Indicate Whether Each of the Following Statements About Sales Tax

question 112

Short Answer

Indicate whether each of the following statements about sales tax is true or false:
1. Remitting to the state the amount of sales tax collected on sales is a claims exchange transaction
2. Collecting sales tax from a customer is an asset source transaction
3. If a company records a $100 sale that is subject to a sale tax rate of 6%, it should record Sales Revenue in the amount of $94
4. The amount a company owes to the state for sales tax it has collected is a current liability
5. When a company records sales tax it has collected from a customer, it records Sales Tax Expense and Sales Tax Payable

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Definitions:

Illegal Behavior

Actions that violate laws and regulations, subjecting the perpetrator to legal penalties.

Federal Trade Commission

A government agency of the United States tasked with protecting consumers and ensuring a strong competitive market by enforcing antitrust and consumer protection laws.

Federal Trade Commission Act

An Act of Congress that established the Federal Trade Commission (FTC), aimed at preventing unfair competition practices and deceptive consumer acts.

United States Congress

The bicameral legislature of the federal government of the United States, consisting of two chambers: the Senate and the House of Representatives.