Day: September 14, 2019

The irrecoverable VAT on the purchase of fixed assets should be . . .

Select ONE answer:

1. shown as an expense in the profit and loss account for the period in’ which the asset is purchased.
2. shown as part of the cost of fixed assets in the balance sheet.
3. deducted from any VAT payable on sales.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Incorrect – The only irrecoverable VAT which should be shown as an expense in the profit and loss account for a period is irrecoverable VAT relating to expenses incurred during that period.
2. Correct
3. Incorrect – Irrecoverable VAT cannot be offset against any VAT payable on sales.
4. Incorrect

 

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