The nature of a sales tax and how it is collected Input sales tax Sales tax on Input sales tax Sales tax on Greater than output?. Output sales tax Sales tax charged by the busine
Trang 1Part D RECORDING TRANSACTIONS
AND EVENTS
Trang 2Part D
Chapter 7: Sales tax
Chapter 8: Inventory
Chapter 9: Tangible non-current assets
Chapter 10: Intangible non-current assets
Chapter 11: Accruals and prepayments
Chapter 12: Irrecoverable debts and
allowances.
Chapter 13: Provisions and contingencies
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Trang 3Chapter 7
Trang 4Learning Objectives
1 The nature of a sales tax and how it is
collected
2 Accounting for a sales tax
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Trang 5The nature of a sales tax and
how it is collected
Input sales tax
Sales tax on
Input sales tax
Sales tax on
Greater than output?
Output sales
tax
Sales tax charged
by the business on
goods/services
Output sales
tax
Sales tax charged
by the business on
goods/services
Greater than input? Pay difference to tax
authorities
Sales tax
Is an indirect tax levied
on the sale of goods and services
Sales tax
Is an indirect tax levied
on the sale of goods and services
Administered by tax
authorities
Can have a number
of rates, e.g standard rate, reduced rate
Trang 6Accounting for a sales tax
(a) Credit Sales
i Include sales tax in sales day
book; analyse it separately
ii Include gross receipts from
receivables in cashbook; no
need to show sales tax
separately
iii Exclude sales tax element
from income statement
iv Credit sales tax payable with
output sales tax element of
sales invoices
(b) Credit Purchase
i Include sales tax in purchases day book; analyse
it separately
ii Include gross payments in cashbook; no need to show sales tax separately
iii Exclude recoverable sales tax from income statement
iv Include irrecoverable sales tax in income statement
v Debit sales tax payable with recoverable input sales tax element of credit purchases
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Trang 7Accounting for a sales tax
(c) Cash Sales
i Include gross receipts in
cashbook; show sales tax
separately
ii Exclude sales tax element
from income statement
iii Credit sales tax payable
with output sales tax
element of cash sales
(d) Cash Purchase
i Include gross payments in cashbook; show sales tax separately
ii Exclude recoverable sales tax from income statement iii Include irrecoverable sales tax in income statement
iv Debit sales tax payable with recoverable input sales tax element of cash purchases