ACCA Knowledge Level Current Liabilities — practice questions

Explore 2 free Current Liabilities questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Current Liabilities questions and exercises with answers

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A business collects 8% sales tax on a $1,000 cash sale. What amount is recorded in Sales Tax Payable for this sale?Read the answer and worked solution →Disposal Steps (ACCA FA)Read the answer and worked solution →

Worked practice questions

A business collects 8% sales tax on a $1,000 cash sale. What amount is recorded in Sales Tax Payable for this sale?

$1,080
$1,000
$80
$108

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Correct answer: C. $80

1. Sales tax is computed on the selling price: \$1{,}000 \times 8\% = \$80. 2. Sales Tax Payable, a liability, is credited for $80. 3. Cash is debited for the total collected, $1,080 (1,000 + 80), and Sales is credited for $1,000. 4. The amount in Sales Tax Payable is $80. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §5.1 "Sales Tax", p.209_

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Disposal Steps (ACCA FA)

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Steps

Remove cost from asset account
Remove accumulated depreciation
Record sale proceeds received
Calculate profit or loss on disposal

Instructions

Tap the asset disposal steps in order.

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