BUSINESS TAXATION
2ND SEM 2024-2025
ASSIGNMENT - May 19, 2025
Submit this assignment on or before Wednesday, May 21, 2025
Encircle the letter which corresponds to your right answer.
1. Statement 1: Inventories of goods for sale which are exempt from VAT may be subject to
transitional input tax when the seller becomes liable to VAT for the first time, or when he
voluntarily registers under the VAT system even if his annual turn-over does not exceed
P3,000,000.
Statement 2: When a transitional input tax is created, the taxable person shall make a journal
entry debiting “Transitional input tax” and crediting “Merchandise inventory.”
Statement 3: The purchase of fish to be processed into sardines shall entitle the manufacturer
of sardines to a 4% presumptive input tax.
Statement 4: A person who sells his riceland because he needs money for the hospitalization of
his child is subject to VAT on the sale of real property.
Which of the following options is wrong?
a. Statement 1 is true, while statement 4 is false. c. Statements 1 and 2 are true.
b. Statement 2 and 3 are false. d. Statements 3 and 4 are false.
2. Statement 1: Deductions for input VAT require documentation of purchase order in the name of
the buyer.
Statement 2: VAT invoices and VAT official receipts cannot be used as deduction at the same
time or simultaneously.
Statement 3: A VAT invoice or receipt issued by a non-VAT supplier does not deprive the buyer
to claim the correct input VAT.
Statement 4: No input VAT is to be paid if the imported goods are for personal consumption.
Which of the following is both correct?
a. Statements 1 and 4 b. Statement 2 and 3 c. Statements 1 and 2 d. Statements 3 and 4
3. Statement 1: The input VAT of a machine worth P1,500,000 classified as goods for sale is to be
amortized over 60 months or the shorter of its estimated useful life.
Statement 2: Transactions made with non-VAT and VAT-exempt persons are not subject to input
VAT.
Statement 3: The depreciable asset must be used in business to observe the P1,000,000
threshold rule in deducting its related input VAT.
Statement 4: All excess of input VAT over output VAT can be applied for refund or issuance of tax
credit certificate.
Which of the following is correct and not correct, respectively?
a. Statements 1 and 4 b. Statement 2 and 3 c. Statements 1 and 2 d. Statements 3 and
4
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4. Statement 1: The input VAT of a VAT person for personal use is creditable against the output
VAT.
Statement 2: The commercial invoice of a foreign seller does not need to be VAT invoice or
receipt to be subjected to VAT.
Statement 3: Transitional input VAT of 3% of the beginning inventory of each year is allowed as
tax credit of VAT system.
Statement 4: Input VAT on importation must be supported by the import entry.
Which of the following is correct?
a. Statements 1 and 3. b. Statements 2 and 4. c. Statements 1 and 2. d. Statements 3 and
4.
5. TStatement 1: The creditable input VAT is increased by transitional input VAT and presumptive
input VAT.
Statement 2: The VAT refund should be filed and applied within 5 years from the filing of VAT
return.
Statement 3: When the input VAT is greater than the output VAT, there is a VAT payable.
Statement 4: For real property bought on installment, the creditable input VAT to the buyer
should correspond to the VAT of the installment payments.
Which of the following is not correct?
a. Statements 1 and 4. b. Statements 2 and 3. c. Statements 1 and 2. d. Statements 3 and
4.
6. Statement 1: Transitional input VAT allows the deduction of a higher amount of actual input
VAT.
Statement 2: The input VAT related to zero-rated purchases is allowed for tax refund or issuance
of TCC.
Statement 3: Input VAT derived from local purchases or importation is not allowed for the
issuance of TCC except in cancellation of VAT registration.
Statement 4: The presumptive input VAT is 4% of all purchases of goods.
Which of the following is true?
a. Statements 1 and 4. b. Statement 2 and 3. c. Statements 1 and 3. d. Statements 2 and
4.
7. Which of the following is not included in the taxable base of input VAT of imported products?
a. Incidental charges after the release of goods from the Bureau of Customs.
b. Value used by Bureau of Customs in determining tariff and custom duties, plus custom
duties and excise taxes.
c. Other charges prior to the release of goods from the BOC.
d. Landed cost plus excise tax.
