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Incomes Statement & Balance Sheet Presentation. Accounting for the Goods and Services Tax. FA2 – Lesson 2. What is Goods and Services Tax (GST). Federal Tax Variation on Value Added Tax (VAT) Extends the VAT concept to cover Services Applied beside Provincial Sales Tax (PST).

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Incomes Statement & Balance Sheet Presentation


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incomes statement balance sheet presentation

Incomes Statement & Balance Sheet Presentation

Accounting for the

Goods and Services Tax.

FA2 – Lesson 2

what is goods and services tax gst
What is Goods and Services Tax (GST)
  • Federal Tax
  • Variation on Value Added Tax (VAT)
  • Extends the VAT concept to cover Services
  • Applied beside Provincial Sales Tax (PST)
application
Application
  • Not just a consumer tax
  • Applies to exchanges of goods and services at ALL levels of commerce
rates
Rates
  • 7% (most common)
  • 0%
  • Exempt
account for the goods and services tax
Account for the Goods and Services Tax.
  • GST collected is not part of the entity's revenue but is a liability to the government.
  • GST paid is not part of the cost of purchases but is a receivable from the government.
  • The receivable and payable can be offset against each other to show either a net receivable or payable.
continued
…continued
  • Under the quick method, revenues would include the GST charged to the customer. However, the amount remitted to the government would be shown as a contra account to sales. As a result, revenues would be reported net of GST remitted.