GST is credited to the GST payable account when a sale occurs. If goods are returned or a discount allowed the _______________ account must be debited with an adjustment for GST.

Question

Quizplus · Accepted Answer

When goods are returned or a discount is allowed, the amount of GST credited to the GST payable account needs to be adjusted. This is done by debiting the GST payable account, as the GST that was originally accounted for as payable now needs to be adjusted due to the return or discount. Therefore, the correct option is B) GST payable. Option A) GST receivable is incorrect as it pertains to the amount of GST that a business has paid and is waiting to receive back as input tax credits, and is not relevant in this situation. Option C) Purchases is incorrect as it is not related to the adjustment for GST in this situation. Option D) Discount allowed is incorrect as it is a nominal account that would not be credited or debited with GST adjustments.

GST Is Credited to the GST Payable Account When a Sale