Tax collection and generation are both different things. A tax collected by the IRS is often less than the tax generated by the buyers and sellers. Talking about Conventional or retail sales tax, we get the question of which of the following accounts is credited by the seller when tax is collected on retail sales. Retail sales tax is an important part of the taxation system. Retail stores also strictly follow the rule of paying the hefty amount of retail taxes corresponding to their profit and sales income. Hefty taxes on labor results in low-income generation hence making the retail taxes comparatively low.
How do you account for the sales tax collected?
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.
What type of account is the sales tax payable?
Sales taxes payable is a liability account in which is stored the aggregate amount of sales taxes that a business has collected from customers on behalf of a governing tax authority. The business is the custodian of these funds and is liable for remitting them to the government on a timely basis.
Which of the following accounts is credited by the seller when tax is collected on retail sales?
Let’s dig the resources, and guess which account gets the chance of credit by the seller during the tax collection on the retailing side. Either it is the Accounts Payable, Payroll tax, Unearned Revenue or Sales Tax payable. The answer is the Sales Tax Payable.
Which of the following is required to be deducted from employees’ paychecks?
There are few pre-set obligatory payroll tax rules that employers need to follow. When an employee does some transaction using the paychecks. FICA taxes get reducted from his income. FICA stands for Federal income tax withholding. These taxes include Social Security & Medical or Medicare taxes. All employees are abode by this act and upon the negligence, the employee would be in trouble of paying the penalty or to face the court trial.