PRELIM EXAMINATION

2nd SEMESTER A.Y. 2023-2024

NAME__________________________________________________________________ SCORE_________________

COURSE______________________ SCHEDULE ____________________________DATE___________________

I. TRUE OR FALSE. ANALYZE the following statements and write TRUE if the statement is correct
and write FALSE if it is wrong. AVOID ERASURES.

________1. A small business enterprise with gross receipts of not exceeding P3,000,000.00 million may
be taxed at 12% (VAT) or 3% (Non-VAT) at the option of the taxpayer.
________2. Taxpayers which are subject to Other Percentage Taxes are generally required to file its tax
return within 20 days after the end of each month.
________3. A person subject to percentage tax is also subject to value-added tax.
________4. The account title to best reflect the VAT on a purchase is output vat.
________5. For VAT purposes, a taxable person is any person liable to pay the VAT, whether registered
or registrable in accordance with the Tax Code
________6. A person subject to excise tax is also subject to value-added tax
________7. The status of a “VAT-registered person” as a VAT-registered person shall not continue until
cancellation of such registration.
________8. Value Added Tax is an Indirect Tax.
________9. Mr. Atay is a dealer of liquors. On his sales in the Philippines, his tax are Vat and Excise
Tax.
________10.Purchases are recorded net of input taxesin the books of accounts of a VAT-registered
taxpayer.

II. MULTIPLE CHOICE. EVALUATE each statement and the choices, then, APPLY your
knowledge by selecting the best answer and encircle the letter only of each number. AVOID
ERASURES.

1. One of the following is subject to 3% percentage tax.

a. Establishments whose annual gross sales or receipts exceed P3,000,000 and who are VAT registered
b. Businesses whose annual gross receipts or sales exceed P3,000,000 and who are not VAT registered
c. VAT registered establishments whose annual gross receipts do not exceed P3,000,000
d. Establishments whose annual gross sales do not exceed P3,000,000 and who are not VAT registered

2. Rusty owns a small eatery near a Lucky Plaza parking area. Its annual gross receipts range from
P400,000 to P450,000. In January, the gross receipts amounted to P27,500 while purchases of goods
subject to VAT is P6,000 and not subject to VAT, P13,000. If Rusty is not a VAT registered
taxpayer, his estimated business tax due for the month is -

a. 825 c. 2,580
b. 2,304 d. 2,500
3. Using the data in No. 2, what is the total amount of purchases for the month of January assuming the
amounts indicated are inclusive of Vat?

a. 6,000 c. 18,357
b. 16,964 d. 19,000

4. On January 5, 2023, Marty Co., VAT-registered, sold on account goods for a total amount of
P212,000 to Gal Corp. total amount due is:
a. 212,000 c. 210,000
 b. 207,760 d. 237,440

5. Although the power of taxation is basically legislative in character, it is NOT the function of
Congress to
a. fix with certainty the amount of taxes.
b. collect the tax levied under the law.
c. identify who should collect the tax.
d. determine who should be subject to the tax.

6. An example of a tax where the concept of proportional tax rate finds applications, except?
a. income tax on individuals.
b. excise tax on petroleum products.
c. value-added tax on certain articles.
d. amusement tax on boxing exhibitions.

7. Which of the following shall be subject to Value- Added Tax?

a. Any person who, in the course of his trade or business, sells, barters, exchanges or leases
goods or properties
b. Any person who, in the course of his trade or business renders service
c. Any person who imports goods
d. All of the choices

8. The following are major internal revenue business taxes in the NIRC of 1997, except one:
a. Income tax c. Value-added tax
b. Excise tax d.. Percentage tax

9. Gross selling price includes all of the following, except one. Which one?
a. Total amount which the purchaser pays to the seller.
b. Total amount which the purchaser is obligated to pay to the seller.
c. Excise tax.
d. Value-added tax.

10. Mr. Tombee is a manufacturer of fermented liquors. In making sales, all taxes on the products and
transactions are passed on to the buyers. For purposes of the value-added tax, which of the three
taxes mentioned here that he pays forms part of the gross selling price?
a. Excise tax c. Percentage tax
b. VAT d. None of the above

11. Value-added tax is an example of

a. Graduated Tax b. Progressive Tax c. Regressive Tax d. Proportional Tax

12. Mang Donald Bee, a sole proprietor, buys and sells "kumot at kulambo" both of which are subject to
value-added tax. Since he is using the calendar year as his taxable year, his taxable quarters end on
the last day of March, June, September, and December. When should Mang Donald file the VAT
quarterly return for his gross sales or receipts for the period of July 1 to September 30?

