This topic shows you how to create a VAT Take-On balances.

Consider this; if you have a VAT Liability, then you would need to deduct it from Equity, because Equity = Assets - Liabilities. See our Accounting tutorial here.

Setup

1. Navigate to Main Menu > Setup > Settings & Defaults > Accounting > Categories.
2. Create a new Equity - VAT Category that reports on VAT amount. The Equity Category that already exists reports on Excl. VAT amounts, so this new Category will report on VAT amounts. See image below:

3. Navigate to Main Menu > Setup > Settings & Defaults > Accounting > Accounts and create a VAT Take-On Account, and link it to the Equity - VAT Category we just created. See image below:

Transacting

1. Navigate to Main Menu > Accounting > Ledger.
2. Select General Journal from the Entry Type Filter drop-down list.
3. Click New > New Blank to create a new entry directly in the Ledger.
4. Begin capturing the transaction as shown in the image below. As you can see, it will balance in the Trial Balance.
   • Because you are working with VAT, the VAT Type must be set to VAT (100%).

The Balance Sheet also reflects the VAT Take-on accurately. See image below:

Navigation

Main Menu > Accounting > Balance Sheet > View