Governments must record a liability for uncollected taxes instead of revenues for uncollected taxes if the taxes are going to be collected

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), uncollected taxes should be recorded as a liability if they are expected to be collected within 60 days after the fiscal year end. This is because the government has a legal claim to these taxes and they are considered earned during the fiscal year they relate to, even if they are collected after the fiscal year end. If the taxes are not expected to be collected within 60 days, then they should not be recorded as a liability, but rather written off as a loss.

Governments Must Record a Liability for Uncollected Taxes Instead of Revenues