Figure 8-1 -Refer to Figure 8-1.Suppose the Government Imposes a Tax of a Tax

question 179

Multiple Choice

Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J+K+L+M represents

• A)total surplus after the tax.
• B)total surplus before the tax.
• C)deadweight loss from the tax.
• D)tax revenue.

Calculate sales tax on transactions and understand its implications on sales and returns.

Prepare journal entries for cash and credit sales, including sales returns and allowances.

Record payment transactions, including discounts for early payment.

Know how to record the payment of sales tax to the state.

---

Definitions:

Outstanding Checks

Checks that have been written and recorded in the issuing entity's books but have not yet been cashed or cleared by the bank.

Note Receivable

A written promise for amounts to be received, typically outlining the terms including payment amounts, interest rate, and due date.

Bank Reconciliation

A process that explains the difference between the bank balance shown in an organization's bank statement, as provided by the bank, and the corresponding amount shown in the organization's own accounting records at a particular point in time.

Bank Reconciliation

The process of comparing and aligning a company’s financial records with those shown in its bank statement to ensure accuracy and completeness.