Cash Basis of Accounting Flashcards
(14 cards)
Since proceeds on sales of plant & machinery are treated as taxable receipts - is there capital gain tax on these types of disposals?
No, CGT is exempt since the taxable receipts would be included in trade profits and thus already accounted for.
Under the cash basis, can you claim allowances on the purchases of plant & machinery?
No, these are considered allowable business expenses.
Is capital expenditure on non-appreciating assets (e.g. land and buildings) an allowable business expense under the cash basis?
Hell nah!
Under the cash basis, does the 15% restriction on high emission lease cars apply?
NOPE.
Under the cash basis, when a capital asset is sold (excluding cars and non-appreciating assets e.g. land buildings) - what is this treated as?
A taxable receipt (increases trading profits).
When switching from the cash basis to accruals basis, what happens to any unrelieved capital expenditure (e.g. hire purchase)?
It is allocated to a capital allowances pool in the next period.
Is the net adjustment expense deductible in full in the first accounting period after leaving the cash basis?
Yes.
How is the net adjustment INCOME figure spread?
It is spread over the next 6 tax years after leaving the cash basis but the trader can elect to tax this sooner.
Under the cash basis, when goods are taken for own use - what is the method of accounting for the drawings?
Add back the cost of the stock.
When switching to the cash basis, in the first year any tax written down value relating to plant & machinery is…?
Deducted entirely in the capital allowances.
Are bad debts an allowable expenses under the cash basis?
No.
Are payments for cars allowable expenses under cash basis?
No, you claim capital allowances on cars as usual.
Under the cash basis, does the 15% restriction for high emissions car apply?
No.
How is the adjustment expense/(income) - negative value means it is adjustment income - calculated?
Opening debtors + opening stock - opening creditors.
