THEORY - expression, technicalities and general help :)

[soopertaco]

The question is Q: hoq is it possible for GST to have a credit balance.
I know the general idea is to say that GST paid on purchases of stock and other items exceeded the GST received from cash cash and credit sales. This may be possible if the buisness purchases a non-current asset or purchases an excess of stock (not sold). In retrospect this may also occur if the business has little sales and thus small payments of GST.

I took a mark off myself for this answer on one of my practice exams..
What should i make sure i mention when answering this and what do i NOT need to mention?

Thanks in advance!

[soopertaco]

question: Explain the operation of the perpetual system of stock recording (mr wood 2011 exam)

[sam.utute]

I think you meant debit balance in the question.
The key to answering this question is to state the following:
GST paid and incurred on purchases of stock and other items was greater than the GST charged and received on cash and credit sales.
You should also provide an example (which you did - the purchase of a NCA). You could also mention this generally occurs when the business has commenced operations.
You don't need to talk about "little sales" etc.