Can someone please explain this for me?
At the end of reporting period, the GST account has a debit balance, the business will get a refund. While if the GST account has a credit balance, the business will pay for the money owed. I don't really understand it. Thanks in advance
The GST account can be an asset or a liability.
A debit balance makes it an asset.
A credit balance makes it a liability.
If the GST is an asset, that means the business has paid more GST throughout the year than they were obliged to, so they're entitled to a refund of the extra money paid. The refund represents "future economic benefit".
If the GST is a liability, that means the business has paid less GST throughout the year than they were supposed to, so they still owe the ATO some money and must pay this. The payment represents an "outflow of economic benefits".