Dreams Take Flight Ltd

question 89

Multiple Choice

Dreams Take Flight Ltd.includes the sales tax in the amount recorded in the Sales account.The adjusting entry at the end of the period includes a:

• A) debit to Sales Tax Payable
• B) debit to Sales Tax Expense
• C) credit to Sales
• D) debit to Sales

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Definitions:

Fixed Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Selling Price

The amount of money charged for a product or service, or the sum of the value that customers exchange for the benefits of having or using the product or service.

Absorption Costing

An accounting method that includes all direct costs and allocated indirect costs (such as overhead) in the cost of a product.

Australian Accounting Standards

The set of accounting principles and procedures that must be followed by companies operating in Australia.