Archie's has a $12 000 credit balance in the GST clearing account.Which of the following statements is CORRECT?
A)The tax paid to suppliers has exceeded the tax collected from customers for the period.
B)This is an amount owing by the government to the business.
C)GST clearing is a tax expense.
D)There is a $12 000 current liability to report on the balance sheet.

Question

Quizplus · Accepted Answer

A credit balance in the GST clearing account indicates that the business has collected more GST from customers than it has paid to suppliers, resulting in a liability to the government. Therefore, it is a current liability to be reported on the balance sheet.

Archie's Has a $12 000 Credit Balance in the GST