Acca financial Accounting (FA) Study Text ac ca (FA)

6 

Calculation of sales tax 

Sales tax is charged at a variety of rates around the world. It is also subject to 

different rates for different products within national boundaries. To reflect this 

ACCA will examine a variety of rates in the Financial Accounting exam. The rate 

will always be given to you in the question. 

 

 

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Returns, discounts and sales tax 

80

 

KAPLAN PUBLISHING

 

Commonly examinable rates include 20% (the current standard rate in the UK), 

17.5% (the previous standard rate in the UK), 15% and 10%. For these rates 

the following price structures are relevant: 

Proforma 

 20% 

17.5% 

15% 

10% 

Net selling price (tax exclusive price) 100.0% 

100.0% 

100.0% 

100.0% 

Sales tax 

20.0% 

17.5% 

15% 

10% 

Gross selling price (tax inclusive price)  120.0%  117.5% 

115% 

110% 

 

•

 

The net selling price is the amount that the entity will recognise as sales 

income. 

•

 

The gross selling price is the price charged to customers. 

•

 

The difference between the gross and net selling price is tax collected on 

behalf of the tax authority which should be paid to it. 

Note:

 You should be prepared to apply any % to the proforma above.