CHAPTER 1- Introduction to Consumption Taxes

MULTIPLE CHOICE- Theory Part 1

1.  Which type of consumption will pay consumption tax?

a.  Domestic consumption

 b.  Foreign consumption

c.  Both domestic and foreign consumption

d.   Neither domestic

domestic nor foreign
foreign consumption
consumption

2. Which is a tax upon the usage of income?

a.  Savings tax

 b.  Investment tax

c.  Consumption tax

d.  Business tax

3. Which is subject to the VAT on importation?

a.  Foreign consumption from resident sellers.

 b.  Foreign consumption from foreign sellers.

c.  Domestic consumption from resident sellers.

d.  Domestic consumption from foreign sellers.

4. Which is subject to business tax?

a.  Foreign consumption from resident sellers.

This website stores data such as
 b.  Foreign
cookies to enable essential site consumption from foreign sellers.
functionality, as well as marketing,
c.  Domestic
personalization, and analytics. You consumption from resident sellers.
may change your settings at any time
d.  Domestic consumption from foreign sellers.
or accept the default settings.

5. Which is an incorrect statement regarding consumption taxes?

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a.  They are always indirect in nature.
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 b.  They effectively tax everyone in the state.
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c.  Apply only when the goods or services are destined for consumption within the Philippines.

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d.  Consumption taxes may encourage savings formation.

6. Which is correct regarding consumption tax?

a.  It may help in the redistribution of wealth in the society.

 b.  It is entirely based upon the ability to pay of consumers.

c.  It applies to both domestic and foreign consumption.

d.  It applies only when the seller is non-resident.

7. Domestic consumption is taxable when the seller is

a.  A non-resident

 b.  A resident

c.  Either resident or non-resident

d.   Neither resident

resident nor non-resident
non-resident

8. Foreign consumption shall

a.  Pay consumption tax if the seller is a resident.

 b.  Pay consumption tax if the seller is non-resident.

c.   Not pay consumption

consumption tax
tax if the seller is non-resident.

d.   Not pay consumption

consumption tax
tax regardless
regardless of the residency of the seller 
seller .

9. The tax on domestic consumption is referred to as

a.  VAT on importation

 b.  Business tax

This website stores data such as
c.  Either
cookies to enable essential siteA or B
functionality, as well as marketing,
   NeitherYou
personalization, andd.analytics. A or
or B
may change your settings at any time
or accept the
10.default settings.
The tax on domestic consumption
consumption from foreign suppliers is

a.  VAT on importation

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 b.  Business tax
Marketing
Personalization c.  Either A or B

Analytics
d.   Neither A or
or B

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11. The tax on domestic consumption

consumption from resident suppliers is

a.  VAT on importation

 b.  Business tax

c.  Either A or B

d.   Neither A or
or B

12. Which is not a business tax?

a.  VAT on importation

 b.  VAT on sales

c.  Percentage tax

d.  Excise tax

13. 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

14. The VAT as a business tax is

a.  12% of sales or receipts

 b.  12% of purchases

c.  12% of mark-up

This website stores data such as
d.  3% of
cookies to enable essential sitemark-up
functionality, as well as marketing,
personalization, andVAT
15. The analytics. You
on importation is
may change your settings at any time
  12% of sales
or accept the defaulta.settings.

 b.  12% of purchases

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c.  12% of mark-up
Marketing
d.  3% of mark-up
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Analytics
16. Which form of consumptio
consumption
n is tax-free?

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a.  Sales to a resident.

 b.  Sales to non-resident.

c.  Importation by an importer engaged in business

d.  Importation by an importer not engaged in business

17. As to incidence of tax, the VAT on importation is a form of

a.  Direct tax

 b.  Indirect tax

c.  Ad valorem tax

d.  Specific tax

18. Which of these import consumption is tax free?

a.  Importation from seller not engaged in trade or business

 b.  Importation from seller engaged in trade or business

c.  Both A and B

d.   Neither A nor

nor B

19. Which importation is subject to the VAT on importation?

importation?

a.  Importation by a person engaged in business

 b.  Importation by a person not engaged in business

c.  Both A or B

d.   Neither A nor

nor B
This website stores data such as
cookies to enable
20. Whoessential site
is the statutory taxpayer
taxpayer to the VAT on importation?
functionality, as well as marketing,
  ForeignYou
personalization, anda.analytics. seller
may change your settings at any time
or accept the default   Domestic buyer
 b.settings.

c.  Both A and B

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d.   None of these
these
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Personalization

Analytics
MULTIPLE CHOICE- Theory Part 2

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1.  Generally, the tax basis of business tax is

a.  Sales or receipts

 b.  Purchase cost

c.  Either A or B

d.  Both A and B

2. Who is the statutory taxpayer of business taxes?

a.  The seller who must be engaged in trade or business.

 b.  The seller, whether or not engaged in trade or business.

c.  The buyer, who must be engaged in trade or business.

d.  The buyer, whether or not engaged in trade or business.

