True or False

1. Marginal income earners are exempt from both business tax and income tax.
2. Self-employed professionals rendering services to clients are engaged in business.
3. Businesses for mere subsistence have gross receipts not exceeding P100,000 per year.
4. A professional consultant, or artist can qualify as a marginal income earner as long as his receipts
do not exceed P100,000 in any 12-month period.
5. A sale made by a non-resident is presumed to be made in the course of business despite
irregularity of sales transactions.
6. A non-profit organization is subject to business tax on all of its receipts if it engages in activities
subject to business tax.
7. A non-profit organization will be exempt from business tax if it uses the income generated from
activities subject to business tax for non-profit purposes.
8. An individual, trust, estate, partnership, corporation, joint venture, cooperative or association will
pay business tax.
9. Every distinct establishment with or without sales operation shall pay the annual registration fee.
True of False
1. Sellers of goods are taxable on gross receipts wile sellers of services are taxable on gross selling
price.
2. A contractor is a seller of goods or property not a seller of services.
3. Excise tax if part of the gross selling price.
4. The term “gross receipts” includes client or customer advances for unperformed jobs.
5. Gross receipts include only cash received and excludes uncollected income.
True of False
1. Non-VAT taxpayers pay their quarterly tax in three monthly payments.
2. Loans or agency monies received by the business are part of gross receipts.
3. There are three types of business taxes: VAT, percentage tax and excise tax.
4. The accounting period for business tax is called the taxable year.
5. VAT taxpayers use BIR Form 2551 while non-VAT taxpayers use BIR Form 2550.

Multiple Choice
1. Which of the following entities below is not considered as a business?
a. A sari-sari store with P500,000 annual sales
b. A news stand with sales exceeding P100,000
c. A cigarette vendor with sales not exceeding P100,000
d. An employed professional earning part-time self-employment income not exceeding
P100,000

2. Which of the following is not considered as engaged in business?

a. A purely self-employed individual
b. A self-employed and employed individual
c. A purely employed individual
d. A and B

3. The business tax on exempt sales is

a. VAT c. A or B
b. Percentage Tax d. None of these
4. The consumption tax on importation is
a. VAT b. A or B
b. Percentage Tax d. None of these

5. The consumption tax on domestic sales is

a. VAT b. A or B
b. Percentage Tax d. None of these

6. The business tax on services specifically subject to percentage tax is

a. VAT b. A or B
b. Percentage Tax d. None of these

7. Which is more likely to qualify as a marginal income earner?

a. Artist c. Sales agent
b. Consultant d. Operator of a single unit tricycle

8. Statement 1: Sellers of goods are subject to percentage tax

Statement 2: Sellers of services are subject to VAT.

Which statement is correct?

a. Statement 1 c. Both statements
b. Statement 2 d. Neither statement

9. Statement 1: Both the husband and the wife are subject to either VAT or percentage tax.
Statement 2: The husband may pay VAT while the wife may pay percentage tax.

Which statement is false?

a. Bothe statements c. Statement 1 only
b. Neither statement d. Statement 2 only

10. Statement 1: An employed taxpayer will pay an annual registration fee.

Statement 2: A self-employed taxpayer will pay an annual registration fee.

Which statement is correct?

a. Statement 1 c. Both statements
b. Statement 2 d. Neither statement

11. The term “gross selling price” excludes

a. The contract price of the goods sold
b. Discounts which are contingent upon future events
c. Delivery charges
d. Sales returns and allowances

12. The term “gross receipts” excludes

a. Reimbursements for customer expenses paid by the service provider
b. Reimbursements for out-of-pocket expenses incurred by the service provider
c. Advances made by the client for services yet to be rendered
d. Cash collections for services rendered
 13. Which is not a constructive receipt?
a. Bank deposits made available to the service provider without restriction
b. Transfer of amounts retained by the payor to the account of the contractor-service provider
c. Judicial consignation by the payor of the contract price which the service provider wishes to
donate to the payor
d. Collection of revenue for past services rendered

14. Which is part of gross receipts?

a. Amounts received which will be remitted to other persons
b. Receipt of notice from a debtor to offset the consideration of the service for the debt of the
service provider
c. Receipt from bank loans
d. Receipt from issuance of stocks or issuance of certificates of indebtedness

