Quote Originally Posted by DaisyGirl View Post
Thanks Greg, I can wrap my head around the In (through the door) and Out (through the door) concept; just trying to see why what I owe is an Asset and what I can claim is a Liability! (Some of us just don't think like you accountant types :-)
If you owe SARS it is a libility, if SARS owes you it is in asset.
Lets say you buy something for R50 + R7 VAT = R57
Now you sell it for R114 (R100 + R14 VAT)

Input R7
Output R14
Nett Effect is R7 Output (OUTput means you must pay OUT to SARS)
[If the net is Input SARS must pay IN to your bank account !]

Might get a bit technical here (Sorry)
Accounting Entries
DR Purchases R50
DR Vat R 7
CR Supplier R57

CR Sales R100
CR VAT R 14
DR Customer R114

Net effect of Vat is R 7 DR + R 14 CR = R 7 CR Therefore a liability