8. Which of the following is the correct creditable transitional input VAT according to law?
a. 2% of available inventory on the date of shifting to VAT.
b. 2% of the beginning inventory during the year of shifting to VAT.
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c. 2% of the available inventory on the date of shifting to VAT or the actual input VAT,
whichever is higher.
d. 2% of the available inventory on the date of shifting to VAT or the actual input VAT,
whichever is lower.
9. Coco Mfg., a VAT-registered business, purchased and used P1,000,000 worth of coconut, the
prime raw materials in the manufacturing of cooking oil and shampoo. Additional information is
gathered as follows:
Sales:
Cooking oil P3,000,000
Shampoo 2,000,000
Packaging costs, inclusive of VAT 224,000
How much is the amount of presumptive input VAT?
a. P10,000 b. P12,000 c. P20,000 d. P32,000
10. Dar Ling, a non-VAT person, decided to register his business under VAT system. His total VAT
purchases before the VAT registration amounted to P896,000 of which 20% remained unsold at
the time of the VAT registration. His other purchases amounted to P1,500,000 of which 50%
remained unsold at the time of VAT registration.
How much is the total transitional input VAT allowed?
a. P3,200 b. P15,000 c. P18,200 d. P34,200
11. Y, a VAT registered business, purchase merchandise for sale from Z, a non-VAT business that
included and collected 12% VAT on its sale to Y amounting to P400,000 plus VAT amounting to
P48,000. If the total sales of Y is P425,600 including VAT, how much is its input VAT carry-over?
a. P2,400 b. P12,000 c. P13,680 d. P16,080
12. Mayon Corporation had the following summary of output and input VAT for the 1st quarter and
second quarter of 2020:
1st Qtr April May
Output VAT P200,000 P300,000 P250,000
Input VAT 240,000 320,000 240,000
What is the creditable input VAT carry-over to be credited in May?
a. P20,000 b. P40,000 c. P60,000 d. P70,000
13. Based on preceding number, what is the total creditable input VAT in April?
a. P360,000 b. P340,000 c. P320,000 d. P300,000
14. Based on the preceding problem, what is the input VAT carry-over to be credited in June?
a. P 0 b. P10,000 c. P40,000 d. P70,000
15. A VAT-registered business reported the following sales before VAT:
Domestic sales P1,125,000
Export sales 300,000
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VAT-exempt sales 60,000
Sales to government 15,000
If its accumulated input VAT amounts to P80,000, the amount of total VAT deductible from sales
to government would be:
a. P15,000 b. P1,800 c. P1,050 d. P750
16. Statement No. 1- The excise tax of a car is an example of specific excise tax.
Statement No. 2- The inputs of distilled spirits are subject to excise tax.
a. Both statements are True c. Both statements are False
b. Only statement 1 is True d. Only statement 2 is true
17. Statement No. 1- Imported buses are not subject to excise tax.
Statement No. 2- An excise tax is imposed only on locally produced goods.
a. Both statements are True c. Both statements are False
b. Only statement 1 is True d. Only statement 2 is true
18. Statement No. 1- An excise tax is payable within 10 days from the close of the month of
production.
Statement No. 2- The owner or importer shall pay excise taxes on imported articles.
a. Both statements are True c. Both statements are False
b. Only statement 1 is True d. Only statement 2 is true
19. Statement No. 1- A liquefied petroleum product is a separate and distinct product from
processed gas.
Statement No. 2- If the domestic products are removed from their place of production without
the payment of excise tax, the owner or person having possession shall be liable for the tax due
thereon.
a. Both statements are True c. Both statements are False
b. Only statement 1 is True d. Only statement 2 is true
20. Statement No. 1- Petroleum products sold to international carriers of Philippine or foreign
registry on their use or consumption outside the Philippines are exempt from excise tax.
Statement No. 2- Mineral resources include quarry resources.
a. Both statements are True c. Both statements are False
b. Only statement 1 is True d. Only statement 2 is true
21. One of the following is subject to common carrier’s tax?
a. Owners of banca
b. Owners of animal-drawn two wheeled vehicles
c. Common carriers by land for transport of goods or cargoes
d. Common carriers by land for transport of passengers.
