ACCA FA · Chapter 4 · Question 3 of 10
At the start of a quarter, a business owed $3,400 sales tax to the tax authority and paid $3,100 of this during the quarter. During the quarter, output tax of $8,750 and input tax of $5,120 were recorded. What is the balance on the sales tax account at the end of the quarter?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $3,930 payable
Explanation
Closing balance = opening liability $3,400 - payment $3,100 + output tax $8,750 - input tax $5,120 = $3,930 payable. Assuming the opening balance was fully settled gives $3,630, while adding the payment instead of deducting it gives $10,130.
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