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 paid ... 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 purchases that can be deducted from the VAT payable to SARS.
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 term is 'credit', indicating that the business has more output VAT than input VAT, thus owing money to 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', as VAT on drawn stock is not recoverable and thus lessens the amount due to SARS.
Step 4
(d) VAT on will not be accounted for by the business on payment of (salaries/electricity).
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Answer
The correct term is 'salaries', as VAT is not applicable to salary payments.
Step 5
2.1.2 Calculate the VAT amounts.
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Answer
For VAT calculations:
For DAJ, the VAT exclusive amount is R1,600 and the VAT inclusive amount is R1,824. This shows that it increases the amount due to SARS.
For CRJ, the VAT exclusive amount is R8,700 and the VAT inclusive amount is R10,374. This also increases the amount due to SARS.
For CJ, the VAT exclusive amount is R1,074 and the VAT inclusive amount is R1,250. This increases the amount due to SARS as well.
