CIMA BA3 · Chapter 4 · Question 7 of 10
A business is unable to recover the sales tax charged on its purchase of a car for a sales representative. How should the irrecoverable sales tax be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is included in the cost of the car and capitalised
Explanation
Sales tax that cannot be reclaimed is a real cost to the business, so it is included in the cost of the asset or expense it relates to. Here it is capitalised as part of the cost of the car and depreciated with it.
More Books of prime entry and sales tax MCQs
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- Q1In which book of prime entry are invoices issued to credit customers first recorded?
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- Q3Which of the following would normally be recorded first in the journal?