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Sales tax is included in the reported sales and purchases of a sales tax registered business.
isn’t the given statement true? why does the soln say it is false?
Sales tax cannot be recovered on some purchases.
what is an example for the given statement? why is it true?The first statement is false.
Sales tax charged does not belong to the company – it is collected on behalf of the state and is paid over to the state.
Sales tax suffered is received back from the state (usually by reduction of the amount paid over).It is true that for some purchases the sales tax suffered can not be recovered from the state. However which items differs for different countries and depends on the tax laws of each country. You cannot be tested on these tax laws in Paper FA.
Please watch my free lectures on sales tax where all of this is explained.
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