VAT
Input Vat: Output VAT:
- VAT on purchases - VAT on sales
- Asset - Liability
- increased by - increased by
- Cash purchases - Cash sales
- Credit purchases - Credit sales
- Cancellation of discounts - Cancellation of discount allowed
- Debtors allowances - returns from - Fee incomes
debtors - Creditors returns
- Bad debts - Drawings of stock
- Discount allowed to debtors - Discount received from creditors
Input VAT (A) Output VAT (L)
Increases input VAT Increases output VAT
We need to pay VAT on the We owe less VAT because out
Cash purchases new stock we owe Cash sales stock decreases
Credit purchases Credit sales
We must now pay VAT on the Opposite/ reverse of
Cancellation of discount stock we “didn’t have to pay Cancellation of discount decreasing output VAT
received for” allowed because of discount allowed to
debtors
VAT must be payed on our Form of generating income so
Any asset bought for the new asset Fee income its similar process to sales
business *if its for the owners use, no
VAT
Decreases input VAT (increases output Decreases output VAT (increases input
VAT) VAT)
We no longer have the stock Trading stock increases again
Creditors allowances - we bought, so we no longer Debtors allowances - so VAT owed must increase
returns made by us owe VAT on it returns made by them
Our stock decreases, so our We originally charged VAT
Drawings of stock VAT decreases Bad debts what we sold on what that
debtor bought, we must now
reverse this
We dont owe VAT on the asset Sale transaction but we are
Discount received from we got for ‘free’ Discount allowed to income because of the
creditors debtors discount given
Input Vat: Output VAT:
- VAT on purchases - VAT on sales
- Asset - Liability
- increased by - increased by
- Cash purchases - Cash sales
- Credit purchases - Credit sales
- Cancellation of discounts - Cancellation of discount allowed
- Debtors allowances - returns from - Fee incomes
debtors - Creditors returns
- Bad debts - Drawings of stock
- Discount allowed to debtors - Discount received from creditors
Input VAT (A) Output VAT (L)
Increases input VAT Increases output VAT
We need to pay VAT on the We owe less VAT because out
Cash purchases new stock we owe Cash sales stock decreases
Credit purchases Credit sales
We must now pay VAT on the Opposite/ reverse of
Cancellation of discount stock we “didn’t have to pay Cancellation of discount decreasing output VAT
received for” allowed because of discount allowed to
debtors
VAT must be payed on our Form of generating income so
Any asset bought for the new asset Fee income its similar process to sales
business *if its for the owners use, no
VAT
Decreases input VAT (increases output Decreases output VAT (increases input
VAT) VAT)
We no longer have the stock Trading stock increases again
Creditors allowances - we bought, so we no longer Debtors allowances - so VAT owed must increase
returns made by us owe VAT on it returns made by them
Our stock decreases, so our We originally charged VAT
Drawings of stock VAT decreases Bad debts what we sold on what that
debtor bought, we must now
reverse this
We dont owe VAT on the asset Sale transaction but we are
Discount received from we got for ‘free’ Discount allowed to income because of the
creditors debtors discount given
