Tag: A-Level

The amount of VAT included in goods costing £200, inclusive of VAT at the rate of 21%, is …

Select ONE answer:

1. £31.50
2. £34.71
3. £42.00
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

Let Cost = 100%
Cost + 21% = 121% = £200
VAT = 21% = £200/ 121 ” 21 = £34.71
Proof: £200 – £34.71 = £165.29 and £165.29 + 21% = £200

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

 

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If the total of sales, including VAT at the rate of 10%, amounts to £1,800, the total of sales excluding VAT amounts to:

Select ONE answer:

1. £1,620
2. £1,636
3. £1,720
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

Let Sales (excl. VAT) = 100%
Therefore, Sales (incl. VAT) = 110% = £1,800
Therefore, Sales excl. VAT (100%) = £1,800/ 110 * 100 = £1,636
Proof: £1,636 + 10% — £1,800

For exam purposes, you may find it quicker, and more foolproof, to do this question as follows:
Sales excluding VAT + 10% = £1,800

1. Incorrect – £1,620 + 10% = £1,782
2. Correct £1,636 + 10% = £1,800
3. Incorrect £1,720 + 10% = £1,892
4. incorrect

 

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VAT paid by a taxable person on the purchase of goods and / or services, other than goods or services in respect of which VAT cannot be reclaimed, from another taxable person is known as . . .

Select ONE answer:

1. output credits.
2. input credits.
3. irrecoverable VAT.
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 – There is no such thing as output credits – tax payable on supplies / sales is known as output tax.
2. Correct
3. Incorrect – Irrecoverable VAT is VAT paid which cannot be reclaimed. VAT paid by a taxable person on the purchase of goods and / or services, other than goods or services in respect of which VAT cannot be reclaimed, from another taxable person would be recoverable.
4. Incorrect

 

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A firm which sells goods, all of which are exempt from VAT . . .

Select ONE answer:

1. A cannot be charged VAT by any of its suppliers.
2. cannot be charged VAT by those who supply services to it.
3. is charged VAT by its suppliers, but may reclaim all of this VAT from HMRC.
4. is charged VAT by its suppliers and cannot recover all of this VAT 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 – The firm will be charged VAT on the purchase of goods, services and other items which are not exempt or zero-rated.
2. Incorrect – The firm will be charged VAT on the purchase of services which are not exempt or zero-rated.
3. Incorrect – Firms selling goods which are exempt from VAT cannot reclaim VAT paid by them on purchases.
4. Correct

 

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If a firm produces only one product, product X, which is zero-rated for VAT purposes, then . . .

Select ONE answer:

1. VAT is payable by the firm on its sales of product X and VAT is recoverable by it on its purchases of raw materials used in the production of product X.
2. VAT is not payable by the firm on its sales of product X and VAT paid on purchases of raw materials used in the production of product X is recoverable.
3. VAT is not payable by the firm on its sales of product X and VAT is not recoverable on its purchases of raw materials used in the production of product X.
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 – As product X is zero-rated VAT is not payable on sales of this product.
2. Correct
3. Incorrect – This would be the case if product X was exempt from VAT, not zero-rated.
4. Incorrect

 

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