University of Nueva Caceres

College of Business and Accountancy

BS Accountancy
Qualifying Examination
BUSINESS TAX
General Instruction: Choose the correct answer.
Theories (18 points)
1. Mang Kanor, a vendor outside the gate of University of Nueva Caceres earning an annual
gross sales of P88,000 from his business, is liable to return which of the following BIR
forms? (Easy)
a. 2551M
b. 2551Q
c. 2550Q
d. None of the above
2. Which of the following 12% tax is applicable even to individuals not engaged in business?
(Average)
a. VAT on domestic consumption
b. VAT on importation of goods
c. VAT on importation of services
d. All of the above
3. Which of the following is true?(Average)
a. Ruby is engaged in the business of selling school supplies such as pens, pencils, bond
papers, etc. Ruby, therefore, is liable both to income tax and VAT.
b. Ruby is engaged in the business of selling school supplies such as pens, pencils, bond
papers, etc. Ruby’s customers, therefore, are liable to VAT but not to income tax.
c. Ruby is engaged in the business of selling school supplies such as pens, pencils, bond
papers, etc. Ruby, therefore, is exempt from VAT but not income tax
d. None of the above.
4. Mr. Durian, at age of 93, decided to distribute all of his present properties to his childrens at
an equal share. Later on, he hired an accountant to prepare BIR Form 1801. Which of the
following reasons does Mr. Durian had in mind upon deciding to allocate all of his properties?
(Average)
a. To reward his children for having grandchildren before he dies.
b. To see his children become financially independent.
c. To settle his properties because his death is imminent.
d. To settle his properties because he wants his children to have his property before he
dies.
5. Mrs. Baligang is an Italian citizen residing in Hong Kong owning real properties in Naga
City, Philippines. Which of the following is her standard deduction? (Easy)
a. P5,000,000
b. P500,000
c. P3,199,200
d. None of the above
6. Which of the following is deductible expense in the gross estate? (Easy)
a. Funeral expense
b. Judicial expense
c. Medical expense
 d. None of the above
7. Which of the following is excluded from the gross estate of Mr. Banggawan? (Average)
a. A property inherited from a parent with a will that the same is to be transferred to
grandchild after 10 years.
b. A property inherited from a parent.
c. A property received from a donation of a friend.
d. A property received from acquisition.
8. Mr. Mahal and Ms. Bigas were married on April 1, 1988. Mrs. Bigas died on May 1, 2009, if
there is no prenuptial agreement, which of the following property regime applicable in order
to compute the gross estate of Mrs. Bigas? (Easy)
a. Absolute separation of property
b. Conjugal partnership of gains
c. Absolute community of property
d. Universal partnership of gains
9. Carla and Cerila Singaporean Fly and Swim is a Singaporean company offering services such
as air flight and shipping of passengers and cargo. Which of the following carriages is subject
to 3% OPT? (Easy)
a. Carriage of passengers from ingoing flight.
b. Carriage of passengers from outgoing flight.
c. Carriage of cargo from ingoing flight.
d. Carriage of cargo from outgoing flight.
10. Under Bayanihan to Heal as One Act of 2020, there is an expansion of goods exempt from
VAT. Which of the following is expressly provided by the law? (Average)
a. Sugarcanes, rice, fish, and carcasses in their original state.
b. Critically needed healthcare equipment and supplies.
c. Canned sardines, canned juice, canned mushrooms, and canned meat products.
d. Prescription drugs and medicines for skin allergies.
11. Ireneo and Ireneo CPA review center acquired the services of Ray Whittington, a Canadian
resident citizen, to provide advice on the current review program of the review center.
Assuming the service is conducted within, which of the following government agencies the
CPA review center will remit the VAT? (Average)
a. Bureau of Internal Revenue (BIR)
b. Bureau of Customs (BOC)
c. Department of Finance (DOF)
d. Department of Foreign Affairs (DFA)
12. Which of the following fees is not included for the computation of VAT on importation?
(Average)
a. Bank charge
b. Wharfage dues
c. Facilitation fee
d. Purchase price
13. Which of the following fees is included for the computation of custom duty? (Average)
a. Bank charge
b. Wharfage dues
c. Facilitation fee
d. Purchase price
14. Which of the following is subject to overseas communication tax? (Average)
a. A call originating from the Philippines with a destination to the Philippines.
 b. A call originating from the Philippines with a destination to the Netherlands.
c. A call originating from the Netherlands with a destination to the Philippines.
d. A call originating from the Netherlands with a destination to the Netherlands.
15. Which of the following is true about tax on agents of foreign insurance providers? (Average)
a. The tax rate is 4%.
b. The tax rate is 2%
c. The tax rate is equal to twice the tax imposed on domestic providers
d. Exempt from tax.
16. Which of the following distinguishes exempt sales from zero-rated sales? (Easy)
a. There is no claimable input VAT on the former while there is claimable input VAT on
the latter.
b. An example of exempt sale is exportation while an example of zero-rated sales is sale
of agricultural products in their original state.
c. Exempt sales are the same with zero-rated sales.
d. Both have the same application when the sale is made to Ecozone Locators.
17. Which of the following is not included in the gross estate? (Average)
a. Revocable transfers where the consideration was not sufficient.
b. Revocable transfers where the power of revocation was not exercised.
c. Transfer under a general power of appointment where the consideration was not
sufficient.
d. Transfer under special power of appointment.
18. Which of the following is deductible for the purposes of computing net distributable estate?
(Average)
a. Vanishing deduction
b. Unpaid medical expenses
c. Standard deduction
d. RA 4917
Practicals (12 points)
In items 19-22: The followings are the inventory of Mr. Deceased, a Filipino residing in Cebu and
married to Mrs. Living, 1 year after his death:
Mr. Deceased Mrs. Living

