Tag: A-Level

Which of the following statements best describes the treatment of VAT in the accounts of a VAT-registered firm?

Select ONE answer:

1. VAT is an expense arising from the sale of goods and services.
2. VAT is normally a liability, calculated by reference to the purchases and sales of goods, services and other items.
3. VAT is levied on customers and is payable by them to the HMRC.
4. VAT is collected by firms from their customers and is retained by the firms.

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

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

The answer is 2

1. Incorrect – VAT is not an expense for a VAT-registered firm. Therefore VAT should not appear in the profit and loss account (revenues and expenses should be shown exclusive of VAT). VAT will either be owed to or be recoverable from, the HMRC. This will be shown in the Balance sheet.
2. Correct
3. Incorrect – Customers pay VAT to the firms from whom they buy goods and services – they do not pay VAT directly to the HMRC.
4. Incorrect – VAT is collected by firms from their customers – but on behalf of the HMRC – to whom it must be periodically remitted.

 

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The current standard rate of VAT is . . .

Select ONE answer:

1. 10%
2. 12.5%
3. 17.5%
4. 20%

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
2. Incorrect
3. Incorrect
4. Correct – The ‘standard’ rate of VAT varies from time to time. At the time of going to press it is 20%.

 

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Value Added Tax . . .

Select ONE answer:

1. is paid by the purchaser of goods and services, at the relevant rate, on the value added to them by their seller.
2. is collected by the HMRC on behalf of the government as value is added to goods and services.
3. is charged at the relevant rate by the sellers of goods and services on the value added by them.
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 – A VAT is paid by the purchaser of goods and services on the full price, excluding VAT, of those goods and services.
2. Correct
3. Incorrect – VAT is charged by vendors of goods and services on the full price, excluding VAT, of those goods and services.
4. Incorrect

 

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The abbreviation ‘VAT’ means . . .

Select ONE answer:

1. Variable Agricultural Tax.
2. Value Associated Tax.
3. Value Added Tax.
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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During the month of March, a firm which wishes to maintain a petty cash float of £200, paid £146 out of petty cash.

How much should it reimburse to the imprest at the end of the month?

Select ONE answer:

1. £54
2. £146
3. £200
4. £254

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 – A Cash sales should be recorded in the cash book (or cash receipts book).
2. Correct – By always reimbursing the amount paid out during a period, the float (imprest) will always be restored to the amount on hand at the beginning of the period.
3. Incorrect – Goods sold on credit should be recorded in the sales journal.
4. Incorrect

 

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