accounting systems and VAT

Question 1

what is the sales cycle

Answer 1

1. order received from customer
2. goods sent along with good delivery note
3. sales invoice sent to customer for payment
4. credit note issues if customer overcharged or goods returned

Question 2

what is the purchases cycle

Answer 2

1. purchase order sent to supplier
2. goods received note and goods
3. purchase invoice received from supplier
4. debit note may be issued to request credit note from supplier

Question 3

what are the three steps for processing transactions

Answer 3

1. inputs
2. accounting system process
3. outputs

Question 4

what are different inputs

Answer 4

• source document (invoice)
• standing data (regularly used info)

Question 5

what are the different accounting system processes?

Answer 5

• calculations
• ledgers
• record keeping
• journal entries

Question 6

what are different outputs

Answer 6

• trial balance
• reports

Question 7

what is real time processing

Answer 7

transactions are processed by the system as they are input

Question 8

what is batch processing

Answer 8

transactions are input into the system and processed later in one go

Question 9

VAT charged on sales?

Answer 9

output VAT and payable to HMRC

Question 10

VAT charged on purchases?

Answer 10

input VAT and can be reclaimed from HMRC

Question 11

What can input VAT not be claimed on?

Answer 11

• purchase of motor cars
• client entertaining expenses