VAT on Sales

Code: 2161
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Account Information

Account Type Statement of Financial Position
Normal Balance Credit

Definition

VAT collected on local sales transactions

Common Journal Entries

Record VAT on sales

Dr. Accounts Receivable
Cr. Sales
Cr. VAT on Sales

Settle output VAT against input VAT

Dr. VAT on Sales
Cr. VAT on Purchases

Pay net VAT to tax authority

Dr. VAT on Sales
Cr. Bank Account

Adjust sales VAT after credit note

Dr. VAT on Sales
Cr. Accounts Receivable

Record VAT on sales

Dr. Accounts Receivable
Cr. Sales
Cr. VAT on Sales

Settle output VAT against input VAT

Dr. VAT on Sales
Cr. VAT on Purchases

Pay net VAT to tax authority

Dr. VAT on Sales
Cr. Bank Account

Adjust sales VAT after credit note

Dr. VAT on Sales
Cr. Accounts Receivable

International Accounting Standards

IFRS IAS 12 Income Taxes

VAT is not an income tax. Collected on behalf of government — not recognised as revenue.

US GAAP ASC 606 Revenue from Contracts with Customers

Sales taxes collected from customers excluded from transaction price (net presentation).