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When a business sells an item and collects a state sales tax on it a current liability arises?
true.
Do you have to charge sales tax on the merchandise you sell in a home business?
Whether you need to collect sales tax depends on where you and your customer is located. If your customers are in the same state as the physical location of your business, they owe sales tax on items. If you are shipping merchandise to a state where your business does not have a location, you will not need to collect sales tax.
What type of account is sales tax payable?
Liability
The amount of sales tax collected on a sale is entered into an account titled?
The amount of sales tax collected on a sale is typically entered into an account titled "Sales Tax Payable." This account represents a liability for the business, as it is money collected from customers that must be remitted to the government. It ensures accurate tracking of the sales tax owed and helps maintain compliance with tax regulations.
What is a sales tax payable account?
A sales tax payable account is a liability account on a business's balance sheet that represents the amount of sales tax collected from customers but not yet remitted to the tax authority. When a business makes a sale, it collects sales tax as part of the transaction and records it in this account until it is time to pay the tax to the government. This account helps businesses track their obligations and ensures compliance with tax regulations. It is crucial for accurate financial reporting and maintaining cash flow.
When a business sells an item and collects a state sales tax on it a current liability arises?
true.
Do you have to charge sales tax on the merchandise you sell in a home business?
Whether you need to collect sales tax depends on where you and your customer is located. If your customers are in the same state as the physical location of your business, they owe sales tax on items. If you are shipping merchandise to a state where your business does not have a location, you will not need to collect sales tax.
What type of account is sales tax payable?
Liability
Where can I go to inform myself of sales tax for business?
You need to contact the department of taxation in the state you are doing business in as well as the IRS. They can send you all the information you need as far as sales tax laws in your state.
The amount of sales tax collected on a sale is entered into an account titled?
The amount of sales tax collected on a sale is typically entered into an account titled "Sales Tax Payable." This account represents a liability for the business, as it is money collected from customers that must be remitted to the government. It ensures accurate tracking of the sales tax owed and helps maintain compliance with tax regulations.
What is a sales tax payable account?
A sales tax payable account is a liability account on a business's balance sheet that represents the amount of sales tax collected from customers but not yet remitted to the tax authority. When a business makes a sale, it collects sales tax as part of the transaction and records it in this account until it is time to pay the tax to the government. This account helps businesses track their obligations and ensures compliance with tax regulations. It is crucial for accurate financial reporting and maintaining cash flow.
Where does sales tax payable on the balance sheet go?
Sales tax payable is a current liability and is presented on the credit side of the balance sheet-
Who does a business owe its sales tax to?
The State that they do business in
Is Nebraska sales tax deductible for small business owners?
If you charge tax on the products/services you sell, the customer pays the sales tax and the business passes the tax onto the state/municipality. If the business buys supplies for use in the business (and not for resale) you will pay sales tax and the entire cost of the supplies will be deductible to the business. If you buy the same supplies from out of state and do not pay Nebraska sales tax, you should pay Nebraska use tax and that amount is also deductible to the business. If the business buys supplies that go into making a product for resale, you should not pay sales tax on the purchase of those supplies.
When companies pay the government collected sales tax sales taxes payable is credited and cash is debited true or false?
True. When companies pay the government the collected sales tax, they credit the "Sales Taxes Payable" account, which reduces the liability, and they debit the "Cash" account to reflect the outflow of cash. This transaction effectively transfers the sales tax liability to the government.
A company had a before tax profit if 2000000- what was their tax liability?
To calculate the tax liability, we need to know the applicable tax rate. Assuming a hypothetical tax rate of 30%, the tax liability would be 30% of the before-tax profit of $2,000,000, which amounts to $600,000. If a different tax rate applies, the tax liability would need to be recalculated accordingly.
Is sales tax included in Gross sales?
Sales tax is not included in gross sales. For example when an item is sold for a total of $105 including $5 in sales tax the proper journal entry is a debit of $105 to cash, credit of $100 to sales, and a $5 credit to the sales tax payable account. The liability for sales tax should appear on the balance sheet.
