Accounting Multiple Choice Question – 19 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A debit balance brought down on the VAT account in a firm’s nominal (general) ledger represents …

Select ONE answer:

  1. an expense.
  2. The VAT payable to HMRC.
  3. irrecoverable VAT.
  4. VAT recoverable from HMRC.

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 4

  1. Incorrect – A debit balance on any nominal (general) ledger account can represent only either an asset or an expense. If VAT incurred was an expense, for example, in the case of an unregistered firm or a firm dealing exclusively in goods and/or services which are exempt from VAT, the amount of such expense would not be entered in the VAT account.
  2. Incorrect – A debit balance brought down cannot represent a liability.
  3. Incorrect – As for answer A above.
  4. Correct

 

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