,600.00 b. 156,000.00 c. 180,000.00 d 0.00

. .

ROSE CAN Corporation processes hot chili-flavored sardines. During the month of April 2016,
ROSE CAN Corporation purchased the following ingredients for the processing of canned
sardines:

Sardines Cost
Fresh Sardines 900,000.00
Hot Chili 65,000.00
Tomatoes 500,000.00
Ordinary Salt 168,000.00
Tin Cans (VAT Inclusive) 39,200.00
Labels 56,000.00

50. From the above data, the presumptive input VAT for the month of April 2016 shall be
a 29,320.00 b. 10,200.00 c. 39,520.00 d. 0.00
.

A domestic seller and exporter had the following summary of trading activities in the first
quarter of 2016:

Particulars Amount
Export Sales ($1 = P50.00) $5,000
Domestic Sales (VAT excluded) 1,500,000.00
Sales of fruits and vegetables 200,000.00
Sales of fish and meat 250,000.00
Purchases (VAT excluded) 1,200,000.00

51. Based on the above table, the amount of Zero Rated Sales is.
a 250,000.00 b. 200,000.00 c. 250,000.00 d 450,000.00
. .

Mr. Crocs died. An inventory of the properties of Mr. and Mrs. Crocs who were under the
Conjugal Partnership of Gains were as follows:

Before Marriage Mr. Crocs Mrs. Crocs Total

Properties inherited before marriage 200,000.00 100,000.00 300,000.00
Other Properties brought into the marriage 400,000.00 500,000.00 900,000.00
Properties During Marriage
Properties inherited during marriage 250,000.00 150,000.00 400,000.00
Properties as fruit of own labor 140,000.00 160,000.00 300,000.00
Properties as fruit of common labor 250,000.00
Fruits
Properties inherited before marriage 100,000.00 50,000.00 150,000.00
 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

Properties inherited during marriage 20,000.00 80,000.00 100,000.00

Properties acquired from own labor 20,000.00 40,000.00 60,000.00
Properties earned from common labor 50,000.00

52. Based on the above table, the amount of separate property of Mr.Crocs is
a 850,000.00 b. 750,000.00 c. 910,000.00 d 0.00
. .

53. Based on the above table, the amount of separate property of Mrs .Crocs is
a 850,000.00 b. 750,000.00 c. 910,000.00 d 0.00
. .

54. Based on the above table, the amount of common property of Mr and Mrs .Crocs is
a 850,000.00 b. 750,000.00 c. 910,000.00 d 0.00
. .

55. Based on the above table, the Gross Estate of Mr.Crocs is

a 850,000.00 b. 750,000.00 c. 910,000.00 d 0.00
. .

Mr. Dugong, a resident citizen, died living the following properties and estate deductions as
follows:
Properties Mr. Dugong Mrs. Dugong Conjugal
Properties
Located in the Philippines
Personal Properties 1,400,000.00 1,100,000.00 2,500,000.00
Family Home 5,000,000.00
Other Real Properties 1,300,000.00 1,800,000.00 4,000,000.00
Total Philippine Properties 2,700,000.00 2,900,000.00 11,500,000.00
Located Abroad
Personal Properties 2,000,000.00 1,000,000.00 4,000,000.00
Real Properties 1,000,000.00 2,500,000.00 3,500,000.00
Total Foreign Properties 3,000,000.00 3,500,000.00 7,500,000.00
World Properties 5,700,000.00 6,400,000.00 19,000,000.00

The following expenses and deductions related to the Gross Estate of Mr. Dugong were as
follows:
Philippines and Abroad Mr. Dugong Mrs. Dugong Conjugal
Properties
Funeral Expenses 250,000.00 0.00 350,000.00
Judicial Expenses 600,000.00
Obligations 1,000,000.00 1,800,000.00 2,000,000.00
Losses 200,000.00 400,000.00 300,000.00
Medical Expenses 400,000.00 200,000.00

56. Based on the above table, the amount of ½ Share of the Surviving spouse is
a. 9,500,000.00 b. 5,750,000.00 c. 7,500,000.00 d 0.00
.

57. Based on the above table, the amount of gross estate of Mr. Dugong is
a 19,000,000.00 b. 24,700,000.00 c. 11,500,000.00 d. 0.00
.

58. Based on the above table, the amount of Family Home to be deducted on the Gross Estate of
Mr. Dugong under the TRAIN LAW is
a. 10,000,000.00 b. 1,000,000.00 c. 5,000,000.00 d 0.00
.
 ADAMSON UNIVERSITY
COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS and TRANSFER TAXATION
FINAL EXAMINATION

59. Based on the above table, the net taxable estate is

a. 10,200,000.00 b. 5,000,000.00 c. 5,200,000.00 d 0.00
.

60. Based on the above table, the estate tax payable using the TRAIN LAW is
a 612,000.00 b. 300,000.00 c. 312,000.00 d 0.00
. .