Question

7. What is the earliest point in the sales tax collection process that revenue may be recognized? How can you justify recognizing revenue on the basis of this event?

8. What special problems do governments face in measuring the income taxes associated with a particular year?

Answer 1

7. Taking place of sales transaction is the earliest point in the sales tax collection process that revenue may be recognized. It is justified because sales tax is derived from underlying activity of sales transaciton and thus when sales transaction is recorded on the happening of its transaction than revenue may be recorgnized

8. Government's main problem is that they can verfiy the sources of income of a person only upto the extent. Transactions which took in place and for which no bill was raised are quite difficult to ascertain for the government. Moreover, claims by indiviual income tax payers are not taken up for scruitiny often, they may take wrong claims to save tax. Such claims remain undetected untill and unless checked in person by tax officials