Asked by Victoria Ferguson on Jul 20, 2024
Verified
Sales taxes collected by the retailer are recorded as a(n)
A) revenue.
B) liability.
C) expense.
D) asset.
Liability
An entity's financial obligation or debt, incurred during business operations, that it is obligated to pay to another entity.
- Learn the procedure for including sales taxes in fiscal activities.
- Recognize the proper classification of sales taxes collected by a retailer.
Verified Answer
ZJ
Zhongyang JiangJul 27, 2024
Final Answer :
B
Explanation :
Sales taxes collected by the retailer are a liability because the retailer collects them on behalf of the government and is responsible for remitting them to the appropriate government agency. The retailer is essentially holding these funds in trust for the government until they are remitted.
Learning Objectives
- Learn the procedure for including sales taxes in fiscal activities.
- Recognize the proper classification of sales taxes collected by a retailer.