3. The economic taxpayers of consumption taxes are

a.  Sellers who are engaged in trade or business.

 b.  Sellers, whether or not engaged in trade or business.

c.  Buyers who are engaged in trade or business.

d.  Buyers, whether or not engaged in trade or business.

4. What is the method used to determine the VAT due and payable?

a.  Direct method

 b.  Indirect method

c.  Tax credit method

This website stores data such as
cookies to enable essential site
d.  Withholding method
functionality, as well as marketing,
personalization, and analytics.
5. Which statement You
is conceptually incorrect?
may change your settings at any time
or accept the defaulta.settings.
  The buyer pays the consumption tax with its purchase to the seller.

 b.  The buyer pays the consumption tax to the government.

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c.  The seller pays the consumption tax to the government.
Marketing
d.  The seller collects consumption tax for the government.
Personalization

Analytics
6. Which is correct?
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a.  The sales to foreigners must include a business tax.

 b.  The sales to residents must include a business tax.

c.  The purchases from abroad must include a business tax.

d.  All of these.

7. The deduction from output VAT is called

a.  Percentage tax

 b.  VAT due and payable

c.  Input VAT

d.  VAT on importation

8. Which is pure form of a sales of tax?

a.  Percentage of tax

 b.  Value added tax

c.  Both A and B

d.   Neither A nor

nor B

9. Statement 1: A business which pays VAT normally does not pay percentage tax.

Statement 2: A business which pays percentage tax also pays VAT.

Which statement is correct?

a.  Statement 1
This website stores data such as
cookies to enable essential site 2
 b.  Statement
functionality, as well as marketing,
personalization, andc.analytics. You
  Both statements.
may change your settings at any time
or accept the defaultd.settings.
   Neither statement.
statement.

10. Which of the following business taxes applies only for domestic consum
consumption?
ption?
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a.  VAT on sales
Marketing
 b.  Percentage tax
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Analytics
c.  Excise tax
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d.  All of these

11. Excise tax is paid by

a.  Sellers

 b.  Buyers

c.  Importers or manufact

manufacturers.
urers.

d.  Seller or buyer depending on who is agreed to pay the excise tax.

12. Export sale is (select the incorrect one)

a.  Exempt to percentage tax

 b.  Exempt from VAT

c.  Exempt form excise tax

d.  All of these.

13. Statement 1: Excise tax is always paid together with VAT or percentage tax.

Statement 2: Excise tax is paid at the point of sale.

Which statement is false?

a.  Statement 1

 b.  Statement 2

c.  Both statements.

statements.

d.   Neither statement.

statement.
This website stores data such as
cookies to enable essential
14. Which site with a tax of zero percent (0%)?
is imposed
functionality, as well as marketing,
personalization, anda.analytics. Yousales.
  All export
may change your settings at any time
or accept the default
 b.settings.
  Export sales of VAT-registe
VAT-registered
red taxpayers.

c.  Import sales of VAT-registered

VAT-registered taxpayers.
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d.  Export sales of non-VAT registered taxpayers
taxpayers only.
Marketing
Personalization

Analytics
15. Which is not subject to excise tax?
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a.  Sin products.

 b.   Non-essentia
 Non-essentiall commodities.
commodities.

c.  Food products.

d.  Mineral products.

16. The tax basis of consumption

consumption tax on foreign purchase is

a.  Sales or receipts.

 b.  Purchase costs

c.  Either A or B

d.  Both A and B

17. The consumption tax on domestic purchases is imposed upon the

a.  Sales or receipts

 b.  Purchase costs

c.  Either A or B

d.  Both A and B

18. Technically, the excise tax on the manufacture of certain articles is payable only when the articles is
intended for

a.  Domestic consumption

 b.  Foreign consumption

c.  Both A and B

This website stores data such as
d.   Neither A nor
nor B
cookies to enable essential site
functionality, as well as marketing,
19. Which is correct with the VAT on importation?
personalization, and analytics. You
may change your settings at any time
a.  Payable only when the importer is engaged in business
or accept the default settings.
 b.  Payable only when the foreign seller is engaged in business.
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c.  Payable regardless of the purpose of the importation.
Marketing
d.  Payable only when the resident seller is not engaged in business.
Personalization
20. The VAT on domestic sales is an example of
Analytics
a.  A direct tax
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 b.  An indirect tax

c.  A regulatory tax

d.  A specific tax

MULTIPLE CHOICE- Problem Part 1 

1.  Free Company, a resident business, renders services to Mr. Erlwin, a resident person who is not
engaged in business.

Which of the following is subject to consumption tax?

