Question

Siyeza Traders is an enterprise that sell motor vehicles in the ordinary course of business at a mark-up of 45% on cost. During the current financial period, Siyeza Traders sold eight motor vehicles for a cash price of R80 000 each (15% VAT inclusive). Round your answer off to the nearest Rand.

3. Which of the following statement is correct?
(1) VAT on cash sales will be debited to the VAT output account.
(2) VAT on cash sales will be debited to the VAT input account.
(3) VAT on cash sales will be credited to the VAT output account.
(4) VAT on cash sales will be credited to the VAT input account.
(5) VAT output account will be transferred to the debit side of the VAT control account

Answer 1

Information provided in Question
	Example 1		Example 2
Cost	100
Mark up	45
Total Cost	145		69565
Vat Output @ 15%	22		10435
Selling price	167		80000

			Example 1
Party A/c	Dr		167			80000
To Sales A/C		Cr		145			69565
To Vat output Account		Cr		22			10435

	Vat control A/C
Dr side	Rs	Cr side	Rs
Vat Output account	22
	Vat Output A/C
Dr side	Rs	Cr side	Rs
		Vat control account	22

Solutions provided	Remarks
1	Worng
2	wrong
3	Wrong
4	wrong
5	Correct

Detailed resaon provided as mentioned below resaon fro option 5 to be correct abd other options i.e 1,2,3,4 are Incorrect

Detailed resaon provided as mentioned below resaon fro option 5 to be correct abd other options i.e 1,2,3,4 are Incorrect
Siyeza traders is selling motor vehicles so in that case vat ha sbecome company liability and it has to credited abd its will be considered as a output
so in this case case option 2 and 4 becomes Invalid
In vat ouput ledger as mentioned below only vat control can be credited and not any other accont i.e vat on cash sales can neither be deboted or credited
so in this case case option 1 and 3 becomes Invalid