Accounting Multiple Choice Question – 18 September 2019

If, for any given accounting period, the total of the debit entries in a firm’s VAT account equals that of the credit entries, thus leaving no balance on the account at the end of the period . . .

Select ONE answer:

1. the firm is not a VAT-registered firm.
2. the firm deals exclusively in goods and/or services which are exempt from VAT.
3. the firm does not owe any VAT to the HMRC on that date.
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 3

1. Incorrect – An unregistered firm would not have a VAT account in its ledger.
2. Incorrect – A firm dealing exclusively in goods and/or services which are exempt from VAT would not have a VAT account in its ledger.
3. Correct
4. Incorrect

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