Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Taxes collected for taxing authorities are recognized as:

Revenue in the income statement

Liabilities on the balance sheet

Expenses in the income statement

Owner's equity

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Verified step by step guidance

Understand the nature of taxes collected: Taxes collected by a business for taxing authorities are not revenue or expenses for the business itself. These amounts are collected on behalf of the government and must be remitted to the appropriate authorities.

Identify the correct classification: Since the business is acting as an agent for the government, the taxes collected are considered liabilities until they are paid to the taxing authorities.

Relate to the balance sheet: Liabilities represent obligations the business owes to others. Taxes collected are obligations to the government, so they are recorded as liabilities on the balance sheet.

Eliminate incorrect options: Taxes collected are not revenue because they do not belong to the business, nor are they expenses because they are not costs incurred by the business. They also do not affect owner's equity directly.

Conclude the correct answer: Taxes collected for taxing authorities are recognized as liabilities on the balance sheet, reflecting the obligation to remit these amounts to the government.