Republic of the Philippines

BATANGAS STATE UNIVERSITY

The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: [email protected] | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Bachelor of Science in Management Accounting

LONG QUIZ
TAX 302- Business and Transfer taxes
Second Semester, AY 2024 – 2025

Name: __________________________________________ Score: ___________

Section: _________________________________________ Date: ___________

I. TRUE OR FALSE
Direction: Write transfer if the statement is correct and business if it is incorrect. (1 point
each=20 points)

1. Which of the following industries is subject to a specific percentage tax instead of VAT?
A) Restaurants and food stalls
B) Insurance companies
C) Supermarkets
D) Export-oriented manufacturers
2. Under the CREATE Act in the Philippines, what is the new percentage tax rate for small businesses
starting in July 2020 until June 2023?
A) 1%
B) 2%
C) 3%
D) 5%
3. How often must businesses file and pay their percentage tax to the Bureau of Internal Revenue (BIR)?
A) Monthly
B) Quarterly
C) Annually
D) Semi-annually
4. Other Percentage Tax is commonly applied to businesses that are:
A) VAT-registered
B) Exempt from VAT due to low gross sales
C) Government-owned corporations
D) Multinational companies
5. Which of the following businesses is typically subject to Other Percentage Taxes (OPT) in the
Philippines?
A) A large corporation earning over ₱3 million annually
B) A VAT-registered business
C) A non-VAT registered business earning less than ₱3 million annually
D) An export company
6. A business is required to register for VAT if it meets which of the following conditions?
A) It has an annual gross sales exceeding ₱3 million
B) It voluntarily registers for VAT even if below the threshold
C) It engages in importation of goods regardless of revenue
D) All of the above
7. Which of the following statements about VAT registration is FALSE?
A) A business with gross sales below ₱3 million can opt to register for VAT voluntarily
B) VAT-registered businesses must issue VAT invoices or official receipts for every transaction
C) Businesses engaged in export sales are required to pay 12% VAT on their sales
D) VAT registration requires securing a BIR Certificate of Registration (BIR Form 2303)
8. What happens if a VAT-registered business fails to file its VAT returns on time?

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: [email protected] | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Bachelor of Science in Management Accounting

A) It will be subject to a 25% surcharge on the tax due plus interest and compromise penalty
B) The BIR will automatically cancel its VAT registration
C) The business will be allowed to pay late without penalties if it provides a valid reason
D) The BIR will require the business to shift to percentage tax instead
9. A VAT-registered business filed its VAT return but failed to pay the corresponding VAT due. What
are the consequences?
A) The business will only be required to pay the principal VAT due without penalties
B) A penalty of 20% interest per annum plus a surcharge will be imposed on the unpaid VAT
C) The VAT liability will be automatically canceled if the business reports losses
D) The business will be required to pay VAT in the next quarter without additional penalties
10. Which of the following VAT transactions is subject to a 0% VAT rate instead of the standard 12%?
A) Sale of goods to an individual in the Philippines
B) Importation of goods for resale in the domestic market
C) Sale of goods and services to entities enjoying tax incentives under special economic zones
D) Sale of goods to local government units
11. A VAT-registered business can claim input VAT credits from which of the following expenses?
A) Purchase of office supplies used exclusively for business operations
B) Purchase of goods and services intended for resale or manufacturing
C) Payments for utilities and rental expenses related to business operations
D) All of the above
12. A VAT-registered taxpayer mistakenly declared a sale as VAT-exempt when it should have been
VATable. What should be done to correct this?
A) No action is needed as long as the mistake is unintentional
B) The taxpayer should amend the VAT return and pay the correct VAT plus penalties if
applicable
C) The taxpayer can simply report the sale correctly in the next quarter’s VAT return
D) The taxpayer should request VAT exemption from the BIR to justify the mistake
13. A business that voluntarily registers for VAT but fails to comply with VAT requirements may face
which consequence?
A) The BIR will revoke its VAT registration and disallow input tax claims
B) The business will automatically be classified as a non-VAT taxpayer
C) The business will be required to shift to VAT-exempt status immediately
D) The business will be banned from VAT registration for five years
14. Which of the following conditions must be met for a business to apply for VAT exemption?
A) It must have gross sales below ₱3 million and be engaged in VAT-exempt activities
B) It must have paid VAT for at least five consecutive years
C) It must submit a special request to the BIR, regardless of sales threshold
D) It must apply for VAT exemption only after reaching ₱5 million in sales
15. A business with both VATable and VAT-exempt sales must allocate input VAT proportionally. What
method is used for this allocation?
A) The business can apply 100% of its input VAT to all sales
B) Input VAT is allocated based on the percentage of VATable sales to total sales
C) Input VAT is only deducted from expenses directly related to VAT-exempt sales
D) The business is not required to allocate input VAT
16. A business sells equipment worth ₱5 million under a deferred payment plan, with installments
payable over three years. How is VAT recognized?
A) VAT is payable on the full ₱5 million upon issuance of the invoice
B) VAT is recognized only when each installment is received
C) VAT is deferred until full payment is made
D) The business can choose when to recognize VAT based on its financial position
17. Which of the following conditions must be met for a sale to qualify for installment VAT treatment?

