SUMMARY OF CONCEPTS VAT INPUT VAT OUTPUT VAT that we pay on goods and services that we buy either for cash on credit. VAT that is charged on items sold by the business either for cash or on credit. How does this affect the journals? · CPJ – a column for VAT input for items purchased.· CJ – a column for VAT on items purchased on account.· CAJ – a column for VAT on items returned to suppliers (this will be a negative amount). · CRJ – a VAT output column to record the VAT component for goods sold for cash.· DJ – a VAT output column to record the VAT on credit sales.· DAJ – a column for VAT on debtors returns (this will be a negative amount). What about discounts? Discount received will be a negative amount in the VAT input column in the CPJ. Discount allowed – will be a negative amount in the VAT output column in the CRJ. What if…? The owner takes drawings?GJ – the VAT amount decreases the VAT input as the owner is the end user and VAT was paid when the item was purchased. There is a bad debt?GJ – the VAT amount can be claimed back from SARS as we paid this amount to him when the sale occurred. The amount is a negative output.
VAT Concepts
ReplyDeleteVAT
‘VALUE ADDED TAX’
SUMMARY OF CONCEPTS
VAT INPUT VAT OUTPUT
VAT that we pay on goods and services that we buy either for cash on credit. VAT that is charged on items sold by the business either for cash or on credit.
How does this affect the journals?
· CPJ – a column for VAT input for items purchased.· CJ – a column for VAT on items purchased on account.· CAJ – a column for VAT on items returned to suppliers (this will be a negative amount). · CRJ – a VAT output column to record the VAT component for goods sold for cash.· DJ – a VAT output column to record the VAT on credit sales.· DAJ – a column for VAT on debtors returns (this will be a negative amount).
What about discounts?
Discount received will be a negative amount in the VAT input column in the CPJ. Discount allowed – will be a negative amount in the VAT output column in the CRJ.
What if…?
The owner takes drawings?GJ – the VAT amount decreases the VAT input as the owner is the end user and VAT was paid when the item was purchased. There is a bad debt?GJ – the VAT amount can be claimed back from SARS as we paid this amount to him when the sale occurred. The amount is a negative output.