ACCOUNT QUESTIONS(VAT, NRV and STOCK VALUATION)?
Question:
What is VAT??
What is the double entry of VAT??
What is input tax and output tax?
What if the VAT account is a DR balance, what does it mean?? and how about if it is a CR balance?
Do we calculate the cash and trade discount before the VAT or after the VAT?
What is NRV?? I know the name is NET REALISABLE VALUE but how to calculate it??
ANd lastly what is stock valuation?
Please help me~ I will be having my AS level exam two days later~
Answer:
VAT - Value added tax
When you pay VAT on your purchases, VAT Dr, Party/Bank Cr. When you collect VAT on sales, Party / Bank Dr, VAT Cr
Diff is the amount receivable or payable
First case above is the input tax - VAT on the inputs ie purchases
Second is the output tax - VAT on output ie sales
Dr - Receivable. You have paid more than collected
Cr - Payable
Discounts are before VAT. VAT is added on net price
NRV = Sale prices less all related selling costs
Stock valuation - Cost at which stock is carried forward in balance sheet ie COST at FIFO, AVERAGE etc
i know VAT is the value added tax, it's a tax on exchanges.
You have far too many questions there. I could write a book whilst I was answering all those.
Give my love to Mousehole, haven't been able to get down there lately
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