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: [email protected] | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Bachelor of Science in Management Accounting

A) The buyer must provide a down payment of at least 50%

B) The selling price must be paid over a period exceeding 12 months
C) The sale price must be below the installment threshold set by tax laws
D) The business must be VAT-exempt
18. Which of the following statements is TRUE about the installment basis of VAT recognition?
A) If the selling price exceeds the threshold, VAT is due on the entire amount at the time
of sale
B) VAT is recognized only when the final installment payment is made
C) Installment sales are automatically VAT-exempt
D) VAT on installment sales is computed based only on the down payment received
19. What happens if the input VAT of a business is greater than its output VAT in a given period?
A) The business must still pay the excess VAT to the BIR
B) The excess input VAT can be carried over to the next period
C) The business must immediately request a refund from the BIR
D) The business is exempted from filing VAT returns in the next period
20. VAT is computed based on which of the following?
A) Net income of the business
B) Gross sales or gross receipts
C) The value of inventory at the end of the period
D) Total capital investment of the business

II. PROBLEM SOLVING

1. SGB, A VAT registered entity had the following data for 2024:

Note: All amounts below are net of VAT.

Compute for the output tax, input tax, and VAT payable every month and for the quarter.

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: [email protected] | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Bachelor of Science in Management Accounting

2. Conanan is a VAT registered taxpayer. It had the following data for the month of January
(VAT inclusive):

Cash sales, invoice amount P 660,800

Sales on account 246,400
Purchases 291,200 – input tax
Consignment shipments
Less than 60 days 38,500
More than 60 days 22,400
Goods paid to creditors (dacion en pago) 16,800
Goods given as Christmas gift to employees 19,040
Property dividends to stockholders 8,960

Required: Determine the Output Tax, Input Tax and VAT payable for the month.

3. DEF Corporation, a VAT-registered entity, recorded various transactions for the period. The company
generated revenue from both government and private clients, including ₱4,000,000 in sales to a
government agency and ₱2,500,000 in sales to private clients. On the expense side, DEF Corporation
incurred ₱2,500,000 in local material purchases and ₱300,000 in utilities and office rent. An important
adjustment in the transactions was that the government only paid 50% of its invoice, resulting in VAT
withholding on the paid portion. Additionally, the company had a prior excess input VAT of ₱50,000,
which must be considered in the final VAT computation. These factors affect the company’s overall
VAT payable, as the withheld VAT and excess input tax will affect the net tax liability to the Bureau of
Internal Revenue (BIR).

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: [email protected] | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Bachelor of Science in Management Accounting

Leading Innovations, Transforming Lives, Building the Nation