What is the best definition of sales tax?

What is the best definition of sales tax?

A sales tax is a consumption tax imposed by the government on the sale of goods and services. A conventional sales tax is levied at the point of sale, collected by the retailer, and passed on to the government.

Do you recognize sales tax as revenue?

No. The sales taxes collected by a retailer are not part of its sales revenues. Rather, the sales taxes collected are reported on the balance sheet as a current liability until they are remitted to the government.

What is meant by excise tax?

Excise taxes are taxes that are imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

Where does sales tax go on P&L?

Generally, the sales taxes would not go through your P&L. Now if you are talking about sales taxes you pay on purchases, then in that case, I would post the taxes to the same expense account as the purchase.

How do you record sales tax on sales?

To record received sales tax from customers, debit your Cash account, and credit your Sales Revenue and Sales Tax Payable accounts. When you remit the sales tax to the government, you can reverse your initial journal entry. To do this, debit your Sales Tax Payable account and credit your Cash account.

How do you account for sales tax on purchases?

What is the difference between sales tax and gross receipts tax?

A gross receipts tax is often compared to a sales tax; the difference is that a gross receipts tax is levied upon the seller of goods or services, while a sales tax is nominally levied upon the buyer (although both are usually collected and paid to the government by the seller).

What is the journal entry for sales tax?

What Is the Journal Entry for Sales Tax? The journal entry for sales tax is a debit to the accounts receivable or cash account for the entire amount of the invoice or cash received, a credit to the sales account and a credit to the sales tax payable account for the amount of sales taxes billed.

What is the process of journalizing transactions?

This cycle starts with journalizing transactions. The process of journalizing transactions refers to the initial recording of all the financial transactions of a business. This recording is done by listing journal entries into the journal. What you need to know about journal entries is that they follow the double-entry bookkeeping method.

How do I reverse my initial journal entry for sales tax?

When you remit the sales tax to the government, you can reverse your initial journal entry. To do this, debit your Sales Tax Payable account and credit your Cash account. This reduces your sales tax liability.

What is journalizing?

Home » Accounting Dictionary » What is Journalizing? Definition: Journalizing is the process of recording transaction in an accounting journal.