Inclusion/Exclusion of VAT in a question

ChloeA95
ChloeA95 Registered Posts: 3 New contributor 🐸
in Level 3 general discussion
Hi all, this may be a really silly question but for my own understanding and peace of mind I just want to be sure. When a question gives you a figure and deliberately says (excluding VAT) does the question want you to work out the full value with VAT or just simply use the non VAT figure? I approached a question like this in my FAPS exam last week and I was in two minds which to use because essentially the figure I used would be either the gain or loss of several other marks also. I would appreciate anybody’s response, thankyou!

Comments

  • anony123
    anony123 Registered Posts: 493 Dedicated contributor 🦉
    It depends on what the question says. Normally if they say excluding VAT they want you to find the whole value so divide by 5 and add the net on. But it depends on the question.
  • ChloeA95
    ChloeA95 Registered Posts: 3 New contributor 🐸
    @anony123 thankyou for the response. I can’t remember the question word for word but it was something like “company A bought a motor vehicle for £27,400 (excluding VAT), fill in the relevant accounts” then it listed Motor Vehicle account so I included the VAT on this one as I believe for non current assets, motor vehicles in particular you include the VAT in the total cost. I will have to read up on it properly.
  • anony123
    anony123 Registered Posts: 493 Dedicated contributor 🦉
    Well it also depends if the business is VAT registered as well, cause if they are you wouldn’t include the VAT. I remember I got that excavated same question on the preparing financial statements. I think there was acc rep and if a profit or loss was made.
  • anony123
    anony123 Registered Posts: 493 Dedicated contributor 🦉
    You know if you mess this part up, pretty much you will lose most of the marks. You will get marks for putting the correct areas eg dr motor be hiked cr acc dep and cr profit or loss.
  • ChloeA95
    ChloeA95 Registered Posts: 3 New contributor 🐸
    The question was regarding purchase of a NCA and I believe the company in question was VAT registered, so I think judging by your comment that I’ve incorrectly included VAT in the total asset cost!
  • anony123
    anony123 Registered Posts: 493 Dedicated contributor 🦉
    Yh that is incorrect I’m 100% certain.
    Imagine if it was 30,000 including VAT and they were VAT registered you would divide by 6 and take it off. There was an exact same question in the practice assessment 1 or 2 I remember about somebody called Dev. How was task 2 on accruals and prepayments? Don’t worry only 2 passed in our class!

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