Properties acquired before marriage:

Exclusive personal use P46,000 P47,000

Inherited properties (acquired 23 years ago) 1,250,000 650,000

Properties from gains of inherited properties 105,000 89,000

Properties from income from industry 7,005,000 3,450,000

House and lot 15,000,000

Property acquired during the marriage:

Exclusive personal use P50,000 P75,000

Inherited properties (acquired 13 years ago) P900,000

 Properties from income from industry P14,670,000 P9,468,000
Additional information:
● House and lot became the dwelling of the family.
● Mr. Deceased died on January 1, 2009. Mr. Deceased and Mrs. Living were married on
September 30, 1991. Their marriage was without prenuptial agreement.
● A loss of P100,000 suffered by the house and lot on April 29, 2009 and an income of
P500,000 is gained on October 23, 2009.
● It was found out on March 9, 2009 that the property inherited by Mr. Deceased during the
marriage was intended for the use of his son, Mr. Prodigal and that Mr. Deceased is only a
trustee of such property.
● An accounting on May 13, 2009 revealed that the properties from income from Mr.
Deceased’s industry is assumed by debt of P4,500,000.
● Before his death, the house and lot had an unpaid property tax of P304,000. P4,000 of which
was already settled on December 9, 2001.
19. How much is the gross estate of Mr. Deceased? (Difficult)
a. 46,287,000
b. 51,187,000
c. 51,283,000
d. 46,383,000
20. How much is the separate property of Mrs. Living? (Average)
a. 23,286,500
b. 122,000
c. 23,143,500
d. 96,000
21. How much is the estate tax due? (Average)
a. 365,610
b. 671,370
c. 686,370
d. 1,029,990
22. Which of the following forms are applicable to the payment of tax? (Average)
a. 1700
b. 1701
c. 1800
d. 1801
23. The followings are the expenses incurred in giving care to Mr. N, a PWD, Ms. M, a senior
citizen, and Mrs. O, a married person:
Mr. N Ms. M Mrs. O