a. Within 25 days from September 30 c. Within 20 days from September 30

b. Within 15 days from September 30 d. Within 30 days from September 30

13. In which of the following cases shall the selling price be deemed inclusive of VAT?
I. If the gross selling price is based on the zonal value or market value of the property
II. If the VAT is not billed separately

a. I only b. II only c. Both I and II d. Neither I nor II

14. Statement 1: A person subject to excise tax is also subject to value-added tax;
Statement 2: A person subject to percentage tax is also subject to value-added tax.
a. Both statements are correct
 b. Both statements are correct
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct

15. Which of the following is not a sale and therefore is not subject to the VAT?
a. Transfer, use or consumption not in the ordinary course of business of goods or properties
ordinarily intended for sale or use in the course of business.
b. Distribution or transfer to shareholders or investors of shares in the profits of a VAT registered
person
c. Distribution or transfer to creditors in payment of debt;
d. Consignment sales

16. Which of the following statements is wrong? The VAT is:

a. not an expense
b. a tax credit
c. not a part of the gross selling price
d. on purchases, is a part of the cost of inventory

19. Statement 1: In the books of accounts of a VAT-registered taxpayer, purchases are recorded net of
input taxes
Statement 2: In the books of accounts of a VAT-registered taxpayer, sales are recorded net of output
taxes.

a. Both statements are correct

b. Both statements are incorrect
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct

20. Which is correct? The inventory balance in the financial statements at any given date of a VAT-
registered person is:
a. Balance, net of input taxes
b. Balance, inclusive of input taxes
c. Balance on which the transitional input tax is computed annually
d. Balance where the value-added tax thereon may be calculated by multiplying it by 12%

21. Mr. Coco is a VAT registered person, with the following data for a taxable month, VAT not
included: Sales, domestic, to consumers – P600,000; Sales, direct exports – P300,000; Purchases,
total invoice cost, from VAT registered persons: Of goods of P550,000 and of services of P330,000.
The sales subject to the value added tax is:
a. P600,000 b. P300,000 c. P400,000 d. P900,000

22. Quarterly VAT declaration is filed on or before the:

a. 15th day from the end of each quarter c. 25th day from the end of each month
b. 25th day from the end of each quarter d. 30th day from the end of each quarter

23. H and W, husband and wife had the following gross sales (net of tax) during the year:

W- restaurant owner P 800 000

H-
a. Professional CPA P 350 000
b. Medium sized store:

Sale of office/school supplies P 2 120 000

Sale of books P 275 000
 Which of the following statements is true?
a. For purposes of the threshold of P 3M, the gross receipts of the husband and wife shall be
combined.
b. The gross receipts shall be subject to VAT even if she does not register voluntarily under the
VAT system.
c. For purposes of the threshold of P 3M, the sale of office supplies and the practice of
profession are considered as separate taxpayers.
d. For purposes of the threshold of P 3M, the aggregation rule for each taxpayer shall apply.
Thus, the gross receipts from the medium sized store shall be added to the receipts from the
practice of profession.

24. The following first quarter data pertain to a value-added taxpayer whose purchases were all from
value-added taxpayers:

Output taxes, January P 132 000

Input taxes, January 240 000
Output taxes, February 348 000
Input taxes, February 144 000
Sales, total invoice price, March 3 360 000
Purchases, total invoice cost, March 1 456 000
The value-added tax payable for March is:

a. P 300,000 c. P 204 000

b. P 192 000 d. P 260 400

25. Statement 1: The output value-added tax is computed by multiplying the gross selling price by 12% or
multiplying the total amount indicated in the invoice by 12/112.
Statement 2: The output value-added tax is computed by multiplying the total amount indicated in the
invoice by 12%.
a. True; True b. False; False c. True; False d. False; True

Part III – Computations / Journal Entry -

Problem 1

Topline Company sold to Bestbooks Enterprises goods worth P 10,000, exclusive of tax. Record the
accounting entries in the sales book and in the purchase book if:

1. The buyer and the seller are subject to VAT.

2. Seller is VAT registered, while buyer is not.
3. Seller is no VAT registered, while buyer is VAT registered

Problem 2

All amounts given are total invoice costs/prices:

A, non-VAT taxpayer, sells to B, VAT taxpayer P 67 200
B, VAT taxpayer, sells to C, VAT taxpayer 100 800
C, VAT taxpayer, sells to D, VAT taxpayer, an exporter 168 000
D, VAT taxpayer, exports 300 000
26. The value-added tax of B: _________
27. The value-added tax of C: _________
28. The value-added tax of D: _________