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) and (b) in the ANSWER BOOK.
(a) VAT ... 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
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Answer
The correct answer is 'input VAT' because it represents the amount of VAT that a business can claim back from the tax authority for goods or services purchased for business purposes.
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' balance, which indicates that the business has collected more VAT than it has paid, leading to a liability 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 answer is 'decrease'. When a business draws stock for personal use, it does not charge VAT on these withdrawals, thereby reducing the amount of VAT payable to SARS.
Step 4
(d) VAT on will not be accounted for by the business on payment of
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Answer
'salaries' is correct as salary payments are not subject to VAT.
Step 5
2.1.2 Calculate the VAT amounts.
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Answer
The VAT amount for each journal entry is calculated as follows:
