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April 03, 2026, 05:14:25 pm
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Author Topic: Can someone please help me on this question? Net Profit and GST  (Read 1215 times)  Share 

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luke_rulz94

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Can someone please help me on this question? Net Profit and GST
« on: April 04, 2012, 01:42:56 am »
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I'm having trouble explaining this question in the Neville Box VCE Accounting 3/4 Textbook,


'' Clayton is happy that she collects a lot of GST as this will increase her net profit for the period. Do you agree with this statement? Explain fully. ''
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bucklr

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Re: Can someone please help me on this question? Net Profit and GST
« Reply #1 on: April 04, 2012, 07:08:32 am »
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The answer is:
No she should not be very happy. Gst collected is not revenue and does not increase net profit. Gst is collected on behalf of the government. When Gst is collected it represents an obligation that the business must pay.
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sam.utute

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Re: Can someone please help me on this question? Net Profit and GST
« Reply #2 on: April 04, 2012, 08:35:00 am »
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E.g. It's a current liability, not a revenue. Use the definition of revenue to justify why it cannot be included in profit.
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luke_rulz94

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Re: Can someone please help me on this question? Net Profit and GST
« Reply #3 on: April 04, 2012, 11:08:14 am »
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Thanks heaps guys !
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