3.1 VAT CONCEPTS Change the underlined parts in the following sentences to make the statements TRUE - NSC Accounting - Question 3 - 2016 - Paper 1

VAT is payable to the South African Revenue Services (SARS), not the South African Reserve Bank. Thus, the statement should read: 'VAT is payable to the South African Revenue Services (SARS).'

Fruits and vegetables are zero-rated for VAT purposes in South Africa. Hence, the correct statement is: 'VAT is charged at 0% on fruits and vegetables.'

To calculate the correct amount of VAT payable:

1. Start with the initial VAT payable:

   VAT Control Account balance: R43,820

   2. Adjust for the errors and omissions as follows:

   • Sales invoices omitted: R10,830 (included VAT)

   • Damaged goods returned: R16,600 (excluding VAT, VAT = R16,600 * 14/114)

   • VAT on sundry expenses: R6,818 (included)

   • VAT on discounts: R756 (excluded)

   • VAT on bad debts: R112 (included)

   • VAT on wrong side of account: R92 (included)

   3. Calculate the adjusted VAT payable:

   R43,820 + R10,830 - (R16,600 * 0.14/1.14) + R6,818 - R756 + R112 - R92

   After calculating, the final VAT payable amount equals R41,620. Thus, the correct VAT the business has to pay is R41,620.