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?n Recoverable sales tax,if any entity purchases or sells inventory,the money paid for VAT is recorded “expenses” with name in SOPL?
2nd question:for recoverable tax
When The entity purchases inventory ,the money paid for VAT is recorded as “asset”??If the sales tax is recoverable then it certainly does not appear in the SOPL.
The net amount of sales tax appears in the SOFP.If sales tax is not recoverable, then the gross amount (including sales tax) is the expense – sales tax is not recorded separately.
This is all explained in my free lectures on sales tax.
“The net amount of sales tax appears in the SOFP”
ie -sales tax of purchases appears as current asset,but sales tax of sales appears as current liability?No – the net of the two appears as either a current liability or a current asset, depending on which is the greater.
Have you watched the free lectures?
But ,l didn’t understand
If l purchases inventory by cash,this is current asset for me?
I give this question,because I read that the balance in trade receivable and payable is included sales tax
But how it is for cash sales and purchases
If the entity have done cash sale ,the net amount of sales tax is current liability??
And if the entity have done cash purchase,the net amount of sales tax is current asset?
?f these are so
How will the amount be recorded in SOFP and what name??Why are you not watching the lectures? You cannot expect me to type them all out here!!
Purchases that have not been sold at the end of the year are inventory.
I do not care what you have read – if the trader is registered for sales tax then only the net amounts are recorded as assets, expenses, liabilities, or income. I explain the entries in my free lectures. The sales tax goes to a separate sales tax account and the net amount (the difference between the sales tax charges and the sales tax suffered) is paid or recovered from the state. Any still owing at the end of the period appears in the SOFP.
You must watch my free lectures on sales tax.
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