Accounting for VAT and payroll

Question 1

what is VAT?

Answer 1

• an indirect tax
• charged on most goods and services supplied within the uK
• is borne by the dial consumer
  collected by businesses on behalf of HMRC

Question 2

what must a business do if it is VAT registered?

Answer 2

• Charge VAT on its sales or services to its customers
• recover the VAT charged on its purchases and expenses

Question 3

What are the VAT rates?

Answer 3

• standard rate 20%
• reduced rate 5%
• zero rate 5%
• Exempt 0%

Question 4

what are the 3 types of discounts?

Answer 4

• trade discounts
• bulk discounts
• prompt payment discounts

Question 5

what is a trade discount?

Answer 5

a definite amount that is deducted from the list price of the goods

Question 6

what is a bulk discount?

Answer 6

given by a supplier for sales orders above a certain quantity

Question 7

what is a prompt payment discount?

Answer 7

it is offered to customers in order to encourage early payment of invoices

Question 8

how is VAT calculated with discounts?

Answer 8

• after trade and bulk discounts have been deducted
• if the customer takes advantage of PPD, VAT is adjusted

Question 9

what are the responsibilities of payroll staff within an organisation?

Answer 9

• calculating correctly the amount of pay due to each employe
• ensuring each employee is paid on time with the correct amount
• ensuring amounts due to external parties such as HMRC are correctly determined and paid of time

Question 10

what are the other deductions that are optional for an employee?

Answer 10

• save as you earn
• give as you earn
• pension contributions