The Happy Accountant

For those of you who might ever wish to calculate VAT at 17.5% without a calculator (or for those who enjoy a bit of mental maths), here’s how:
Work out 10% of the net value (by moving the decimal point one place to the left)
Half the above answer
Halve the answer again
Add the three numbers, calculated above, [...]

The VAT fraction of 7/47, is arrived at by converting the decimal fraction of 0.175/1.175 (see the post on Calculating the VAT) to the lowest whole numbers. 
7/47 is only the VAT fraction for standard VAT at 17.5%
If VAT is at 5%, the VAT fraction would become 1/21 (which is just the whole number equivalent of [...]

In a similar way, if you want to calculate the net amount (the amount before VAT at 17.5% was added on) for a receipt for £18.80, you could do the previous calculation and then subtract: £18.80 - £2.80 = £16.  But to do it in one step, more quickly, the calculation would be:
£18.80 divided by 1.175
which gives you [...]

If you are presented with receipts (usually for, but not limited to, the purpose of claiming expenses) and need to calculate the VAT (at 17.5%) element for a receipt for £18.80:
£18.80 divided by 1.175
then multiply the answer by 0.175
which gives you VAT of £2.80
OR mutliply £18.80 by 7/47 (which is commonly referred to as the VAT fraction)

This is not an abandoned blog, however, it’s been very busy recently (not that I am complaining, I love being busy!).
We’ve also had a run of family celebrations, including my youngest daughter’s very first birthday.  How time flies.

Who says accountants are no fun?  Accountants jokes and fun is a blog collection of jokes for and about accountants, blogged by Mark Lee, an accountant himself (although no longer in practice).

When the customer eventually pays, the second stage of double entry is as follows:
CASH ACCOUNT
Debit £200
DEBTORS ACCOUNT
Credit £200
Therefore, the two entries in the debtors account will eventually (hopefully!) cancel eachother out.  Since, in the first stage 9the actual sale), there was a debit of £200 and in the second stage (when payment is made), there [...]

Not every business makes cash sales.  However, with a credit sale, there is no immediate entry in the Cash account, since no cash has actually changed hands.  Therefore, debtors accounts are used.  For example, if a business makes a credit sale for £200, the sale itself is accounted for as follows:
DEBTORS ACCOUNT
Debit £200
SALES ACCOUNT
Credit £200

Suppose a business makes a cash sale for £100, it’s double-entry accounting would be as follows:
CASH ACCOUNT
Debit £100
SALES ACCOUNT
Credit £100
This is because the cash asset increases by £100 (and an increase in an asset is a debit)
Note that the debits and credits for the cash account (ie the bank account) look back to front if [...]

 T accounts are what ledger accounts might look like if they were kept on paper (as opposed to using computer software). 
They are nothing mysterious, drawn on paper, a T account is quite literally a large T!  The title of the ledger (for example, “motor expenses” is written across the top), debit entries against that account are [...]