Question

A debit balance in the VAT control account at the end of a financial period, will be disclosed as a current liability on the statement of financial position of an entity

Answer 1

Answer:

Vouching of the balances of all incomes and expenses account is known as vouching of ______. [A] Personal ledger.

Answer 2

The answer of the question is as follows:

Explanation:

• The VAT control account is used to determine the amount payable to or by SARS. At the end of the fiscal year, the VAT control account has a credit balance.

• Keep in mind that the balance on the VAT control account should equal either the amount owed to HMRC (if it's a credit balance)
• or the amount owed to the firm (if it is a debit balance).
• If the credit entries outnumber the debit ones, HMRC will be liable for the difference.
• A current asset will be indicated if the VAT control account has a debit balance.
• Input VAT is not recoverable if a vendor is not registered for VAT purposes;
• it should be included in the cost of the item and forms part of the purchase price.