How to read a sales invoice
Net, VAT and gross: find each figure on an invoice and know what it means for the seller and the buyer.
In this room: 2 tasks, 8 questions
- The parts of an invoice4 questions
- The same invoice, seen from both sides4 questions
An invoice lists what was sold and what is owed. Three figures matter most.
- Net amount
- the price of the goods before VAT
- VAT
- the tax added, at 20% of the net amount here
- Gross amount
- net plus VAT: what the customer must pay
| Description | Quantity | Net |
|---|---|---|
| Menus, A4 folded | 500 | 400.00 |
| Flyers, A5 | 300 | 150.00 |
Answer the questions below
3 more questions follow in this task.
One document, two businesses. To the seller it is a sales invoice. To the buyer it is a purchase invoice.
The seller's customer is a trade receivable. The buyer's supplier is a trade payable.
The seller collects the VAT from the customer and later pays it to HMRC. Until then the seller owes it, so it is a credit in the VAT account.
Answer the questions below
3 more questions follow in this task.