ACCA FA · Chapter 4 · Question 2 of 10
During a quarter, a business made sales of $180,000 excluding sales tax and purchases of $92,000 including sales tax. All items are subject to sales tax at 15%. How much sales tax is payable to the tax authority for the quarter?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $15,000
Explanation
Output tax = $180,000 x 15% = $27,000. Input tax on purchases (tax-inclusive) = $92,000 x 15/115 = $12,000. Amount payable = $27,000 - $12,000 = $15,000. Treating the purchases as tax-exclusive gives input tax of $13,800 and a payable of $13,200.
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