22. Taxes imposed on substance known as to harm health
a. Sin tax b. Sumptuary tax c. Green tax d. Vanity tax
23. Excise tax on locally produced excisable goods shall be paid.
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a. Within 15 days from the removal of the goods c. Upon removal of the goods
b. Before the removal of the goods d. Upon sale of the goods
24. Who is required to pay the excise tax on excisable goods?
a. Producer c. Possessor of excisable goods with unpaid excise tax
b. Importer d. Any of these
25. Which of the following agricultural products is subject to excise tax?
a. Tobacco rolls b. Ground coffee c. Refined sugar d. All of these
26. The term “quarry resources” does not include
a. Marble and volcanic cinders c. Granite and basalt
b. Rock phosphate d. Metallic rocks or mineralized rocks
27. No excise tax credit or refund is allowed to the export of which of the following commodities?
a. Mineral products b. Coal c. Coke d. Petroleum products
28. Which is subject to the 20% jewelry tax?
a. Dental gold alloys or gold tooth filling c. Silver plated wares
b. Gold plated frames or mountings for eyeglasses d. Pearls
29. Petroleum products sold to the following shall be subject to excise tax.
a. Government agencies and GOCCs c. Asian Development Bank
b. Economic zones d. International carriers
;
30. Which of the following product is subject to both ad valorem and specific tax?
a. Distilled spirits b. Cigars and cigarettes c. Automobiles d. A and B
31. Statement 1. Excise taxes imposed and based on weight and volume capacity or any other
physical unit of measurement shall be referred to as ad valorem tax.
Statement 2- Excise taxes imposed and based on selling price or other specified value of the
good shall be referred to as specific tax.
a. True; True b. True; False c. False; True d. False; False.
32. Statement No. 1: Documentary stamp tax is a national tax.
Statement No. 2: The object of documentary stamp tax is the document.
Which statement/s is/are incorrect?
a. Statement No. 1 c. Both statements are correct
b. Statement No. 2 d. Both statements are incorrect
33. Which of the following statement is not true about other percentage tax?
a. It s a business tax. c. It is a transfer tax.
b. It is an ad valorem tax d. It is not a progressive tax
34. The percentage tax rates on services specifically subject to percentage tax ranges from
a. ½ of 1% to 3% b. ½ of 1% to 30% c. 6/10 of 1% to 3% d. 6/10 of 1% to 30%
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35. To be subject to the general percentage tax, a taxable person must not be
a. Non-VAT registered c. VAT-registered
b. Operating below the VAT threshold. d. All of these.
36. Which domestic common carrier is specifically subject to percentage tax?
a. Common carrier by air c. Common carrier by land
b. Common carrier by sea d. All of these.
37. The percentage tax specifically imposed on certain domestic transporters is called.
a. Common carrier’s tax b. Skipper’s tax c. Transporter’s tax d. Gross receipt tax
38. From which of the following sources is the gross receipt of an international carrier subject to
percentage tax?
a. Outgoing transport of passenger c. Outgoing transport of cargoes
b. Incoming transport of passengers or cargoes d. None of these.
39. Which is not specifically subject to common carrier’s tax?
a. Bus b. Taxi c. Truck d. Jeepney
40. Which is more likely exempt from business tax?
a. Tricycle b. Jeepney c. Car for hire without chauffeur d. Pedicab
41. Franchise grantees of telephone, telegraph, and other communication equipment are subject to
percentage tax on
a. Overseas dispatch of message c. Both a and b
b. Domestic dispatch of message d. Neither a nor b
42. Which of the following franchisees is subject to the franchise tax?
a. Electricity b. Transportation c. Telephone d. Water utility
43. What is the business tax liability of gas and water utilities with gross receipts exceeding
P10,000,000?
a. VAT b. 3% percentage tax c. 2% percentage tax d. Exempt
44. Agents of foreign insurers are subject to
a. 2% premiums tax b. 4% premiums tax c. 5% premiums tax d. 10% premiums tax
45. Which is the correct percentage tax on the following service providers?
a. Operators of jai-alai c. Keepers of garage
b. Franchisees of water utility d. Life insurance companies
46. The gross receipts of banks pertain to
a. Principal collection c. Interest collection
b. Principal and interest collection d. None of these.
