Quicken & Other Budget/Accounting Software/Vat Return



Where do i record Vat Refund received? Is it under asset? Let me know the entries.



We dont have a VAT tax here in the USA. So Im my knowledge of VAT if very

My understanding is that you collect VAT on sales you make and may deduct any
VAT that you paid on purchases incurred to make that sale (this may not be
accurate, so please do your own research).
Im unclear how you can get a refund.  Since the tax is a consumption tax
I would think that if your sales VAT were less than VAT paid the difference
would be your VAT expense.

If the refund was due because you invoiced a customer VAT tax, and then paid the
VAT to the government, and then the customer returned the merchandise you sold
so you had to give a credit memo, then the VAT refund should adjust an income account

Debit cash in bank
Credit  Sales

If the refund was due becuase you paid excess VAT to vendors over Sales then you would
create the following journal entry

Debit Cash in bank
Credit  (whatever account you post VAT expense line item on a vendor bill)

Linda Saltz
Certified QuickBooks Advisor

---------- FOLLOW-UP ----------


This is Vat refund from purchase, so where should i allocate the vat refund $? Under income?

I recommend posting the refund to the same account you used when you
posted the vendor bill. (this will reduce the expense rather than
increase an income account). Its a good idea to keep a spreasheet
on deposits into bank that are not from Sales. This would be an
good example. Another example would be a loans from owners or banks/
That way if you are ever asked how come deposits in the bank dont match
up with cash basis sales, you have a nice list.

The JE would be
Debit Cash in bank
Credit  (whatever account you post VAT expense line item on a vendor bill)

Linda Saltz, CPA  

Quicken & Other Budget/Accounting Software

All Answers

Answers by Expert:

Ask Experts


Linda Saltz, CPA, QBalance.com


QuickBooks best practices, troubleshooting, accounting, tax We have over 70 pages of website content about QuickBooks tips, running a business, tax and business startup at http://www.qbalance.com


Accountant and CPA over 20 years. Specializing in accounting software for over 12 years, Certified QuickBooks Pro Advisor, QuickBooks seminar instructor since 1997.
Producer of www.QBalance.com over 100 pages devoted to QuickBooks help and support and training for small business owners in tax and accounting issues.

©2016 About.com. All rights reserved.