I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART D: RECORDING TRANSACTIONS AND EVENTS 

 

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 

Sales tax is an indirect tax levied on the sale of goods and services. It is usually administered by the 

local tax authorities. 

 

Registered businesses charge output sales tax on sales and suffer input sales tax on purchases. If 

output sales tax exceeds input sales tax, the business pays the difference in tax to the authorities. If 

output sales tax is less than input sales tax in a period, the tax authorities will refund the difference to 

the business. 

 

Some sales tax is irrecoverable. Where sales tax is irrecoverable it must be regarded as part of the cost 

of the items purchased and included in the statement of profit or loss charge or in the statement of 

financial position as appropriate. 

 

An outstanding payable for sales tax will appear as a current liability in the statement of financial 

position.