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
(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 answer is Input VAT, as it refers to the VAT a business can reclaim on goods and services purchased for business use.
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, because a credit balance indicates that the business has more output VAT than input VAT to pay 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 Increase, since VAT on drawings is considered output VAT and will raise the total VAT payable.
Step 4
(d) VAT will not be accounted for by the business on payment of (salaries/electricity).
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Answer
The correct answer is Salaries, as VAT is not applicable to salary payments.
Step 5
2.1.2 Calculate the VAT amounts.
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