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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › clarify
in sales tax chapter as u said when we pay tax on electricity the tax amount suffered in taken to debit side of sales tax and at the end the balances of sales tax shows if it is credit balance then we owe that much to the state and vice versa.
so my point is that this tax we paid on electricity isn’t considered as expense for running the business and so we dont bring this sales tax a/c to statement of profit/loss as it gets settled down with the state and doesnt affect our profit. Am i right.
Correct. Assuming the business is registered for sales tax, then neither the tax charged on sales not the tax suffered on expenses affects the SOPL.