WESLEYAN UNIVERSITY PHILIPPINES

COLLEGE OF BUSINESS AND ACCOUNTANCY

FINAL EXAMINATION
Name:
Year, Course & Block:

Score:
Professor:

I. True or False.
1. On transactions in the course of trade and business, non stock, non profit private
organizations are not exempt from vat.
2. A person may be subject to business tax even if he is not engaged in business.
3. In a manufacture of products, it is possible that Vat and percentage tax are
simultaneously imposed.
4. VAT, being an indirect tax can be shifted or passed on the seller.
5. Any business pursued by an individual where the gross sale or receipts do not
exceed 100,000 during any 12 month period shall be considered principally for
subsistence or livelihood and in the course of business.
6. Any person who sells, barters, exchanges, leases goods or property and any
person who imports goods shall be subject to VAT.
7. VAT is a privilege tax.
8. Government Corporation are not exempt from VAT.
9. VAT and Percentage taxes cannot be imposed at the same time.
10. The term engage connotes a single act or isolated transactions.
11. Expenses of the prayer vigils succeeding the burial are deductible from gross
estate.
12. Mourning apparel of all minor children of the decedent regardless of civil status
cannot be deducted from gross estate.
13. Even property previously taxes situated outside the Philippines of a NRA estate,
for estate tax purposes, can be allowed Vanishing deduction.
14. For estate tax purposes, a NRA estate is entitled to the same deductions as a RA
estate.
15. A transfer for public use or purpose is one made in favor of the Philippine
government or any political subdivision for the publics exclusive use.
16. The benefit of vanishing deduction may only be applied once.
17. Vanishing deduction is being allowed to lessen the impact of successive taxation
of the same property within a very short period due to the death of decedent
transferor.
18. For unpaid taxes to be deductible from gross estate, such must have accrued at
the time or before the decedents death.
19. So that unpaid mortgage may be deducted from gross estate, the FMV of the
mortgaged property must form part of the gross estate in full.
20. It could be that the amount to be included as part of the gross estate in a claim
against insolvent person is less that the full amount owed.
21. The standard deduction is in addition to all other deductions to which only
Filipino citizens are entitled.
22. Only a husband and wife may constitute a family home.
23. The amount for inclusion in the gross estate for family home may be less than
its FMV.
24. The amount for inclusion in the deduction from gross estate for family home
may be more than 1,000,000.
25. The maximum deduction from gross estate for medical expenses is 500,000
whether paid or unpaid.
26. Legitime is that part of the testators property which he cannot dispose of
because the law has reserved it for compulsory heirs.
27. In every inheritance, the relative nearest in degree excludes the more distant
ones, saving the right of representation when it properly takes place.
28. Disinheritance can be effected only through a will but the legal cause therefor
may not be specified.
29. The last will may not be modified even if the disposition of the decedents estate
impairs the legitime of his compulsory heirs.
30. The surviving spouse is not entitled to his legitime if all other compulsory heirs
exist.
II. Multiple Choice.

1. One of the following is not transaction deemed sale:

a.
Transfer, use or consumption not in the course of business of goods or
properties originally intended for sale or for use in the course of business.
b.
Distribution or transfer to shareholders or investors of goods or properties
as share in the profits of a VAT- registered person or creditors in payment of
debt.
c.
Retirement from or cessation from business, with respect to all goods on
hand as of the date of such retirement or cessation.
d.
Consignment of goods if actual sale is made within 60 days following the
fate of such goods were consigned.

2. The allowable transitional input tax is:

a.
The lower between 2% of the value of beginning inventory or actual VAT
paid on such inventory.
b.
The higher between 2%of the value of beginning inventory or actual VAT
paid on such inventory.
c.
The actual VAT paid on the beginning inventory.
d.
2% of the value of beginning inventory.
3. All of the following except one is allowed presumptive input tax. Which one?
a.
Processor of sardines and mackerel.
b.
Manufacturer of refined sugar and cooking oil.
c.
Manufacturer of packed noodle-based instant meals.
d.
Processor of milk and coffee.
4.