47. The premium tax on life insurance applies to
a. Direct premium b. Re-insurance premium c. Refunded premium d. All of these
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48. Which is not subject to amusement tax?
a. Places of boxing exhibitions c. Cockpits
b. Places of professional basketball games d. Golf course
49. Which of the following sales is subject to stock transaction tax?
a. The sale by an investor of a listed stock directly to buyer.
b. The sale by a listed corporation of shares through the PSE.
c. The sale by an investor of a listed stock through the PSE.
d. The sale by a listed corporation of shares directly to buyer.
50. Fiona Shrek, a mini-mart owner and a non-VAT person, provides the following data for the year
200A:
Gross sales P800,000
Cost of Sales 600,000
Merchandise inventory, end 100,000
Operating expenses 100,000
The amount of other percentage tax payable is:
a. P96,000 b. P64,000 c. P24,000 d. P 6,000
51. American Hawk, an international air carrier, recorded the following taxable receipts during a
month for outgoing flights:
From booking agencies in
Philippines Abroad Total
Passengers P2,000,000 P3,000,000 P5,000,000
Cargoes 500,000 1,200,000 1,700,000
Total P2,500,000 P4,700,000 P6,700,000
Compute for the percentage tax:
a. P15,000 b. P51,000 c. P60,000 d. P75,000
52. Bullion Bank reported the following receipts during the month:
Interest income:
1 to 3 year loan P1,100,000
3 to 5 year loan 700,000
6 to 8 year loan 600,000
8 to 10 year loan 400,000
Total P 2,800,000
Compute for the gross receipts tax.
a. P100,000 b. P110,000 c. P80,000 d. P70,000
53. Boy Manok is an operator of a cockpit. During the quarter, it collected P200,000 from gate
receipts, P240,000 from “tongs” and P300,000 from business concessionaires inside the
cockpits. Total winnings on derby sets totaled P2,400,000. What is the amusement tax?
a. P 0 b. P74,000 c. P111,000 d. P133,200
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54. The OPT on amusement activities is a
a. Local tax b. National tax c. Specific tax d. Transfer tax
55. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts
of the preceding year do not exceed P10,000,000 shall be
a. 2% of the gross receipts c. 4% of the gross receipts
b. 3% of the gross receipts d. 5% of the gross receipts
56. Amounts received for overseas dispatch, message or conversations originating from the
Philippines are subject to
a. 3% franchise tax c. 2% franchise tax
b. 10% overseas communication tax d. 10% VAT
57. One of the following is not subject to the 3% percentage tax.
a. International air carrier doing business in the Philippines
b. International shipping carrier doing business in the Philippines.
c. Domestic carriers and keepers of garage.
d. Franchise grantee of electric utilities.
58. A tax on the right or privilege to enter places of amusement.
a. VAT b. Franchise tax c. Amusement tax d. Income tax
59. One of the following is not subject to amusement tax on gross receipts
a. Disco houses b. cockpits c. professional basketball d. bowling alleys
60. A, operates a ferryboat. During a particular quarter, its receipts consist of the following:
Gross receipts:
Transport of passengers P1,000,000
Transport of goods 1,500,000
Transport of cargoes ` 500,000
The common carrier’s tax payable is-
a. P30,000 b. P90,000 c. P100,000 d. None
61. Using the same data above, the output VAT is-
a. P360,000 b. P90,000 c. P100,000 d. P240,000
62. A promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate
receipts amounted to P3,000,000 and additional receipts from television coverage was
P2,000,000. The amusement tax due is –
a. None b. P500,000 c. P300,000 d. P900,000
63. Assuming that the above data is not a world championship but a Philippine national boxing
championship, how much is the amusement tax?
