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Automated Sales Tax

Question 1

Dawn's Technology Co provides computer services to which special sales tax rules apply. The company set up a taxable product/service item for sale and accepted the default Sales Tax category

How will Automated Sales Tax calculate sales tax on invoices for this product?

It will not calculate sales tax at all

It will always calculate the sales tax based on the street address of the seller

It will calculate sales tax based on the normal state rate, not the specialty rate

It will calculate the sales tax based on the shipping address of the customer

Question 2

Kaydee’s Kites sold a big order of kites to a taxable customer, Circus Town. They should have charged sales tax, but did not do so. Circus Town already paid that invoice in full.

Which steps should you recommend to charge Circus Town only the sales tax on a follow up invoice?

Create a new invoice, entering a sales tax item in the Item Details grid

Create a credit memo against the first invoice, and create a new replacement invoice including the sales tax

Create an invoice using Kites in the Item Details grid with a quantity of zero, then override the sales tax so that the invoice is sales tax only

Create an invoice for a bundle, where the bundle consists of +1 taxable item and -1 non-taxable item, and put the taxable total in the Rate column

Question 3

Which 2 statements are correct regarding adjusting sales tax on a return?(Select all that apply)

Rounding up should post to an income account

Penalties should post to a contra-income account

Interest charged should post to a payable account

Rounding down should post to an income account

Early payment discount (credit) should post to an income account

Question 4

There are two methodologies for tax only transactions, and a scenario for each. We will call them scenario A and scenario B.

Scenario A occurs when the business owner forgot to charge sales tax on one or more invoices and is now invoicing the customer to recoup the sales tax.

Scenario B occurs when the business undergoes a Sales Tax Audit.

The business owner realizes that he’ll never be able to recoup the missed sales taxes from all the sales because there were too many sales transactions and perhaps small amounts of sales tax on each one. Therefore, he will have to pay the sales tax himself.

What should be done for each scenario?

  1. Invoice the customer for an item called Sales Tax. B. Write a check to the state for an expense account called Sales Tax expense.
  2. Invoice the customer for an item called Sales Tax. B. Enter a bill from the state for an account called Sales Taxes payable.
  3. Invoice the customer for a bundle, where the bundle is made up of +1 of a taxable item and -1 of the same item but not taxable. B. Create a Sales Receipt using a bundle, where the bundle is made up of +1 of a taxable item and -1 of the same item but not taxable. Override the sales tax to zero.
  4. Invoice the customer for a bundle, where the bundle is made up of +1 of a taxable item and -1 of the same item but not taxable. B. Create a Sales Receipt using a bundle, where the bundle is made up of +1 of a taxable item and -1 of the same item but not taxable. Add an additional line for Sales Tax Expense and enter the amount of tax as a negative number.

Question 5

Using the Automated Sales Tax experience in QuickBooks Online, which 3 situations can lead an invoice to have no tax for an otherwise taxable product or service?(Select all that apply)

The customer is tax-exempt

The original invoice was voided and recreated

The invoice is dated during a sales tax holiday

The user selected Override this amount and entered an amount of zero for the sales tax

The user changed the taxable status of the product or service on the invoice from taxable to exempt

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