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Chapter 6. Collecting and Paying Sales Tax > Accounting for Sales Tax

Accounting for Sales Tax

When you create an invoice for a taxable sale, several accounts are affected. Not only do you increase your sales revenue account and your accounts receivable account (or cash, if it is a cash sale), but your sales tax liability account is affected as well. Then, at the end of the month, when you pay your sales tax, the liability account is reduced. Here's how a sample transaction is recorded in QuickBooks.

An invoice is issued for the sale of $100 of taxable items and $5 sales tax, for a total of $105. Here are the accounts that are affected:


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