5) Accounting for GST Flashcards
What is the perpetual inventory system
The perpetual inventory system keeps an exact record of the number of items of a product a business has at hand at any given time. This provides the business with the exact number of stock at hand after each sale.
What is the periodic inventory system
The periodic inventory system only updates the ending inventory balance after a physical inventory count (stocktake) is conducted. This means that the business does not know the current stock available after each sale.
Advantages of perpetual inventory system
- Short term income statements can be prepared
- Possibility of running out of inventory is reduced
- Fast and slow moving inventory lines can be easily identified.
Disadvantage of perpetual inventory system
More expensive to set up than periodic
What is the ABN
Australian Business Number is a number that businesses must use so that the Australian Taxation Office can identify them in their dealings. If a business does not register for an ABN, owing entities can withhold tax from the payments at the higher marginal tax rate.
What is GST
GST is a broad tax of 10% placed on the supply of most goods and services consumed in Australia.
A business only has to register for GST if they have an annual revenue of above $75,000 or $150,000 if they are non-for-profit.
A business can decide, however, if they say no, the business must pay tax, however, cannot claim tax credits back, and cannot collect tax for the government.
What are input taxed supplies
Input taxed supplies are sales of goods and services that dont include GST in the price. THe GST is not charged on input taxed supplies, and input tax credits cannot be claimed for aything acquired to make the supply of these items.
