“Sales discounts are taken on sales tax.” Do you agree or disagree with the statement? Explain your answer.
I disagree that sales discounts are taken on sales tax because the sales discount is subtracted from the gross sales which equals the net sales and the net sales is multiplied by the sales tax then the total is added to the net sales.
Why is sales tax a liability to a business?
A company sells its products to customers, and charges them a sales tax on behalf of the local government authority. The company is then liable to pay the collected sales taxes to the government. In this case, the initial collection of sales taxes creates a credit to the sales taxes payable account, and a debit to the cash account. When the sales taxes are due
I disagree that sales discounts are taken on sales tax because the sales discount is subtracted from the gross sales which equals the net sales and the net sales is multiplied by the sales tax then the total is added to the net sales.
Why is sales tax a liability to a business?
A company sells its products to customers, and charges them a sales tax on behalf of the local government authority. The company is then liable to pay the collected sales taxes to the government. In this case, the initial collection of sales taxes creates a credit to the sales taxes payable account, and a debit to the cash account. When the sales taxes are due