Hii everyone!
Just a quick question:
We do we not include GST in the inventory card (even though when you buy the inventory you include gst)?
Thank you!
VCE Accounting Questions Thread
11 days later
Joseph41 added the VIC Units 3&4 Accounting VIC Units 1&2 Accounting tags .
5 months later
- Edited
GST is being paid to the ATO, and is thus not included in the valuation of the inventory itself. Of course, when a business purchases inventory, it must debit its GST Clearing account as the liability to the ATO decreases. In this case, the Bank/Accounts Payable (depending on whether the transaction was a cash/credit purchase) is credited by both the value of the inventory itself + the GST. However, in the inventory card, we are looking at the value of the inventory that the business has on hand, and GST is not included in this.
Sorry if this has any errors, I'm talking off the top of my head.
Thank you very much Darkness! I understand now.
I also have another question:
I have seen the word 'transactions' in VCE accounting a lot.
Can transactions be negative? Or can they be a cash inflow as well?
For example, I saw somewhere and it said that revenue was a 'transaction'.
On the internet it says that transactions are any activity that effect the financial statements.
So does that mean they can be like cash inflows too?
Or does it always have to mean a withdrawal of money?