Accrue for VAT on purchases?
I have started a small business and am pulling together the monthly management accounts for the Board but am coming across a number of probably very simple accounting/book keeping problems.
The first I have a dilemma over is the treatment of VAT on monthly accrued expenses, should this be recorded as follows?
1. DR P&L expense: £100
2. CR Balance sheet accruals: £120
3. DR Balance sheet VAT debtor: £20
OR should I ignore VAT as I don't have an invoice for the accrued expense?
Any thoughts would be appreciated!
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