Multiple Choice
1. A non-VAT registered service provider shall pay
a. 3% percentage tax on its gross receipts
b. 12% VAT on its value added
c. 12% VAT on its export sales or receipts
d. 3% percentage tax on its export sales
2. Which must be present to construe the existence of a business?
a. Regularity of transaction
b. Offering of services or goods to the public for a profit
c. Actual presence of profit during the period
d. Both A or B
3. A person who made a one-time or casual sale of properties is
a. Exempt from business tax
b. Subject to percentage tax
c. Subject to value added tax
d. Subject to either percentage tax or value added tax.
4. A VAT-registered person shall pay
a. 3% percentage tax and VAT
b. 12% VAT on its sales or receipts
c. 12% VAT on its value added
d. 12% VAT on its export sales

5. Who are subject to VAT?

a. Those who optionally register as VAT taxpayers.
b. Those who are mandatorily required to register as VAT taxpayers.
c. Those who are registrable to VAT.
d. Any of these.

6. Who are not required to register to the VAT system?

a. Those who are below the VAT threshold
b. Those whose only sales are exempt sales
c. Those who only derive receipts from services specifically subject to percentage tax
d. Any of these
7. A non-VAT registered seller of goods shall pay
a. 3% percentage tax on its gross receipts
b. 12% percentage tax on its value added
c. 3% percentage tax on its sales
d. 12% VAT on its gross receipts

8. A VAT-registered seller of goods shall be subject to

a. 12% output VAT on sales
b. 12% output VAT on gross receipts
c. 3% percentage tax on sales
d. 3% percentage tax on gross receipts

9. Who is entitled to claim (deduct) input VAT against output VAT?

a. VAT registered persons only
b. VAT registrable persons only
c. Non-VAT registered persons
d. All of these

10. Who pays percentage tax?

a. Those who exceed the VAT threshold and opt to be register as non-VAT
b. Those who did not exceed the VAT threshold but are registered as VAT taxpayers
c. Only those service providers specifically subject to percentage tax
d. Those providers of services specifically subject to percentage tax and those whose sales or
receipts in any 12-month period are below the VAT threshold.

11. When the receipts from services specifically subject to percentage tax exceeds the VAT threshold,
future receipts from these services are
a. Exempt from percentage tax
b. Still subject to the same percentage tax
c. Subject to VAT
d. Subject to 3% percentage tax

12. A VAT-registered person who did not exceed the VAT threshold will pay
a. VAT b. Both A and B
b. Percentage tax c. Either A or B at his discretion

13. Once the vatable sales or receipts exceed the VAT threshold, future monthly sales from vatable
sales or receipts shall be subjected to
a. 3% percentage tax.
b. Percentage taxes of various rates.
c. 12% VAT
d. 0% VAT.

14. A marginal income earner shall pay

a. 3% percentage tax a. Either A or B
b. 12% Vat b. Neither A nor B
15. The export sales of VAT-registered taxpayers are
a. Subject to zero-rated VAT.
b. Exempt from business tax.
c. Subject to 12% VAT.
d. Subject to 3% percentage tax.

16. The export sales of non-VAT registered taxpayers are

a. Subject to zero-rated VAT.
b. Exempt from business tax.
c. Subject to 12% VAT.
d. Subject to 3% percentage tax.

17. A non-VAT person with exempt sales exceeding the VAT threshold is still
a. Exempt from business tax on exempt sales
b. Exempt from VAT on all its sales
c. Exempt from percentage tax on all sales
d. A and B

18. A VAT-registered person who exceeded the VAT threshold will pay
a. VAT c. Both A and B
b. Percentage tax d. Either A and B at his discretion

19. A non-VAT registered person who exceeds the VAT threshold shall pay
a. VAT c. Both A and B
b. Percentage tax d. Either A or B at his discretion

20. A non-VAT registered person who did not exceed the VAT threshold shall pay
a. VAT c. Percentage tax at various rates
b. 3% Percentage tax d. Either A or B at his discretion

21. What is the general VAT threshold?

a. P1,919,800 c. P3,000,000
b. P,1919,500 d. P10,000,000

22. Which is a special VAT threshold?

a. P1,919,800 c. P3,000,000
b. P1,919,500 d. P10,000,000

23. The mandatory or voluntary registration as VAT taxpayers under the special threshold is
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year.
d. perpetually irrevocable.

24. Mandatory or voluntary registration as a VAT taxpayer under the general threshold is
a. revocable anytime.
b. Revocable after the lapse of three years.
c. revocable within a year.
 d. perpetually irrevocable.

25. The VAT registration upon commencement of operation based upon expectation of exceeding the
VAT threshold shall be
a. revocable anytime.
b. revocable after the lapse of three years.
c. revocable within a year if sales do not actually exceed the VAT threshold.
d. perpetually irrevocable