VAT Declaration Point Set to Accounting Date

This example applies when the VAT declaration point is set to accounting date. The example has the following conditions:

• An advance payment of 1,160.00 EUR is received, and the standard VAT rate is 16 percent.

• An invoice with the total 4,640.00 EUR, including 16 percent VAT, is sent to the customer.

• The advance payment is applied against the invoice.

• The final payment is received from the customer.

Here are the accounting entries:

1. When advance payment is received:

   Note:

   Although the amount posted under advance payments received is 1,000.00, the customer's total balance must be decreased by 1,160.00.

   Accounting Entry	Debit	Credit
   Cash	1,160.00
   Advance Payments Received (AR)		1,000.00
   VAT Output on Advance Payments (VOAP)		160.00

2. When invoice is sent to the customer:

   Accounting Entry	Debit	Credit
   Accounts Receivable	4,640.00
   User-defined (Revenue)		4,000.00
   VAT Output Final		640.00

3. When advance payment is applied against the invoice:

   Accounting Entry	Debit	Credit
   Advance Payments Received (AR)	1,000.00
   VAT Output on Advance Payments (VOAP)	160.00
   Accounts Receivable		1,160.00

4. When the final payment is received:

   Accounting Entry	Debit	Credit
   Cash	3,480.00
   Accounts Receivable		3,480.00