The Amount of Sales Tax Collected by a Retail Store

question 107

Multiple Choice

The amount of sales tax collected by a retail store when making sales is

• A) a miscellaneous revenue for the store.
• B) a current liability.
• C) not recorded because it is a tax paid by the customer.
• D) recorded as an operating expense.

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Definitions:

Excess Capacity

The situation where a company is producing less than its full potential output due to lack of demand or other constraints.

Efficient Scale

The level of production at which a firm achieves the lowest average total cost, with economies of scale fully exploited.

Business-Stealing Externality

Negative impacts on existing firms due to entry of new competitors, which can steal customers and reduce profits.

New Firms

Companies that have recently entered the market, bringing innovation, competition, and potentially disrupting established market dynamics.