When a Business Collects GST from Customers, It Records

question 16

Multiple Choice

When a business collects GST from customers, it records:

• A) a contra asset.
• B) a liability.
• C) an expense.
• D) an asset.

---

Definitions:

Work in Process Inventory

The expenses associated with goods that are still in the manufacturing stage, encompassing wages, raw materials, and indirect costs.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period, indicating its profitability.

Indirect Labor

Labor costs associated with the support work of producing a product or providing a service, not directly involved in the active manufacturing or service delivery process.