You are the internal auditor - NSC Accounting - Question 2 - 2018 - Paper 1
Question 2
You are the internal auditor. The sole owner, Samson, used a business cheque to buy a new car for R460 000 including VAT. This car is kept at home for his wife’s use... show full transcript
Worked Solution & Example Answer:You are the internal auditor - NSC Accounting - Question 2 - 2018 - Paper 1
Step 1
Explain the implications of tax evasion
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Answer
This action could be seen as tax evasion, as Samson is attempting to reduce the amount he owes to SARS for VAT. Such a practice is illegal and unethical.
Step 2
Discuss personal and business finances
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Answer
It's important to keep personal and business finances separate. The car should not be used as a business asset if it is primarily for personal use. Treating the full amount of R460 000 as a business expense could mislead financial reporting and tax calculations.
