If the gross value including 20% VAT is 240, what is the net value?

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Prepare for the AAT Level 2 Bookkeeping Test with flashcards and multiple choice questions. Each question includes hints and explanations to improve your understanding and readiness for the exam.

Multiple Choice

If the gross value including 20% VAT is 240, what is the net value?

Explanation:
VAT is added to the net price to give the gross amount, so gross = net × (1 + VAT rate). With a 20% rate, the gross value is 1.20 times the net value. To find the net value, divide the gross by 1.20. 240 ÷ 1.20 = 200. The VAT portion would be 240 − 200 = 40, which is 20% of the net price. So the net value is 200.

VAT is added to the net price to give the gross amount, so gross = net × (1 + VAT rate). With a 20% rate, the gross value is 1.20 times the net value. To find the net value, divide the gross by 1.20. 240 ÷ 1.20 = 200. The VAT portion would be 240 − 200 = 40, which is 20% of the net price. So the net value is 200.

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