Resume with extra hour
on 26.10.14 (extra hour
from DST)
weekends: 2-3
hours session?
Accounts
Preparation
ASSETS - debit
----------------
CAPITAL - credit
LIABILITIES - credit
VAT
VAT Rates
Std rate = 20%
Default rate; most goods and services
Reduced Rate = 5%
Domestic fuel & power; children's car seats
Zero rate = 0%
Books & newspapers; children's clothing & footwear; public transport
Items not covered
by VAT scheme
Exempt items - Royal Mail stamps & postage;
insurance; providing credit; education &
training; some services provided by doctors & dentists
Outside Scope of VAT: Rates; wages & salaries; donations to charity
Fundamental difference between Zero Rated goods and services
and Exempt goods and services:
If a business supplies only zero rated
goods and services, it would collect
no VAT on supplies but would claim
back any VAT on its purchases
If a business supplies only exempt goods
and services, it cannot register for VAT
and does not collect VAT on its supplies
nor claim back any VAT on its purchases
If turnover > VAT
threshold then
business must
register for VAT
INPUT TAX / debit / VAT reclaimable (Asset)
VAT on - purchases; purchases on non-current
assets; refunds received from sales returns;
expenses/services; petty cash expenditure
OUTPUT TAX / credit / VAT payable (liability)
VAT on - sales of goods/services; sale
of non-current assets; refunds given
on purchase returns
Use a Sub-divided Accounting System
Main books
General Ledger
Control Accounts
Sales Control Account (SLC)
Purchases Control Account (PLC)
Cash book
Also book of prime entry
Usually kept in columnar format
Petty cash
Cash and Bank account
Settlement Discounts
Discount Received =
income from credit supplier
Discount Allowed =
expense from credit customer
VAT is calculated on discounted value
Subsidiary books
Sales Ledger / memorandum accounts of each
credit based customer (trade receivables)
Purchase Ledger / memorandum accounts of
each credit based supplier (trade payables)
Books of Prime Entry
Journal
Sales Day Book
Purchases Day Book
Sales Returns Day Book
Purchases Returns Day Book
Advantages
Individuals work within a
specific section and can become
specialised
Lends itself more easily to
sharing of workload which
improves speed and accuracy