FRA exam paper from December 04

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I think I must be having an extreme blond moment; can anyone throw some light on this one:<BR><BR>FRA exam paper from December 2003; question 2.1 (c)<BR><BR>I thought the answer to this would simply be to CR Selling Expenses with £280 (£329 less VAT) and DR Admin Expenses with £280.<BR><BR>The answer sheet says DR Admin Expenses £280; DR VAT £49; CR Selling Expenses £329<BR><BR>Why do you need to CR Selling Expenses with £329? Surely when the original entry was made it would have been to DR Selling Expenses £280 and DR VAT £49<BR><BR>Why would VAT be affected?<BR><BR>Sorry if this is obvious but I can't see it!!<BR><BR>Thanks

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    Hi.<BR><BR>Without looking at the paper:<BR><BR>Is it that it was posted incorrectly to selling expenses? You therefore have to correct the error, before making the correct post.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    i have just had a look at it and it says "the total value" ie including vat, therefore the vat was not separated, i think thats what it means. its the wording of these thats the killer. I passed that one so i do remember it. hope that helps and good luck!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    The amount that was posted the selling expenses was inclusive of vat. So not only was it posted to the wrong account but erro in principle as well.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    Hi,<BR><BR>The amount was incorrectly posted to Selling Expenses instead of Admin; would't this just be the net amount.<BR><BR>The question reads:<BR><BR>The total value of a purchase invoice for electricity for £329, including VAT of 17.5% was debited to selling expenses. Electricity should be charged to admin expenses.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    Penny has dropped, thanks all.<BR><BR>I must be careful with reading what is actually written!!!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    Hi again.<BR><BR>I've just looked at the question - it says the whole of the invoice (including V.A.T.) was debited to selling expenses. To correct this mis-post you credit the full amount to selling expenses, to take you back to the 'starting point'. You then make the correct entries.<BR><BR>It's usually helpful to actually write out the 't'- accounts, so you can see what's happening.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    FRA exam paper from December 04

    I had problems with those journals too. I've been trying to find some similar questions to practise with but not had much luck so far. Most of the stuff we did in class ignored VAT. Things would be so much easier without it -dream on!

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