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yang company sold merchandise for $2,000 cash. the event is subject to a state sales tax of 9%. recognizing the sale will require yang to

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Recognising the sale will require Yang to recognize sales tax liability of $180.

A tax is a form of transfer of wealth from households and businesses to the government.

Types of Taxes

  1. Sales tax: it is a type of consumption tax. It is the tax levied on the sales of products. An example is the value added tax.
  2. Excise tax: it is a tax levied on certain goods and services at the point of sale. This tax is usually levied on goods that the government wants to discourage its consumption.  e.g. tobacco

In order to determine the tax liability of Yang, this formula would be used:

sales tax x cost of goods sold

9% x $2000

0.09 x $2000

= $180.

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