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SWFT Comprehensive Vol 2020

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter24: Multistate Corporate Taxation

Section: Chapter Questions

Problem 35P

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Related questions

Question

A3

Answer the following questions related to sales tax transactions in merchandising
companies:
a. at the time of the sales transaction when a customer buys the product, who is paying the
sales tax? The company or the customer?
b. Is the amount of the sales tax ever included in the Sales Revenue account? Why or why
not?
c. at the time of the transaction when the company remits the sales tax to the state, is the
company incurring an expense on the income statement? Why or why not?

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How is the sales tax rate usually determined? Does the company get to keep the sales tax as earned revenue?
Sales Tax Payable is a liability account that is credited for the amount of tax imposed on sales.
Who is responsible for collecting sales and excise taxes? Who actually pays the tax?
The definition of gross income in the tax law is: All items specifically listed as income in the tax law All cash payments received for goods provided and services performed All income from whatever source derived All income from whatever source derived unless the income is earned illegally
Which of the following accounts is credited by the seller when tax is collected on retail sales? A. Payroll Tax B. Unearned Revenue C. Accounts Payable D. Sales Tax Payable
When entering tax classes for the sales transaction type, what two items must you enter the tax classes for? What about the purchases transaction type? What information is included in tax groups? What is the purpose of defining vendor groups? How do you change the tax class in individual vendor profiles? List the three methods by which an invoice can be distributed, and give an example of each method. Explain the purpose of each method. What was the purpose for deleting the Accounts Payable opening balances batch in the General Ledger module for Omni Electrical Supplies Ltd.? Which accounts are affected and what must be done to ensure no errors are created?
Which of the following is false regarding consumption and business tax? a. Importations of goods are subject to value-added tax whether the imported goods are to be used in business or not. b. All business taxes are consumption taxes but not all consumption taxes are business taxes. c. Business taxpayers with annual receipts higher than the VAT threshold who registered as VAT taxpayers may switch to a non-VAT registration provided such actual receipts during the year proved to be lower than the threshold. d. A business taxpayer subject to other percentage taxes shall register as a VAT taxpayer if its total sales or receipts exceeds the VAT threshold. e. All of the other choices is correct.
Who is the person statutorily liable to pay the consumption tax on importation of goods? *SellerBuyerBoth seller and buyerAnswer not given
When a sale is made and sales tax is collected from the customer, the sales tax is recorded as a/an ______________________ until the amount owed to the state is remitted. Group of answer choices revenue (sales tax revenue) current asset (cash) current liability (sales tax payable) expense (sales tax expense)
The IRS requires companies that use LIFO for financial statement reporting to also use LIFO to calculate cost of goods sold on their tax returns. Why do you think the IRS wants companies to be consistent with the cost-flow assumption they use? What benefit could a company receive by choosing a different method for reporting than for its tax return?
Which of the following would be included in the journal entry to record the payment of accrued sales tax? Select one: O a. A credit to Sales tax expense O b. A debit to Sales tax expense O c. A credit to Sales tax payable O d. A debit to Sales tax payable
The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as a. Sales tax expense. b. Sales tax revenue. c. Sales tax receivable. d. Sales tax payable.

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