Sales taxes payable is debited and cash is credited when companies send sales taxes collected from customers to the government.

Question

Quizplus · Accepted Answer

When companies send sales taxes collected from customers to the government, they decrease their cash balance by making a payment to the government and increase their sales taxes payable liability account. Therefore, sales taxes payable is debited and cash is credited in the accounting entry.

Sales Taxes Payable Is Debited and Cash Is Credited When