General Accounting Discussions: DEVELOPMENT OF CHART OF ACCOUNT

Basically there are two approaches to prepare the chart of account of a company.


1) In the first approach, cost heads are separately opened for the cost of goods, administrative expenses,
.marketing and business promotion expenses. In this case grouping of chart of account is kept in mind at the time of data entry and the list of chart of account also becomes lenghty.

2) In the second approach, cost heads are not repeated. A generic list of cost heads are prepared and these are linked with the departments and products / projects. Software itself pick the relevant department and product / projects to prepare the desired grouping. In this approach data entry operator is not required to look at the groupoing because it is processed by system itself.

Kindly provide your comments that which one of the approach is the best one with its justification.
And which one approach is being used in the current scenartios by large organizations.

VIvienna

GST - what does it mean for a company?

If you are GST registered, you are required to collect GST tax from your customers for the goods and services rendered by your company and then pay the collected tax to goverment .

As an example, if you charged $1,000 for your goods or services to a customer, you must invoice your customer $1,040 ($1,000 for your service plus 4% GST).

This GST amount in the invoice (appropriately must be called a Tax Invoice) collected on behalf of goverment from your customer must be sent to Malaysia tax department on a montly, quarterly or half yearly basic via GST tax filing.

Remember These Important Points on GST

The Goods and Services Tax (GST) applies to most goods and services. going to implements at 4%.

The GST is a value-added tax, because the government only receives tax on the increase in the value of the good at each stage of distribution.

Zero-rated items are goods and services that at the time of this lesson have the GST percentage set of 0%. Sellers of zero-rated goods and services will receive a rebate of any GST they paid in acquiring those goods and services from their suppliers while sellers of GST exempt goods and services will not.

A GST Payable account is kept in the general ledger. This account is a record of the tax collected on sales (credited) and paid on purchases (debited). The balance represents what must be remitted to the federal government.

GST collected on sales - GST paid on purchases = GST remitted to the Government.

A credit balance in the GST Payable account is remitted to the government on a monthly, quarterly, or annual basis depending on the size of the business.

If there is a debit balance, the company will receive a refund from the government because it has paid more on purchases than it has collected on sales

Taxable Period

Taxable period is a period where a taxable person is liable to account and pay tax to the goverment his GST Liability.

The standard taxable period is on a quarterly basic but a person may apply or be allocated monthly or half yearly taxable period. Taxable period are proposed as follow

1.Category A - Monthly Submission of GST Return - Non Standard taxable period of 1 month for taxable person with annual taxable tunover exceeding RM5 million or any export based traders who may suffer cashflow problems if they file their returns on a quarterly basic subject to approval.

2.Category B - Quartely Submission , standard taxable period of 3 month for all taxable person with annual taxable turnover not exceeding RM5 million

3.Category C - Half yearly Submission , Non standard taxable period of 6 month in special cases subject to approval.

A taxable person may after being assigned a category apply in writting to the Director General to be assigned to any other category at the absolute discretion of the DG.

Introduction of GST

The Malaysian Goverment in its 2010 Budget Speech annouced the final stage preparation for the introduction of the Goods and Service Tax which is expected to take ffect from mid 2011.

This proposal will integrate the present Sales and Services Taxes into a single broad based tax on consumption to be called the Goods and Service Tax (GST)

GST is a consumption tax and it collected at every stage of production and distribution chain unlike the present tax system which is a single stage tax and it also impose when goods are imported into Malaysia.