a.  Free Company

 b.  Mr. Erlwin

c.  Both A and B

d.   Neither A nor

nor B

2. Baliwag Company, a non-resident business, purchased P200,000 from Cauayan Company, a resident
 business. Which
Which will
will pay the consumption
consumption tax on this
this transaction?
transaction?

a.  Cauayan Company

 b.  Baliwag Company

c.  Both A and B

d.   Neither A nor

nor B

3. Heidenberg Corporation, a resident business, purchased P100,000 goods from Kiwi Company, a non
resident business. Which will pay the consumption tax on this transaction?

a.  Heidenberg Corporation

This website stores data such as
 b.  Kiwisite
cookies to enable essential Company
functionality, as well as marketing,
  Both AYou
personalization, andc.analytics. and B
may change your settings at any time
   Neither A nor
or accept the defaultd.settings. nor B

4. Mr. Cedric, an employee, sold his residential lot to Mrs. Corneto, a real property dealer. Which is
Privacy Policy
subject to consumption tax with respect to this transaction?

Marketing a.  Mr. Cedric

Personalization
 b.  Mrs. Corneto
Analytics
c.  A and B
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d.   Neither A nor

nor B

5. Mr. Bangus made a casual sale involving a car to Mrs. Tulya, a resident buyer. Mr. Bangus is not a car
dealer. Which is subject to consumption tax?

a.  Mr. Bangus

 b.  Mrs. Tulya

c.  Both Mr. Bangus and Mrs. Tulya

d.   Neither Mr. Bangus nor

nor Mrs. Tulya

6. Mr. Cavite produces an excisable article for sale in the Philippines market. Which is incorrect with
respect to Mr. Cavite's business taxation?

a.  Mr. Cavite is subject to either VAT or percentage tax.

 b.  Mr. Cavite pays excise tax in addition to VAT or percentage tax.

c.  Mr. Cavite pays excise tax in addition to VAT and percentage tax

d.  Mr. Cavite will pay excise tax without regard to whether he is VAT or non-VAT taxpayer.

7. A person engaged in business is subject to 3% business tax. He has inventories if goods in his
 possession which costs P77,600 which he intends to sell to earn a mark-up of 25% of cost net of the 3%
 business tax.
tax.

He shall invoice the sale of the P77,600 goods at

a.  P100,000

 b.  P103,000

c.  P97,000

This website stores d.data such as

  P110,000
cookies to enable essential site
functionality, as well as marketing,
personalization, and analytics. You
may change 8.your settingswants
A business at anytotime
make a P10,000 profit from the sale of an inventory costing P30,000.
or accept the default settings.
The business is subject to 3% percentage tax.

At what amount shall the business invoice the sale?

Privacy Policy
a.  P41.237
Marketing
Personalization  b.  P41,200

Analytics
c.  P40,000
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d.  P38,800

9. A person who imports goods or properties will more likely to pay

a.  A 3% percentage tax on the importation

 b.  A 12% VAT on the importation

c.  Either 3% or 12% tax on the importation

d.   No consumption

consumption tax

10. A person who is not regularly engaged trade or business sells made a casual sale of property for
P100,000. What will be the invoice price of the sale?

a.  P100,000

 b.  P103,000

c.  P112.000

d.  Either B or C
11. Alison is regularly engaged in the sales of goods. He will pay

a.  Value added tax only.

 b.  Percentage tax only

c.  Either A or B

d.   Neither A nor

nor B

This website stores data such as

cookies to enable essential site
functionality, as well as marketing,
12. Mr.
personalization, andVenturais
analytics.subject
You to 3% percentage tax. He made a total collection of P206,000 during a month
may change and paid
your P103,000
settings in time
at any purchases. Compute his percentage tax.
or accept the default settings.
a.  P0

Privacy Policy  b.  P3,000

Marketing c.  P6,180

Personalization
d.  P12,000
Analytics
13. A business taxpayer purchased P120,000 from non-residents and sold goods worth P140,000 for
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What is the concept of value added for VAT purposes?

