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level: Sales & Purchases (Sales Tax)

Questions and Answers List

level questions: Sales & Purchases (Sales Tax)

QuestionAnswer
What are the key accounting standards examinable in this paper relating to sales and purchases?IAS 18 & IFRS 15
What are two of the main topics in the sales and purchases topic of Syllabus Section D?- Accounting for discounts - Sales Tax
What is the net selling price?The amount that the entity will recognise as sales income and is the amount exclusive of tax.
What is the gross selling price?The price charged to the customer and the price that is inclusive of tax.
When sales tax needs to be accounted for what difference is there to the normal purchasing records?There needs to be a sales tax account which is the payables/receivables account with the tax department.
How is sales tax paid recorded?Dr. Purchases Dr. Sales Tax Cr. Cash/payables
How is sales tax charged recorded?Dr. Receivables Cr. Sales Cr. Sales Tax