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FA Chapter 12 Questions Sales Tax
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why is payable ?
thank you John great lectures. though i still struggle with the accounting entries 馃檨
Thank you for your comment 馃檪
80% for the first time thanks alot
17.5/117.5×590790=87990
there is 87900 written
True but it is clearly a tiny typing mistake because the next line is correct and the final answer is correct 馃檪
For question 1, what if the entity was NOT registered for sales tax..would the sales tax be capitalised?
Yes (although only the tax on the otherwise capitalised amount – the tax on the remainder increases the expense)
Thank you, but I would like to clarify one thing what do you mean by “tax on the remainder”? And did you mean that sales tax IS CAPITALISED for entities that are NOT registered for sales tax? Is yes then why is it that way?
No I did not write that!
If a business is not registered then the cost of something is the cost including the sales tax, and the sales tax is not recorded separately.
This total amount (including the sales tax on it) is capitalised if the expenditure is on something that should be capitalised (such as the cost of a machine).
The total amount (including the sales tax on it) is recorded as an expense in the SOPL if the expenditure is on something that is not capitalised (such as maintenance costs).
Oh ok. I misunderstood previously. Now I get it, thank you very much. Your website is really helpful
You are welcome 馃檪
I thank Allah to start with.
Next, thanks to the management and staffs of Opentuition.com. I manage to get 100%
Well done 馃檪
Hi. Why do we deduct tax on purchases ?
The tax due to or from the state is the total of the tax charged on sales less the total of all tax suffered.
I do explain all of this in my free lectures on sales tax.
Thank you!
decrease and increase in allowance for doubtful debts what are the effects of netprofit
An increase in the allowance reduces profit. A decrease in the allowance increases profit.
This is all explained in my free lectures on irrecoverable debts and allowances. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
thank Sir i really appreciate you..
Thank you for your comment 馃檪
Question 4 says the taxable sales and the taxable purchases are ”net of sales tax”, so doesnt that mean the 90000 and the 72000 were exclusive of sales tax, if so wouldnt the answer be 2000 payable instead of 1800 payable
The amounts are exclusive of tax. Therefore the tax charged on sales is 10% x 90,000 and the tax suffered on purchases is 10% x 72,000.
Sir the questions is taken from the past exams or created by you.
Great respect to you sir
The ACCA does not release past exams for Paper FA.
Do appreciate these tests are just short tests and it is vital that you buy a Revision Kit from one of the ACCA approved publishers. The Revision Kit is full of exam standard questions in all the different formats that are used in the exam.
These questions are easy. I got all correct. I woudn’t have achieved 100% without open tuition lectures. Really want to thank all of the open tuition tutors especially Mr. John sir.
Thank you for your comment 馃檪
5 questions aren’t enough for revision. Please add more quedtions
No – you must buy a Revision Kit from one of the ACCA approved publishers as we continually say on this website.
The short tests are only meant as a quick check on each chapter.
I catch it so quickly n easy. Only the last question I got wrong but I understand after all.
Great 馃檪
Hi
in Question 3 it states that 579790 is inclusive of tax. when calculating the tax at 117.5% I get the answer of 86351.70, could you please explain why this is rounded up to 87990?
thanks
The question says that the purchases are 590,790 (not 579790) and the answer is correct – it has not been rounded 馃檪
thanks sorry I think I miss read the question now looking at it again I am able to work it out
馃檪
No problem 馃檪
hi,kindly clarify on the answer for question 2, why is the balance at the end of the period on the credit side instead of the debit side?
The tax collected on the sales is more than the tax suffered on the purchases and therefore there is a liability owing to the state. Liabilities are always credit balances.
Do watch the free lectures on this.
i will watch the lectures ,thank you for taking time to reply
You are welcome 馃檪
Hello,
please check the answer from question 3 and correct the result from tax on purchases. Correct answer shouldn’t be 87990?.
Regards,
Larisa
Thanks – I will correct it. It was just a simple typing error.
However the final answer is, of course, correct! 馃檪
Regarding question 1. can a tax charged on a non current asset for use in the business itself be recovered? i’m confused because it is not bought for resale. right?
when a company makes sales inclusive of tax does the tax deoartment owe them or they owe the tax department?
They the company owes the tax to the state.
You really should watch my free lectures on this!! (The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well)
John
Why would installation and delivery be capitalized? Wouldn’t those just be expenses for the business when buying the computer much like Maintenance? I know I’m wrong, maybe I’m forgetting a discussion from a previous chapter!
Thanks 馃檪
Installation and delivery are costs that are need to have the machine working in your building in the first place, and will only be paid the one time.
Maintenance is not needed to get it to start working, but is an expense that will be needed later to keep it working, and will be payable every year (like repairs).
What about additional memory? That certainly doesn’t need to get the computer up and running, does it?
Additional memory is capital expenditure.