Chapter 11, Problem 3QC

To determine

Current Liability: It refers to a person’s debts and obligations which are due to be settled within a period of 12 months from the date of reporting. These are shown on the Liability side of the Balance Sheet. For example: Creditors, Govt. Taxes, Short Term Loans, etc.

Sales Tax: Sales tax is a tax imposed on the sale of goods. This tax is levied by the state government. It is an indirect tax which is paid to the government by the seller though the ultimate burden of tax is born by the purchaser. In other words, the seller of goods collects the tax from the purchaser of goods and pays the same to the government.

To determine:

The current liability which the sale creates