If people or companies don't pay their bills, they are considered to be in default. Accounts payable reference the obligations to vendors for purchases of inventory, supplies, or services on credit. Purchases related to accounts payable may be reported at the gross method or the net method. When testing accounts payable, assertions about purchases and cost of goods sold are also
Introduction Value added tax (VAT), or goods and services tax (GST), is a consumption tax levied on value added. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer; where sales tax is levied on total value at each stage, the result is a cascade (downstream taxes levied on upstream taxes). Exports by definition, are consumed abroad and are usually not subject to VAT; VAT charged under such circumstances is usually refundable. This avoids downward pressure on exports and ultimately export derived revenue. A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.
Case in point, it can be said that while acquiring products from a retail shop, the retail deals tax is really paid by the clients. The retailer inevitably passes this duty to the particular power. The circuitous tax, really raises the cost of a decent and the clients buy by paying more for that item. Importance of Indirect Taxes:
Generic Questions: What is a VAT? It is an indirect tax associated on the utilization of most goods and services. VAT is imposed by VAT-enrolled organizations that supply good and services in the course or advancement of their business. VAT is also appropriate on the import of goods. VAT is imposed at each phase in the production network and is gathered by organizations for the benefit of the government.
Managers as well as management use cost accounting to help in justifying the capacity in helping to cut costs for the company in order to increase that company’s profit. Internal use, versus external use tools allow users such as financial accounting, cost accounting who do not need to follow the General Accepted Accounting Principles (GAAP) because they use a more practical type if accounting. The importance of cost accounting," 2011). It also gives managers a good idea of what the actual cost of the processes, depart... ... middle of paper ... ...ployee and customers to make the company profitable. Works Cited Accounting Tools.
An income statement provides insight into a company’s sales and expense amounts, and how they affect liquidity. Most businesses typically prepare a monthly income statements to assess business
It indicates how the revenues (money received from the normal business course of a firm) are transformed into the net income. It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs; such as depreciation and amortization of various assets, and taxes.  The purpose of the income statement is to show stake holders whether the company gained or lost money during the period under review. Changes in Equity The statement explains the changes in a company's retained earnings over the reporting period. They break down changes in the owners' interest in the organization, and the profit or loss is being accumulated from one accounting period to another.
Yet, those difficulties notwithstanding, it can be said that Value Added Tax system definitely has its advantages and is certainly recommended for most economies, particularly the developing ones. Definition “Value Added Tax is a tax on the value added at each stage of production and distribution process and can be aptly defined as one of the forms of consumption taxation since the value added by a firm represents the difference between its receipts and cost of purchased inputs.” Need for VAT Value Added Tax is one of the most radical reforms that have been proposed for the Indian economy after years of political and economic debate. The reasons for advocating Value Added Tax is that it will replace a complicated tax structure that will also do away with the fraudulent practices. Following are some of the most important benefits if VAT is introduced. • VAT will encourage and result in a better-administered system that will close avenues of tax evasion.
The total tax, regardless of the stage of production at which it was collected, ends up being added to the final sales price. No matter how many steps there are in the production process, a fixed percent of the final price of the product would represent the value-added tax, just as a retail sales tax is a fixed percent of the final product price. However, unlike a sales tax, the cost of the VAT to consumers would be hidden. Unless politicians took the unlikely step of requiring retailers to state explicitly the portion of the sales price that is due to the VAT, consumers would be unaware of the tax (Wikipedia Encyclopedia). The concept of VAT was first adopted by France in 1954.