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

9. Current Liabilities

Sales Tax Payable

Financial Accounting

9. Current Liabilities

Sales Tax Payable

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following accounts is credited by the seller when sales tax is collected on retail sales?

Cash

Accounts Receivable

Sales Revenue

Sales Tax Payable

Previous problemNext problem

Verified step by step guidance

Understand the concept of sales tax: Sales tax is a liability for the seller because it represents an amount collected from customers that must be remitted to the government. It is not revenue for the seller.

Identify the accounts involved: When sales tax is collected, the seller typically debits either Cash or Accounts Receivable (depending on whether the payment is immediate or deferred) and credits Sales Tax Payable, which is a liability account.

Analyze the transaction: The seller collects the sales tax from the customer at the point of sale. This creates an obligation to pay the collected tax to the government, which is why the Sales Tax Payable account is credited.

Understand why Sales Tax Payable is credited: Crediting Sales Tax Payable increases the liability on the seller's books, reflecting the obligation to remit the collected tax to the government.

Review the correct answer: Based on the explanation, the correct account to credit when sales tax is collected is 'Sales Tax Payable,' as it represents the liability for the seller.