From VAT registered business

Canned goods and rice P11,200 39,200 25,200

Food supplements 8,960 10,080 16,800

Insulins 35,840 60,480 20,608

From Non VAT business

 Canned goods and rice 6,160 9,968 30,464

Food supplements 672 784 18,704

The amount presented is the normal invoice price. What is the amount of VAT from sale to N,
M, and O respectively? (Average)
a. P960, P0, P4,500
b. P1,032, P0, P9,768
c. P1,075.20, P0, P5,040
d. P1,155.84, P0, P10,940.16
24. Festine Company is a VAT registered company selling raw materials for car and motorcycle
assemblies. The following is the summary of its acquisition and selling of its products:
Sale to companies located in Clark Special Economic Zone, P50,000,000
Sale to other companies, P35,000,000
Sale through export, P87,000,000
Acquisition from a domestic VAT registered company, P23,000,000
Acquisition from a domestic non VAT registered company, P13,000,000
How much is the VAT still due and payable of the Festine Company? (Average)
a. P1,440,000
b. P16,320,000
c. (P120,000)
d. (P4,320,000)
25. Rey Ocampo has P2,340,000 gross receipts in 2021. In 2022, he has a gross receipts of
P1,245,000 and an expense of P450,000. Assuming that Rey Ocampo is not VAT registered,
what amount of business tax must he pay in 2022? (Average)
a. P37,350
b. P12,450
c. P95,400
d. P85,178
26. Rex Banggawan is a welder who works on a 6-month contractual basis with different LGUs.
In 2024, he had a gross receipts of P4,500,000 and until now, he has not yet registered as a
VAT person. In 2025, he had a gross receipt of P6,000,000 and he had acquired supplies from
VAT registered business totaling P2,350,000. How much is his business tax payable?
(Average)
a. P60,000
b. P180,000
c. P720,000
d. P438,000
27. Carlyn Rosa is a service provider for different types of companies across Manila. In 2022, she
has gross receipts of P1,240,000 and is not a VAT registered person. In 2023, she has in his
financial records in the view of financial accounting:
Service income, P900,000
Accrued service income, P340,000
Unearned service income, P460,000
How much is his business tax in 2023? (Difficult)
a. P12,400
b. P24,800
c. P27,200
 d. P20,400
28. Bull Horse Race Tracks has a gross receipt of P350,000 during the first quarter. On the last
day of the quarter. Peter “the lucky” won on his 45th noncombination bet ticket that cost him
P4,500. He received P90,000 cash on hand as a prize from winning. What is the date of filing
the business tax and how much is the tax to be returned in relation to the situation? (Difficult)
a. April 25, P105,000
b. April 25, P73,000
c. April 20, P113,955
d. April 20, P115,000
29. PLF Co., a VAT registered, is a transportation service company that provides in-land and
in-air domestic carriage and shipment of passengers and cargo. The following summarizes the
gross receipts during the first quarter of 2021:
Gross receipts from the 4 airplanes, P900,000
Gross receipts from 15 trucks, P1,250,000
Gross receipts from 18 buses, P1,100,000
How much is the VAT and common carrier tax respectively during the first quarter? (Average)
a. P258,000 and P33,000
b. P108,000 and P70,500
c. 0 and P97,500
d. P390,000 and 0
30. Antoni J. Dayag is a non-VAT sole proprietor selling merchandise in Manila. In the first
quarter of 2021, he has a gross sales of P490,000. What is the BIR form must he accomplish
and when is the due date of the same? (Average)
a. 2550M, April 25
b. 2550Q, April 20
c. 2551M, April 20
d. 2551Q, April 25
Nothing follows~~

Prepared by: James B. Cantorne

The questions are based on the following authors and reviewers, these are modified by the preparer:
1. Omar Erasmo Ampongan
2. Rex Banggawan
3. Nickolai Soriano
4. Kenneth Manuel
5. Reginald Laco
The questions are formed in parallel competency with the current preboard of the various review
centers and is answerable within 1 hour and 15 minutes. The following are coverage of this test:
1. VAT on importation
2. Regular VAT
3. Other Percentage Taxes
4. Exempt Goods and Services
5. BIR forms
The following is not covered by the same:
1. Tax remedies
2. Excise Tax