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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). 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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  1. Incomes Statement & Balance Sheet Presentation Accounting for the Goods and Services Tax. FA2 – Lesson 2

  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)

  3. Application • Not just a consumer tax • Applies to exchanges of goods and services at ALL levels of commerce

  4. Rates • 7% (most common) • 0% • Exempt

  5. Example

  6. Example

  7. Example

  8. Example

  9. Example

  10. 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.

  11. …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.

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