Northern Retailers Regularly Makes Payments to a State Government for the Sales

question 16

Multiple Choice

Northern Retailers regularly makes payments to a state government for the sales taxes resulting from its sales to customers. These sales taxes:

• A) should appear on Northern's income statement as an expense.
• B) are based upon a company's gross profit in most states.
• C) are long-term liabilities when they have been paid.
• D) are collected by Northern's as an agent for the state's taxing authority.

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Definitions:

Financial Instruments

Assets that can be traded, including stocks, bonds, derivatives, and currencies.

U.S. Government

The federal government of the United States, a constitutional republic comprising the Executive, Legislative, and Judicial branches.

Market-Value Weighted

An indexing method where the weight of each constituent security in an index or portfolio is based on its total market capitalization, favoring larger companies.