Rounding Down

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

Please could someone explain how the 'Rounding Down' rule is applied.

Do we round down all numbers that we would normally round up.

For example:-
20.58 becomes 20.57.

Hope this makes sense

Thank you

Sarah

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding Down

    Hello

    The rule is 'round down VAT'. Anything else gets rounded up, its just VAT that the rule applies to. However you may notice some companies round VAT up, this is probably due to their accounts system automatically rounding up like you would normally. If you notice on Sage, sales orders VAT gets rounded down, purchase orders VAT gets rounded up.
    Always check invoices though, if they have rounded VAT don't worry too much, you should enter on your system whatever you've been invoiced. However, if the VAT is completely wrong then do contact the person and inform them of the error. Sorry baffled on a bit there, overall the correct answer is VAT=round down.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding Down

    Sorry this may be a bit clearer:

    Figures are rounded to 2 decimal places. Rounding up will apply from 5, below 5 will round down, but not for VAT. VAT gets rounded down whatever the next digit after 2 decimal places:

    Supplies = £24.58
    VAT = £4.30 (£4.3015)

    Supplies = £24.67
    VAT = £4.31 (£4.31725) normally you would of rounded this figure up to £4.32 but its VAT so it gets rounded down.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding Down

    Thank you that is brilliant.

    Regards

    Sarah

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