Which of the following input taxes can be refunded, converted into tax
credit certificate or carried over to the next quarter at the option of the VATregistered taxpayer?
a. Input tax on purchase of raw materials.
b. Input tax on importation of supplies.
c. Input tax on zero-rated sales of goods or services.
d. Input tax on purchase of services.

5.
a.
b.

Which of the following statements is incorrect?

The payment of VAT is monthly for both sale of goods and sale of services.
A VAT-registered taxpayer can pass on the VAT even to buyers who are not
VAT-registered.
Any business pursued by an individual whose aggregate gross sales or
receipts do not exceed P100,000 during any 12-month period shall be
considered principally for subsistence or livelihood and not in the course of
trade or business.
A taxpayer whose gross receipts during the previous year exceed
P1,500,000 is not required to pay VAT if he fails to register under VAT system.

c.

d.
6.
a.
b.
c.
d.

The VAT shall apply to goods or properties originally intended for sale
or use in business, and capital goods which are existing as of the occurrence of
one of the following:
Change of business activity from VAT taxable status to VAT-exempt status;
Change of control of a corporation by the acquisition of the controlling
interest of such corporation by another stockholder or group of stockholders;
Change in the trade or corporate name of the business;
Merger or consolidation of corporation.
7.

1st Statement:
The input value-added-tax on purchase of capital
goods valued at P1,000,000 shall be spread over 60 months of the life of
property is equivalent to 5 years or more.
2nd Statement: The input value-added-tax on purchase of capital goods valued
at P1,000,000 shall be spread over the life of property if the life of
property is less than 5 years.
a. True, true
c. False, false

b. True, false

d. False, true

8. Which of the following transactions is subject to zero-rated value-added-tax?

a. Services rendered to persons engaged in international shipping or air
transport operations.
b. Services rendered by banks, non-bank financial intermediaries.
c. Generation, transmission and distribution of electricity.
d. Services rendered by professionals such as CPAs, Physicians and Lawyers.
9. Which of the following transactions is exempt from value-added-tax?
a. Sale of books, newspaper and magazines.
b. Sale of work of art.
c. Sale of literary works.
d. Sale of musical composition.
10. Which of the following transactions is subject to value-added-tax?
a.
Services subject to other percentage tax.
b.
Educational services duly approved by Department
of Education, CHED and TESDA or those operated by the Government.
c.
Sale of coal and natural gas.
d.
Lending activities by credit cooperatives.

11. Which of the following transactions is exempt from value-added-tax?

a.
Medical services such as dental and veterinary services rendered by
professionals.
b. Legal services.
c. Services arising from employee-employer relationship.
d. Services rendered by domestic air transport companies.
12. Tinapa Corporation has the following sales (inclusive of VAT) during the month:
Sale to private entities
224,000.00
Sale to export-oriented enterprise
100,000.00
Sale of exempt goods
100,000.00
The following input taxes were passed on by its VAT suppliers during the
month:
Input tax on taxable goods
5,000.00
Input tax on zero-rated sales
3,000.00
Input tax on sale of exempt goods
2,000.00
Input tax on depreciable capital good not
attributable to any specific activity
20,000.00
The VAT payable for the month:
a. 1,000
b. 7,200

c. 9,000
d. 16,000

13.

During the month of September 2006, Pavement Corporation had

domestic sales amounting to P1,680,000 and export sales amounting to
P1,500,000. during the same month, Pavements total purchases directly
attributable to domestic sales amounted to P1,120,000 and total purchases
directly attributable to export sales P1,008,000.
For the month of May, Pavement corporations VAT payable:
a. (48,000.00)
c. 60,000.00
b. 54,000.00
d. 62,000.00
14.

1st Statement:
The gross estate of a Filipino residing in the USA
shall be composed of properties situated in the Philippines only.

2nd Statement: The gross estate of an American residing in the Philippines shall
be composed of properties situated in the Philippines excluding intangible
personal properties if there is reciprocity.
a. True, true
b. True, false

c. False, false
d. False, true

15.

