Cuesta Lealyn C.

BS in Accountancy

ACC321 (7844) – 8:30-9:30

Prof. Laurence Baguio, CPA

ULO-A Let’s Analyze Answers

Activity 1

1. Garrett is subject to 12% value-added tax as well as excise tax. He is liable

with such tax because upon the initial registration of the business, Garrett
opted to register his business as VAT which means his gross sales or receipts
exceeds P3,000,000.Excise tax also because the product is a sin product
which is non-essential goods that is why it is subject to excise tax.
2. D. Isolated sale of goods or services for a gross selling price or receipts of
P500, 000. It is said that transactions of business that are subject to business
tax in the course of trade or business is that there is regular conduct of a
commercial activity regardless whether or not the business is a non-stock,
non-profit private organization. Also isolated services rendered by non-
resident foreign persons are considered as being rendered in the course of
trade or business which means that the non-resident foreign taxpayer is
subject to business tax.
3. Yes, not including the interest income earned from Beezy’s deposits in
computing his income tax is correct because once the income is subject to
final tax, it is not anymore included in the computation of regular income tax.
4. Lady Matiyaga is the one who is correct in paying the annual registration fee
because she has multiple businesses under her name and the registration fee
required to be paid shall be for every separate or distinct establishment where
sales transactions occur. In her case, she pays the annual registration fee for
each of her business.
5. a.) No, the CPA’s income is not subject to business tax but subject to income
tax because the CPA is rendering his service as a professional accountant.
b.) No, accountant’s income is still subject to income tax and not business tax
because he is practicing his profession.
c.) Yes, it is possible to be taxed with business tax and income tax to the
same taxpayer if the taxpayer is conducting a business and also practicing his
profession.