Sales Taxes Collected by a Company on Behalf of the State

question 76

Multiple Choice

Sales taxes collected by a company on behalf of the state and local government are recorded by:

• A)A debit to an expense account.
• B)A credit to a revenue account.
• C)A debit to a revenue account.
• D)A credit to a liability account.

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Definitions:

Expected Total Sales

The forecasted amount of sales a business anticipates to achieve in a specific period, calculated based on market research and historical sales data.

Average Price

The mean cost of goods or services calculated over a specific period or set of units, used to determine general price levels.

Standard Cost System

A cost accounting system that uses predetermined costs for materials, labor, and overhead charges to control actual costs and measure variances.

Material Variances

Material variances are differences between the actual costs of materials and the expected (or standard) costs.