a.  P200,000

 b.  P140,000

c.  P80,000

d.  P60,000

14. In the immediately preceding problem, what is the basis of percentage tax?

a.  P200,000

 b.  P140,000

c.  P120,000

d.  P180,000

15. Assuming the same data in the above problem, what is the basis of VAT on importation?

a.  P200,000

 b.  P140,000

c.  P120,000

d.  P80,000

16. Mr. Coroneti imported P300,000 equipment for business use and a P1,200,000 car for personal use.
This website stores data such as
What isessential
cookies to enable the amount
site subject to the VAT on importation?
functionality, as well as marketing,
  P0
personalization, anda.analytics. You
may change your settings at any time
  P300,000
 b.settings.
or accept the default

c.  P1,200,000
Privacy Policy
d.  P1,500,000
Marketing
Personalization
MULTIPLE CHOICE- Problem Part 2 
Analytics

Basic Case 1
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1.  A business taxpayer had the following purchase and receipts:

Import goods or services P190,000

Domestic purchase of goods or services P100,000

Domestic sales of goods and services P150,000

Export sales of good or services P50,000

Determine the total amount of which will be subject to consumption tax to the business taxpayer.

a.  P500,000

 b.  P400,000

c.  P350,000

d.  P340,000

2. In the immediately preceding problem, determine the amount subject to the consumption tax if the

taxpayer is not engaged in business.

a.  P490,000

 b.  P390,000

c.  P200,000

d.  P190,000

Basic Case 2

3. A VAT-registered taxpayer recorded the following sales and purchases during the month:

Sales P300,000
This website stores data such as
cookies to enable essential Purchases
site P200,000
functionality, as well as marketing,
personalization, andAll amountsYou
analytics. above are exclusive of any VAT.
may change your settings at any time
or accept the defaultWhat would be the the output VAT?
settings.

a.  P48,000
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 b.  P36,000
Marketing
c.  P24,000
Personalization

Analytics d.  P12,000

4. What is the input VAT?

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a.  P48,000

 b.  P36,000

c.  P24,000

d.  P12,000

5. What is the VAT payable?

a.  P36,000

 b.  P24,000

c.  P12,000

d.  P0

6. Assuming the taxpayer is a non-VAT taxpayer paying 3% percentage tax, the percentage tax shall be

a.  P12,000

 b.  P9,000

c.  P6,000

d.  P3,000

Basic Case 3

A business taxpayer recorded the following

f ollowing transactions
transactions during the month:

 Philippines Abroad Total  

Sales P350,000 P200,000 P550,000

This website storesPurchases

data such as P150,000 P100,000 P250,000
cookies to enable essential site
functionality, as wellTotal
as marketing, P500,000  P300,000  P800,000 
personalization, and analytics. You
may change Assuming the taxpayer
your settings is a VAT-registered taxpayer
at any time
or accept the default settings.
7. Compute the output VAT.

Privacy Policy a.  P0

Marketing  b.  P24,000

Personalization
c.  P36,000
Analytics
d.  P42,000
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8. Compute the VAT on importation.

a.  P0

 b.  P12,000

c.  P18,000

d.  P32,000

 Assuming the taxpayer is a non-VAT taxpayer.

9. Compute the percentage tax.

a.  P0

 b.  P6,000

c.  P9,000

d.  P10,500

10. Compute the VAT on importation

a.  P0

 b.  P3,000

c.  P12,000

d.  P18,000

Basic Case 4

Sindangan Company, a VAT registered taxpayer, purchased P400,000 worth goods and sold the same for
P800,000.
This website stores data such as
11. Assuming
cookies to enable that
essential sitethe business operation of Sindangan Company is limited to Philippine residents,what is
functionality,
theastotal
wellbusiness
as marketing,
tax it will report on its sales?
personalization, and analytics. You
a.  P96,000
may change your settings at any time
or accept the default settings.
 b.  P48,000

Privacy Policy c.  P24,000

Marketing d.  P0
Personalization
12. Assuming that the purchases were import and the sales were exports, compute the business tax and
Analytics
total consumption tax, respectively:
Save a.  Accept All P144,000
P96,000:
 

 b.  P24,000: P144,000

c.  P24,000: P72,000

d.  P0: P48,000

This website stores data such as

cookies to enable essential site
functionality, as well as marketing,
personalization, and analytics. You
may change your settings at any time
or accept the default settings.

Privacy Policy

Marketing

Personalization

Analytics

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