2.1 VAT
2.1.1 Choose the correct word(s) from those given in brackets - NSC Accounting - Question 2 - 2017 - Paper 1
Question 2
2.1 VAT
2.1.1 Choose the correct word(s) from those given in brackets. Write only the word(s) next to the question number ((a)-(d)) in the ANSWER BOOK.
(a) VAT pai... show full transcript
Worked Solution & Example Answer:2.1 VAT
2.1.1 Choose the correct word(s) from those given in brackets - NSC Accounting - Question 2 - 2017 - Paper 1
Step 1
(a) VAT paid to a service provider for the purchase of goods is regarded as (input VAT/output VAT).
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Answer
The correct term is input VAT as it refers to the VAT paid on goods and services that the business will reclaim.
Step 2
(b) A (debit/credit) balance in the VAT Control Account reflects the final amount payable to SARS.
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Answer
The correct answer is credit. A credit balance suggests that the business owes VAT to the South African Revenue Service (SARS).
Step 3
(c) VAT on drawings of stock will (increase/decrease) the VAT payable to SARS.
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Answer
The correct term is decrease. VAT on drawings is treated as an output VAT, which will reduce the amount payable to SARS.
Step 4
(d) VAT on electricity will not be accounted for by the business on payment of (salaries/electricity).
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Answer
The correct answer is salaries. VAT on expenses like salaries is not recoverable as it is not a business expense related to sales.
Step 5
2.1.2 Calculate the VAT amounts.
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Answer
In this question, we are determining whether each transaction increases or decreases the VAT amount owed to SARS:
(a) DAJ Credit note issued: This will decrease the amount owed to SARS by R224.
(b) CRJ Cash register tape: This will increase the amount owed to SARS by R1,218.
(c) CJ Invoice received: This will increase the amount owed to SARS by R1,274.
