Debtors Creditors – Invoicing Quiz Explained

AccountingQuizzes Calculate the Value of Invoice Excluding Sales Tax. You have to do a Little Maths here. Participate with your Classmates!

Posted by AccountingQuizzes on Monday, November 9, 2015

Accounting Quiz: Debtors Creditors / Invoicing

 

The invoice amount inclusive of Sales Tax is $1,100. Let’s say that the sales tax in this case is 10%. What is the invoice amount excluding sales tax,

A)  $1,210

B)  $990

C)  $1,000

D)  $110

Explanation:

It is important to note that $1100 is the amount inclusive of sales tax, that is we have arrived at $1100 after adding 10% of sales tax to the price excluding sales tax.

Lets say if the price without sales tax is “y”

Then,  we can reach at price including sales tax ($1100) by multiplying exluding sales tax price “y” with 110% or 1.10

y x 1.10 = $1100

y= 1100 / 1.10

y= $1000

Therefore the price excluding of sales tax has come to $1000. The correct answer is definitely C.  

You can cross check by adding 10% to $1000, that will give you a price inclusive of sales tax that was mentioned in the question.

 

 

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