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Fa1, chapter 1 test question 7

Forums › FIA Forums › FA1 Recording Financial Transactions Forums › Fa1, chapter 1 test question 7

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by Ken Garrett.
Viewing 5 posts - 1 through 5 (of 5 total)
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  • January 19, 2022 at 6:58 pm #647050
    shanx3
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    can someone explain the working for this question to me I am struggling. i dont know where the 1.16 came from.

    January 19, 2022 at 8:00 pm #647056
    shanx3
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    okay after much frustration I realized where the 1.16 came from. it is 116/100 //face palms//

    January 19, 2022 at 8:16 pm #647057
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10193
    • ☆☆☆☆☆

    Net cost before discount = 3,000
    After the 20% discount the net cost is 80% x 3,000 = 2,400.

    Sales tax of 16% has to be added: 16% x 2,400 = 384

    Gross cost = 2,400 + 384 = 2,784

    Or, gross cost = 2,400 x (1 + 0.16) = 2,400 x 1.16 = 2,784

    January 20, 2022 at 1:03 am #647071
    shanx3
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Thank you so much for replying! I really appreciate the lay out above, as I understand it better. Can you help me with the working for q8? how and why is it 3600 to be paid to the government?

    January 20, 2022 at 10:01 am #647107
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10193
    • ☆☆☆☆☆

    If it made no purchases, the sales tax of 4,600 has to be paid to the government.

    However, purchases (including 20% tax) of 6,000 were made. The net price would be 6,000/1.2 = 5,000 and the tax is 1,000 (check: net = 5,000 and tax is 20% of 5,000 = 1,000 so fross price is 6,000).

    Tax on purchases can be offset against tax on sales therefore 4,600 – 1,000 = 3,600 to be paid.

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