a. None b. P500,000 c. P300,000 d. P900,000
64. A is a radio-TV broadcasting franchise grantee. During the preceding year, its gross receipts did
not exceed P10,000,000. During the first quarter of the current year, it has the following data:
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Gross receipts, sale of airtime P2,000,000
Gross receipts, use of radio station’s communication facilities 500,000
Business expenses 700,000
The franchise tax due for the first quarter is
a. P60,000 b. P40,000 c. P75,000 d. P39,000
65. Nash Shrek, a mini-grocery owner and a non-VAT person, provides the following data for the
year 200A:
Gross sales P800,000
Cost of Sales 600,000
Merchandise inventory, end 100,000
Operating expenses 100,000
The amount of other percentage tax payable is:
a. P96,000 b. P64,000 c. P24,000 d. P 6,000
66. In the third quarter of 20xx, a taxpayer engaged in the sale of services whose annual gross
receipts do not exceed P3,000,000 has the following data:
Accounts receivable, beginning of the quarter P 50,000
Sales during the quarter 100,000
Accounts receivable, end of the quarter 75,000
Purchase of supplies, total invoice amount 11,200
The percentage tax due for the quarter is-
a. P2,250 b. P3,000 c. P7,500 d. P6,500
67. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular
quarter follow:
Gross receipts:
Cockpit operations P500,000
Restaurant operations:
Sale of foods 100,000
Sale of liquor 150,000
The amusement tax due from A is-
a. P90,000 b. P135,000 c. P225,000 d. P75,000
68. Using the above data, except that the restaurant is not owned by A but is owned b y another
person, B, not a VAT registered and whose gross sales never exceeded P3,000,000. The
amusement tax due from A is-
a. P90,000 b. P135,000 c. P225,000 d. P75,000
69. Continuing the preceding number, the percentage tax due from B is-
a. P P90,000 b. P135,000 c. P225,000 d. P7,500
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70. Doc. Mitsui, a VAT registered surgeon, conducted a cosmetic surgery on Miss Mitsubishi for
P1,200,000. The fee is agreed to be inclusive of VAT but exclusive of excise tax. What is the
excise tax?
a. P60,000 b. P57,143 c. P53,571 d. P50,000
71. ABJ Company is a VAT registered car manufacturer. It had the following data on the
manufacture of a car model during a period of recession:
Petroleum costs P1,000,000
Transport and other expenses of sale 200,000
Final selling price to customer 1,100,000
What is the basis of the ad valorem tax?
a. P1,000,000 b. P1,100,000 c. P1,200,000 d. P1,320,000
72. Biltrex Company sells sports car with selling prices ranging P2M to P20M. During the month, it
completed production of 2 units of the Tigris model with aggregate cost and wholesale price of
P2M and P6M.
What is the ad valorem tax?
a. P3.0M b. P1.2M c. P600,000 d. P 0
73. Rope Company imports and manufactures various automobile models. During the month, it had
the following data on its operation:
Total costs Total selling price
Cars imported P10,000,000 P12,500,000
Cars produced 30,000,000 31,000,000
Total P40,000,000 P43,500,000
The sales of these cars are subject to 10% excise tax.
Compute the excise tax.
a. P3,000,000 b. P4,000,000 c. P4,350,000 d. P4,550,000
74. A small-scale miner sold his gold to a gold trader for P500,000. Compute the excise tax.
a. P 0 b. P20,000 c. P50,000 d. P100,000
75. Auto Motive Company imports and manufactures various automobile models. During the
month, it had the following data on its operation:
Total costs Total selling price
Cars imported P10,000,000 P12,500,000
Cars produced 30,000,000 31,000,000
Total P40,000,000 P43,500,000
The sales of these cars are subject to 10% excise tax.
Compute the excise tax.
a. P3,000,000 b. P4,000,000 c. P4,350,000 d. P4,550,000
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76. For the given year 2024, the following information from business:
Gross receipts from business P900,000
Rental income 650,000
Operational expenses 400,000
Real properties 17,000,000
Compute the individual community tax.
a. P1,555 b. P1,155 c. P5,200 d. P5,005
77. Based on the preceding information, if the taxpayer is a corporation, how much is the corporate
community tax?
a. P7,920 b. P7,560 c. P1,120 d. P10,500
78. Which is an incorrect statement?
a. Donor’s tax is imposed on donation inter vivos.
b. Estate tax is imposed on donation mortis causa
c. Income tax is imposed on onerous transactions
d. None of these
79. Who is one directly liable to the payment of donor’s tax?
a. The donor c. The donee
b. The person in possession of the property upon discovery of the donation d. Any of these.
