ACCA FA · Chapter 4 · Question 6 of 10
A trader who is NOT registered for sales tax buys goods for resale for $2,000 plus sales tax at 20%. At what amount should the purchase be recorded?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $2,400
Explanation
A business that is not registered cannot reclaim input tax, so the sales tax is part of the cost of the goods. The purchase is recorded at $2,000 + ($2,000 x 20%) = $2,400. Only a registered business would record $2,000 and a separate sales tax receivable.
More Sales, purchases and sales tax MCQs
- Q8How is the total of the net sales column of the sales day book posted to the general ledger?
- Q9The following information relates to a business for a year: Opening inventory $14,200 Purchases $86,500 Carriage inwards $1,900 Carriage…
- Q10A business registered for sales tax issues a credit note to a credit customer for goods returned with a net value of $1,200. Sales tax is…
- Q1A business registered for sales tax sells goods on credit for $4,800, including sales tax at 20%. Which journal correctly records the sale?
- Q2During a quarter, a business made sales of $180,000 excluding sales tax and purchases of $92,000 including sales tax. All items are…