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

Sales tax charged on sales (output tax)  

Dr Receivables/cash – sales price including sales tax (gross selling price) 

Cr Sales – sales price excluding sales tax (net selling price) 

Cr Sales tax (sales tax) 

 

 

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Returns, discounts and sales tax 

82

 

KAPLAN PUBLISHING

 

Key points relating to sales tax on sale transactions: 

•

 

The sales account does not include sales tax because it is not income – it 

will be paid to the tax authority. 

•

 

If the entity makes sales on credit, the sales day book analyses the total 

amount due from the customer between the net sales amount and the 

sales tax, with the relevant totals posted in the ledger accounts. 

•

 

If an entity makes cash sales, on which sales tax has been charged, the 

total amount received must be split between the net sales value and the 

sales tax collected. 

•

 

The receivables account does include sales tax, as the customer must pay 

the full amount due.