Ipis Mining is a VAT-registered domestic mining entity. One of its

products is silver being sold to the Bangko Sentral ng Pilipinas. It filed a claim
with the BIR for tax refund on the ground that under Section 106 of the Tax
Code, such sale is?
a. Subject to 12% VATABLE transactions.
b. Subject to zero-rated transactions.
c. Is an exempt sale.
d. Is classified as effective zero-rated transaction.

16.

A decedent died single, leaving a family home which consists of a piece

of land that he inherited 3 years ago (with a value at the time of P600,000)
with a fair value of P800,000 at the time of his death, and a house thereon
which he built at a cost of P650,000, and a fair market value at the time of his
death of P450,000. Other properties in his gross estate have a fair market
value if P550,000. Unpaid obligations at the time of his death amounted to
P300,000.
The vanishing deduction is:
a. 200,000
c. 40,000
b. 500,000
d. 225,000

17 to 19 are based on the following: During the month of February 2006, Rocker
chicks Trading realized sales of P990,000, VAT exclusive. The owner took goods with
a selling price of P50,000 (VAT exclusive) costing P40,000 for personal use. During
the same month, the company also sold goods worth P300,000 to the Asian
Development Bank. The company had an approved zero-rating from the BIR.
There was also purchases of goods for sale to private customers amounting to
P336,000, VAT inclusive; office supplies for use in the business, P30,000 VAT
exclusive and purchase of services amounting to P11,000, VAT exclusive. The
services had not been paid yet.
17.

How much were the total taxable sales?

a. P1,340,000
c. P1,040,000
b. P1,330,000
d. P1,300,000

18.
a.
b.
19.
a.
b.

How much were the total output taxes?

P160,800
c. P124,800
P159,600
d. P143,571
How much was the VAT payable?
P119,880
c. P83,880
P85,000
d. P85,200

20.A VAT subject real estate dealer sold a residential lot on January 15, 2007. The
following information was made available on the terms of the sale:
Gross selling price
P 3,000,000
Initial payments on January 15, 2007
750,000
Balance to be paid in equal installment,
installments starting February 15, 2007
2,250,000
The zonal value of the residual lot was P3,500,000.
How much was the output tax on January 15, 2007 using 12% VAT rate?
a P 420,000
c P 105,000
.
.
b P 360,000
d None of the choices
.
.

iii. Problems.
1. Decedent is a Filipino and is an unmarried head of the family. The following are
data pertinent to his death:
Real and personal properties
Family Home (FMV)
Funeral Expense
Judicial Expense
Medical Expenses 50% unpaid

3,500,000
1,750,000
250,000
1,250,000
350,000

Required: Compute for the net taxable estate (5pts) and for the estate tax due
(5pts)
2. Mr. Ipis Butterfly, Filipino, single, died on November 1, 2015. The following assets,
expenses, liabilities and charges were left:
Assets:
Fishpond in Talugtog Nueva Ecija
Lot in Buliran Cabanatuan City
House and Lot in Sta Rosa, Nueva Ecija (FH)
Honda Car
Farm in Nueva Ecija donated mortis causa to sister
Time Deposit

2,500,000
625,000
593,750
375,000
262,500
150,000

Expenses, Liabilities and Charges

Funeral Expenses paid jointly by brothers and sisters of decedent
137,500
Mortgage on Fishpond (112,500 was paid before death)
137,500
Medical Expenses incurred during 2015
287,500
Unpaid Real estate tax for the 4th qtr of 2015
20,000
Required: Compute for the net taxable estate (10pts) and for the estate tax due
(10pts)
Estate tax table
Over

But not Over

The Tax Shall be

Plus

Of the Excess Over

P 200,000.00

Exempt

P 200,000.00

500,000.00

5%

P 200,000.00

500,000.00

2,000,000.00

P 15,000.00

8%

500,000.00

2,000,000.00

5,000,000.00

135,000.00

11 %

2,000,000.00

5,000,000.00

10,000,000.00

465,000.00

15 %

5,000,000.00

1,215,000.00

20 %

10,000,000.00

10,000,000.00