80. The transfer of property by gift is perfected from the
a. Delivery of the gift c. Filing of donor’s tax return
b. Acceptance of the donee d. Payment of donor’s tax
81. The first procedure to compute the donor’s tax is to determine the
a. Gross gifts b. Net gifts c. Donor’s tax d. Donor’s residency and nationality
82. When a property is donated, the basis of the donor’s tax is
a. The cost of acquisition if acquired by purchase or the fair market value at acquisition date,
whichever is higher.
b. The agreed value by the donor and the donee
c. The fair market value at the time of donation
d. Any of the above
83. Reciprocity in donor’s tax is applicable to nonresident alien’s
a. Intangible property within c. Personal property within
b. Intangible property within and without d. All properties situated within
84. Which one of the following is not an essential element of taxable gift?
a. Capacity of the donor c. Delivery or acceptance of the gift
b. Intent to make a gift d. Capacity of the donee
85. Which of these donations is subject to donor’s tax?”
a. Irrevocable donation c. Transfer under special power of appointment
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b. Transfer in contemplation of death d. Transfer under general power of appointment
86. What is the required form in the donation of real property?
a. Written agreement b. Public instrument c. Oral agreement d. A or B
87. Which is taxable only on Philippine donations?
a. Filipino residing in Jolo, Sulu, Philippines.
b. A Filipino citizen, residing in Canada
c. An Australian citizen, residing in the Philippines
d. An Italian citizen, residing in the United Arab Emirates
88. The donation of a non-resident alien donor is exempt from donor’s tax if the property is
a. Located abroad c. An intangible property located in the Philippines
b. A real property located abroad d. Located in the Philippines at the date of donation.
89. Which of these is taxable in the Philippines?
a. Donations made abroad c. Donations made in the Philippines
b. Donations of property situated in the Philippines d. All of these.
90. Counted from the date of donation, the donor’s tax is paid within
a. 10 days b. 15 days c. 30 days d. 60 days
91. Which is not included in net gift?
a. Transfers to the government
b. Transfers to non-profit and non-stock charitable institutions
c. Portion of the fair value of the property adequately paid for
d. All of these
92. Which of these is not included in the net gift?
a. Dowry gift to a step-child c. Gift to relatives
b. Gift to a spouse d. Gift to a stranger
93. In 2019, Mr. and Mrs. Mapagbigay made a single donation of P200,000 to their son on account
of his graduation from college. The donation was taken from the salaries of Mr. Mapagbigay.
Which is correct?
a. The donation is exempt from donor’s tax c. Both spouses will pay donor’s tax
b. The donation is subject to income tax d. Either of the spouses pays the donor’s tax.
94. Mr. and Mrs. Aguinaldo donated a piece of land worth P500,000 to their daughter, Hanna, who
is getting married. In the same year, Mr. and Mrs. Aguinaldo made a prior donation of P100,000
to a family friend.
Which is correct?
a. Either Mr. or Mrs. Aguinaldo shall report a net gift of P350,000.
b. Either Mr. or Mrs. Aguinaldo shall report a net gift of P100,000.
c. Mr. and Mrs. Aguinaldo are exempt to pay donor’s tax.
d. Both Mr. and Mrs. Aguinaldo shall report a net gift of P50,000
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95. Mr. Alfonso donated a brewery with a value of P24M to Mr. Ginebra. Mr. Ginebra assumed the
mortgage on the property valuing P18M. Compute the net gift.
a. P24M b. P18M c. P6M d. P5.75M
96. Mr. Kinoto, a non-resident Japanese, donated an agricultural land in Japan worth P800,000 to a
non-resident Filipina girlfriend. Mr. Kinoto paid P20,000 donor’s tax in Japan. What is the
donor’s tax due and payable in the Philippines?
a. P48,000 b. P33,000 c. P13,000 d. P 0
97. Derrick made the following donations:
January 5, 2019 – cash, to half-sister P200,000
August 17, 2019 – Car, to girlfriend 800,000
November 8, 2020 – Stocks, to granddaughter 400,000
Compute Derrick’s gift tax on the January 5 donation.
a. P 0 b. P3,000 c. P12,000 d. P30,000
98. Compute the gift tax on the August 17 donation of Derrick.
a. P32,000 b. P42,000 c. P45,000 d. P60,000
99. Compute Derrick’s gift tax on the November 8 donation.
a. P9,000 b. P24,000 c. P28,000 d. P69,000
100. Mr. A, a resident alien, gave a diamond ring worth P200,000 to his wife on account of
their anniversary. How much is the taxable donation?
a. P200,000 b. P100,000 c. P110,000 d. P 0
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