Monthly remittance of sales tax due has no effect on the income statement,but reduces cash flow from operating activities.

Question

Quizplus · Accepted Answer

Remittance of sales tax decreases assets (cash)and liabilities (sales tax payable).It does not affect the income statement.It is reported as a cash outflow for operating activities.(Recall that the collection of sales tax is reported as a cash inflow for operating activities).

Monthly Remittance of Sales Tax Due Has No Effect on the Income