Sales Taxes Collected from Customers Should Be Recorded in a Liability

question 156

True/False

Sales taxes collected from customers should be recorded in a liability account until the cash is passed along to the taxing authority.

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Definitions:

Noncash Assets

Assets that cannot be easily converted into cash, such as real estate, equipment, and investments.

Capital Balances

The amount of money each partner has invested in a partnership or the equity value in partnerships' accounts.

Statement Of Partners' Equity

A financial document that shows changes in the ownership interest of partners in a partnership over a period of time.

Total Capital

The sum of a company's debt and equity, representing the funds used to finance its operations and growth.