Study Unit 5(B) covers the following:

  • Value Added Tax

Value Added Tax

TAKE NOTE: While the examples in the videos may use a 14% VAT rate, the principles still applies even though the VAT rate is now 15%

We need to learn how to account for VAT on all relevant transactions. The debits and credits of the VAT implications as well as the calculations and how they affect the format of the Journals must be learnt.

Download these slides for this Study Unit before you proceed. Please note that the layout is set as two slides per page.

Handout: SU5(B) – Processing Accounting Data Part B Notes (PDF)

Lecture 1: Value Added Tax – What is it? (INFOGRAPHIC)

What is Value Added Tax (VAT)?

Lecture 2: Value Added Tax – Introduction (VIDEO)

What is VAT? 
Some details and theory you need to know, including the difference between Standard-rated, Zero-rated and exempt supplies.

Lecture 3: Value Added Tax – Calculations (VIDEO)

How is VAT calculated?
There are a few tricky calculations related to VAT the you need to understand and be able to work with.
Make sure you follow the reasons for the calculations closely!

Lecture 4: Value Added Tax – Calculations of Inclusive and Exclusive VAT (VIDEO)

How do you calculate Inclusive VAT from Exclusive VAT, and vice-versa.
Be careful with your formulae!

Lecture 5: Value Added Tax – General Journal & General Ledger (VIDEO)

Watch the processing of the General Journal and the General Ledger to see where the VAT you’ve calculated fits in. Note the difference between questions that give you VAT inclusive vs VAT exclusive amounts! You need to watch the detail carefully!