Invoices, etc.

Sales tax transactions originate on invoices and the like. Sales tax items name the tax, apply the tax rate, connect the tax agency (vendor) and transfer the amount to Sales Tax Payable. The specimen below supplements the description of invoicing in Chapter 7.

Tax column (right-hand end) displays a T if this item is taxable . Tax, for this item on this invoice, can be turned on or off by clicking here. When sales documents are printed, this same T will be printed with taxable items, unless that option is switched off in File|Preferences|Sales Tax.

Tax item box (bottom) shows the tax item listed in the record for this customer, but the down-arrow shows a different tax item could be selected.

Tax rate (next right) shows the rate from that item.

Tax amount (further right) is the rate times the total of taxable items. If the standard setup does not charge the correct tax, see below in Peculiar Situations, “Sales tax will not calculate correctly.”

Customer is taxable can be changed for this one sale.

The tax item named in the box works like a line item. It transfers the amount of the sales tax from Accounts Receivable to Sales Tax Payable.