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
Choose the correct word(s) for (a)
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Answer
The correct term is input VAT. Input VAT refers to the VAT paid on purchases and services, which can be reclaimed by the business.
Step 2
Choose the correct word(s) for (b)
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Answer
The appropriate term is credit. A credit balance in the VAT Control Account indicates that the business has to pay that amount to SARS.
Step 3
Choose the correct word(s) for (c)
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Answer
The correct choice is decrease. VAT on drawings of stock will reduce the VAT payable to SARS as it represents goods taken out of the business for personal use.
Step 4
Choose the correct word(s) for (d)
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Answer
The answer is salaries. VAT is not applicable on salary payments as employee remuneration is exempt from VAT.
Step 5
Calculate the VAT amounts for (a)
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Answer
For the credit note issued (DAJ), the VAT calculated is:
VAT=R1,600imes0.14=R224
Indicating it will increase the amount owed to SARS.
Step 6
Calculate the VAT amounts for (b)
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Answer
For the cash register tape (CRJ), the VAT is:
VAT=R8,700imes0.14=R1,218
This will also increase the amount owed to SARS.
Step 7
Calculate the VAT amounts for (c)
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Answer
For the invoice received (CJ), the VAT is:
VAT=R10,374imes0.14=R1,274
This amount will decrease the amount owed to SARS.
