Author: stuart001uk2014

A form ‘VAT 100’ is . . .

Select ONE answer:

1. the form used by firms to register for VAT.
2. a form issued by HMRC demanding immediate payment of VAT outstanding.
3. the form on which periodic VAT returns are made by VAT-registered firms.
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
2. Incorrect
3. Correct
4. Incorrect

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At the beginning of a VAT period, a firm which buys and sells exclusively on credit owed £2,000 to HMRC in respect of VAT.

Its credit sales and credit purchases for the period, inclusive of VAT at the rate of 20%, amounted to £72,000 and £48,000 respectively.

During the period the firm paid £3,000 to HMRC in respect of VAT.

What was the balance carried down on the firm‘s VAT account at the end of the period?

Select ONE answer:

1. £3,000 Debit
2. £3,000 Credit
3. £3,400 Debit
4. £3,900 Credit

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 1

VAT on sales = £72,000/ 120 * 20 = £12,000
VAT on purchases = £48,000/ 120 * 20 = £8,000

VAT balance b/d (credit entry) = £2000
VAT on Sales (credit entry) = £12,000
Total Credit entries = £14,000

VAT on purchases (debit entry) = £8,000
Bank payment to HMRC (debit entry) = £3,000
VAT balance c/d (debit entry) = £3,000
Total debit entries = £14,000

1. Correct
2. Incorrect
3. Incorrect
4. Incorrect

This work is licensed under a Creative Commons Attribution 4.0 International License.

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

This work is licensed under a Creative Commons Attribution 4.0 International License.