GRADE

HIGHER EDUCATION DEPARTMENT

Accountancy Programs

1st Semester, A.Y. 2018-2019

QUIZ 02
AC1541-A – Business and Transfer Taxes
Mr. John D. Vargas, CPA, MBA

ANSWER SHEET DATE: October 6, 2019

Student Name: _______________________________________________ Section: ______________ Raw Score: _____

Over 20
TEST I: Theories TEST 2: Problem Solving
(15 points, 1 point each) (20 points, 2 points each)
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 Higher Education Department
Accountancy Programs
st
1 Semester, A.Y. 2018-2019

QUIZ 02
AC1541-A – Business and Transfer Taxes
Mr. John D. Vargas, CPA, MBA

QUESTIONNAIRE

Test 1: Choose the best answer.

1. The following are requisites of donation for purposes of the donor’s tax, except one:
a. Capacity of the donor
b. Capacity of the donee
c. Delivery of the subject matter of gift
d. Donative intent

2. On a contribution to the Roman Catholic Church by an individual, which of the following correctly state/s the
rule/s in computing donor’s tax?
a. There is no deduction from the gross gift
b. It is not considered a gift on which there will be a donor’s tax
c. It is considered a gross gift and a deduction from the gross gift
d. It pays the donor’s tax at the time the contribution at the graduated rates of donor’s tax.

3. In computing the donor’s tax on a subsequent donation, the donor must also consider:
a. All prior net gifts during his lifetime
b. All prior net gifts during the calendar year
c. The present and the immediate preceding donations
d. Only the present donations

4. One of the following statements is correct. The donor’s tax return:

a. Must be filed within thirty days after the end of the calendar year
b. Must be filed within thirty days from the date of the donation
c. Must be accompanied by a certificate of a CPA if the gross gift exceeds 2,000,000
d. In case of husband and wife making donations, one donor’s tax return shall be signed by either the
husband or the wife.

5. Donor’s tax as distinguished from estate tax.

First statement: The rates for donor’s tax are lower than those of estate tax in all cases.
Second Statement: In donor’s tax, the exemption is P250,000 while in estate tax it is none.
a. Both distinctions are correct
b. Both distinctions are wrong
c. First distinction is correct, the second is wrong
d. First distinction is wrong, the second is correct

6. 1st statement: Donation of a real property worth P5,000 must be in writing.

2nd statement: Donation of a real property worth P3,000 need not be in writing.
a. First statement is correct
b. Second statement is correct
c. Both statements are correct
d. Both statements are incorrect

7. All of the following except one are exempt from gift tax under special laws
a. Donation to Integrated Bar of the Philippines
b. Donation to Development Academy of the Philippines
c. Donation to Philippine Institute of Certified Public Accountants
d. Donation to International Rice Research Institute

8. One of the following statements is false

a. Contracts of donation between husband and wife are void in all cases
b. The donation in writing of a real property is void
c. Donations between persons guilty of adultery or concubinage are void
d. Donations to conceived or unborn children are valid

9. Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders
services, and any person who import goods shall be subject to:
a. Business tax
b. Value-added tax
 c. Other percentage tax
d. Excise tax

10. The account title to best reflect the value-added tax on purchase:
a. Sales tax payable
b. VAT Payable
c. Input Tax
d. Output Tax

11. One of the following is not a major business internal revenue tax in the tax code:
a. Value-added tax
b. Excise tax
c. Income tax
d. Percentage tax

12. In the value-added tax on sale of services, the output tax is computed:
a. On billings of the month
b. On collections of the month on all billings made
c. On the contract price completed during the taxable period
d. Only and strictly on labor performed under the contract for services

13. Which statement is correct? The value-added tax on goods or properties sold:
a. Is based on gross sales and not on net sales
b. May be due even if the goods or properties were not actually sold
c. Is not imposed on goods exported
d. Is a selling expense of the trader

14. Value-added tax is a/an

a. Indirect tax
b. Direct tax
c. Local tax
d. Personal tax

15. Taxpayer operates a local grocery store and is not VAT registered. His annual gross sales amounted to 4,000,000
for the year although his operations resulted to net loss for the year. He is subject to:
a. 3% Other Percentage tax
b. 12% Value added tax
c. 0% Value-added tax
d. None, because operations resulted to loss

-end-
II. PROBLEMS

Problem 1:

Taxpayer is a VAT-registered person; Data for a month (exclusive of VAT):

Cash received:
For building completed with a contract price of PHP 5,000,000 PHP 3,800,000
Advances received for building to be constructed 300,000
Cash received on materials returned to VAT suppliers 100,000
Cash received from owners, for materials used in construction (not included above) 1,000,000
Cash received from owners for building permit fees 200,000
Cash received from VAT sub-contractors for overpayments 300,000
Cash paid:
To VAT registered sub contractors 900,000
To VAT registered suppliers of materials 1,100,000
To non-VAT suppliers of materials 500,000
To the city government, for building permit fees 200,000
Advances to VAT registered sub contractors 150,000
Operating expenses 80,000

1. Output tax? 612,000

2. Input tax? 210,000
3. Value added tax payable is? 402,000

Problem 2:

Sale by real estate dealer

Date of sale January 2, 2008
Consideration in the deed of sale PHP 6,000,000
Fair market in the assessment rolls 5,100,000
Zonal Value 4,900,000
Cost to the Seller
Payments on the consideration:
Assumption of mortgage by buyer PHP 2,000,000
June 2, 2008 (date of sale) 500,000
June 2, 2009 700,000
December 2, 2009 2,800,000

4. Output tax on June 2, 2008- PHP 300,000

5. Output tax on June 2, 2009- PHP 84,000
6. Output tax on December 2, 2009- PHP 336,000

Problem 3:

The Pastry shop sells cakes and pastry items to well-known hotels around the metro. The hotels are allowed credit based
on the track record of the hotels. The total amounts received or receivable from sales by the Pastry shop in April of Year
X were P220,000, including the value-added tax. 75% of the sales are normally on account.

7. How much is the value-added tax on the sales amount for the month of April, Year X? PHP 23,571.43

Problem 4 Donor’s Tax (use TRAIN Law)

Determine the deemed gift/net gift of the following:

8. Raffy gave his brother, Andrew a parcel of land as a birthday present. At the time of donation, the property has a fair
market value of PHP 500,000 and is subject to mortgage of PHP 100,000. PHP 150,000

9. Imelda gave her daughter Carina PHP 800,000 cash on her 18th birthday on the condition that PHP 100,000 shall be
donated to St. Joseph Parish. Accordingly, PHP 100,000 was donated to church. PHP 450,000

10. Cindy is planning to buy a new set of earrings and ring. Her best friend Faye sold it for PHP 185,000. Faye’s old
set of jewelry was acquired in 1997 for PHP 125,000. Its fair market value at the time of sale is PHP 250,000.
PHP 65,000