1. The owner of a business for a mere subsistence is called a marginal income earner.

(T)
2. Which of the following entities below is not considered as a business?
Sari-sari store with P500,000 annual sales
A newsstand with sales exceeding P100,000
A cigarette vendor with sales not exceeding P100,000
An employed professional earning part-time self-employment income not exceeding P100,000
3. Which is considered engaged in business even if not regularly engaged in trade?
A non-resident seller who exports to the Philippines
An importer who imports goods into the Philippines
A seller who makes a one-time sale of property
Any seller who sells goods or services at a price above P100,000 during the year.
4. Which is more likely to qualify as a marginal income earner?
Artist
Consultant
Sales Agent
Operator of a single unit tricycle
5. A person who made a one-time or casual sale of properties is
Exempt from business tax
Subject to percentage tax
Subject to value added tax
Subject to either percentage tax or value added tax
6. Who are subject to VAT?
Those who optionally register as VAT taxpayers
Those who are mandatorily required to register as VAT taxpayers
Those who are registrable to VAT
Any of these
7. Who are not required to register to the VAT system?
Those who are below the VAT threshold
Those whose sales are exempt sales
Those who only derive receipts from services specifically subject to percentage tax
Any of these
8. Who pays percentage tax?
Those who exceed the VAT threshold and opt to be register as non-VAT
Those who did not exceed the VAT threshold but are registered as VAT tax payers
Only those service providers specifically subject to percentage tax
Those providers of services specifically subject to percentage tax and those whose sales or
receipts in any 12-month period are below the VAT threshold.
9. A VAT-registered person who did not exceed the VAT threshold will pay.
Vat
Percentage tax
Both
Either at his discretion
10. A marginal income earner shall pay
3% percentage tax
 12% vat
Either a & b
Neither a nor b
11. A VAT registered person who exceeded the VAT threshold will pay
VAT
Percentage tax
Both a and b
Either a or b at his discretion
12. A non-vat registered person who did not exceed the VAT threshold shall pay
VAT
Percentage tax
Both a and b
Either a or b at his discretion
13. What is the general VAT threshold?
P1,919,800
P1,919,500
P3,000,000
P10,000,000
14. What is the special VAT threshold?
P1,919,800
P1,919,500
P3,000,000
P10,000,000
15. The mandatory or voluntary registration as VAT taxpayers under the special threshold is
Revocable anytime
Revocable after the lapse of three years
Revocable within a year
Perpetually irrevocable
16. Mandatory or voluntary registration as a VAT taxpayer under the general threshold is
Revocable anytime
Revocable after the lapse of three years
Revocable within a year
Perpetually irrevocable
17. The VAT registration upon commencement of operation based upon expectation of exceeding
the VAT threshold shall be
Revocable anytime
Revocable after the lapse of three years
Revocable within a year if sales do not actually exceed the VAT threshold
Perpetually irrevocable
18.
Indicate whether the sale of the following items is exempt or vatable

1. Vegetables – exempt
2. Cooked rice – vatable
3. Boiled eggs – exempt
4. Lumber – vatable
5. Bamboo shoots – exempt
6. Cacao – exempt
7. Cheese – vatable (processed)
8. Furniture – vatable
9. Dried fish – exempt
10. Wheat – exempt
11. Charcoal – vatable (non-food)
12. Fresh sea foods – exempt
13. Zoo animals – vatable
14. Aquarium fish – vatable
15. Canned fish – vatable

1. The sales of processed agricultural products is vatable – T

2. The sale of fruits and vegetables is exempt from business tax – T
3. The sale of fertilizers, seeds and pesticides is exempt from VAT. – F
4. Frozen meat is considered a processed agricultural food product. – F
5. The sale of bread is exempt from business tax – f
6. A fruit vendor is exempt from business tax – t
7. Restaurants are exempt from vat – f
8. Agricultural cooperative are exempt from VAT – t
9. Electric cooperative are subject to VAT – T
10. Hospitals are subject to VAT – F
11. A manufacturer of canned sea foods is exempt from VAT – F
12. The services of agricultural contract grower are subject to VAT – F

1. Which of the following sale is not subject to business tax?

Sale of a car by a dealer
Casual sale of a car by a non-dealer
Sale of real property by a dealer
Sale of office equipment by a business
2. Which of these pay business taxes?
Vegetable dealer
Fruit dealer
Gold trader
fisherman
3. Which is exempt from business tax?
Bakery
 Manufacturer of canned fruits
Manufacturer of noodles
Meat vendor
4. All of the following are exempt agricultural produce except
Palay
Corn
Tobacco
garlic
5. Which of the following is considered as not in its original state?
Frozen fish
Dried fish
Marinated fish
none
6. The sale of this agricultural or marine product is exempt from business tax
Mackerel
Silk
Leather
pearl
7. Which of the following is least likely subject to VAT
Banana cake
Cassava chips
Chocolate
Corn grits
8. Which of the following sale is not exempt from business tax?
Sale of pets
Sale of unprocessed agricultural food products
Sale of processed marine foods
Sale of unprocessed non-food agricultural products
9. Which is not subject to business tax?
A purely employed professional
A professional practitioner
A self-employed individual
All of these
10. Which is exempt from business tax
Private school
Government school
Non-profit school
All of these
Sellers of services are subject to VAT on their gross sales or receipts. False

Sellers of goods are subject to VAT on gross receipts. False

Sellers of properties are subject to VAT on the fair market value of the property sold or disposed of.
False

The sale of real property on the deferred payment basis, not on the installment basis, shall be subject
to VAT similar to a cash sale. TRUE

The distribution of cash dividend is a deemed sale subject to output VAT. FALSE

Only VAT registered taxpayers can claim input VAT. TRUE

The transitional input VAT is 2% of the vatable beginning inventory. FALSE

What is the basis of the output VAT on sales of services?

Gross selling price

Gross receipts

Fair value

Fair value or gross selling price whichever is higher.

Which of the following is subject to output tax if sold by a person not engaged in business?

Sale of personal residence

Sale of car

Sale of investment in stocks

None of these

Which of the following when sold will result in an output VAT?

Vegetable

Furniture

Fruits

Rice

Which is a deemed sale transaction?

Change in corporate name

Merger or consolidation of corporations

Sale of the entire business

 Placement of an investment by a shareholder

Which statement is correct?

Zero-rated sales are taxable, but will not result in an output VAT

Zero-rated sales are non-taxable; hence, these will not result in an output VAT

VAT zero-rating and VAT exemption are synonymous concepts

All of these.

The sale of services to the following cannot qualify for zero-rating

Sales to a resident person doing business in the Philippines

Sale to a non-resident engaged in business abroad

Sale to a non-resident not engaged in business abroad

Sale to a resident export-oriented enterprise.

The amortization of input VAT on certain properties is allowed when the aggregate acquisition costs

Exceeds P1M

Do not exceed P1M

Exceeds P1,919,500

Exceeds P10M

The amortization period for depreciable capital goods or properties shall be

Whichever is longer between the actual useful life in months or 60 months

Whichever is shorter between the actual useful life in months or 60 months

60 months if the useful life of the capital goods or properties does not exceed 5 years

60 months without regard to the actual useful life in months