A) What is VAT? what is the difference between input and output VAT?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A) What is VAT? what is the difference between input and output VAT?
B) Samo is a trader who purchases inventory at a cost of 60,500 (inc. VAT) and incurs
the expense of 4,000 (Inc. VAT) and sells the inventory for 85,000 (Excl. VAT).
Required:
(a) If it standard rate is 20%. How will much the trader pay to HMRC or HMRC will
pay for him?
(b) If it Zero rate (0%). How much the trader will pay for HMRC or HMRC will pay to
Samo?
Transcribed Image Text:A) What is VAT? what is the difference between input and output VAT? B) Samo is a trader who purchases inventory at a cost of 60,500 (inc. VAT) and incurs the expense of 4,000 (Inc. VAT) and sells the inventory for 85,000 (Excl. VAT). Required: (a) If it standard rate is 20%. How will much the trader pay to HMRC or HMRC will pay for him? (b) If it Zero rate (0%). How much the trader will pay for HMRC or HMRC will pay to Samo?
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