Question

1. Which of the following statement is not true regarding sales tax:

a)Sales tax is a consumption tax

b)Sales tax applies to the sale of certain goods and services

c) Sales tax is levied at the point of sale

d)Sales tax is collected by the retailer and passed on to the government

e)Consumers pay sales tax directly to the state

f) If a business fails to collect sales tax from a consumer, they are still responsible for paying the uncollected sales tax

2.  Select the best answer to complete this sentence

California requires sellers to register for a seller's permit if the seller makes:

a) 3 or more sales in a 12-month period

b) 5 or more sales in a 12-month period

c) $2,500 or more in sales in a 6-month period

d) $2,500 or more in sales in a 12-month period

3. When a seller's permit is required, a seller is allowed to make sales of merchandise inside California

a) for 30 days before getting a permit.

b) for 90 days before getting a permit.

c) . for 6 months before getting a permit.

d) never. This violates the law and subjects the seller to fines and penalties.

4. To apply for a seller's permit, the business or individual can apply through which of these methods? (Select 3 correct answers)

a) Through a volunteer CDTFA advocate

b) By registering online through the CDTFA website

c) By registering in person at a CDTFA field office.

d) By downloading, completing, and emailing an application to [email protected].

e) By calling the Customer Service Center for assistance

5.  If a seller located in California is only selling online (Etsy, Amazon, eBay, etc.) they are not required to register for a California Seller's Permit.

a) True

b) False

6. When goods are sold by a California business and sent to a buyer who is located in another state, which of the following conditions are reasons why the sale would be considered non-taxable:

a)The goods are shipped directly to the out-of-state buyer using a vehicle owned by the seller.

b) The goods are delivered to the out-of-state buyer using a common carrier (such as the US Postal Service)

c) The goods are being used in a foreign country

d) All of these are reasons the sale would be considered non-taxable

7. Which of the following items should be retained by the seller when shipping or delivering goods out of state and claiming the sales as non-taxable? (select all of the correct answer choices)

a) Bills of lading, delivery receipts

b) Sales invoices showing postage charges

c) Freight invoices

d) Copy of buyer's sales tax exemption certificate

e) Sales invoices showing postage

8. According to Publication 108, in which of the following instances would labor be considered taxable?

A. Cutting metal or lumber provided by a customer

B. Replacing a hard drive on a used computer

C. Altering a new suit to better fit the buyer

D. Manufacturing a new piece of equipment

E. Altering a customer's used suit to fit better

Group of answer choices

All of these are taxable

All of these are non-taxable

A, B and E are taxable

A, C and D are taxable

Only B and D are taxable

9. Which of these answers is an incorrect response to this question as discussed in Publication 100:

Delivery-related charges are not taxable when:

a) Shipment is sent directly to the buyer via a common carrier

b) Invoice clearly lists shipping and handling charges as one charge

c) Invoice clearly lists the delivery, shipping, freight, or postage as a separate charge

d) The charge is not more than your actual cost

10) Which of these are not part of a California Resale Certificate completed by a purchaser.

A. Description of property being purchased

B. Seller's permit number

C. Date of purchase

D. Name of vendor where goods are being purchased

E. Dollar amount of purchase

F. Declaration that the goods will be resold during the purchaser's regular course of business

G. Name, title, address, phone number and signature of purchaser

Group of answer choices

Description of property being bought for resale

All of these are part of the Resale Certificate

None of these are part of the Resale Certificate

A, D and F

C and E

A, C and F

Only C

Only B

11. Which of the following are the responsibility of the seller when accepting a resale certificate? (select the 4 correct answer choices)

a) Questioning whether the purchaser's line of business is in line with the goods you are selling to them

b) Ensure that goods being sold are clearly described on the certificate

c) To avoid tax, the resale certificate must be submitted to the seller in a timely manner

d) Submit copies of all resale certificates with the sales tax return

e) Seller must retain the resale certificates to substantiate that no sales tax was required to be collected

12. Which of these methods can NOT be used to verify a seller's permit:

a) Call the CDTFA

b) Verify the permit online

c) Use the mobile application to verify a permit

d) All of these are correct methods to verify a seller's permit

13. What are the penalties for illegal use of a Resale Certificate?

A. 25% penalty for fraud or intent to evade tax

B. Revocation of your sellers permit

C. it is a misdemeanor charge to use resale certificate illegally, subject to a fine of $1,000-$5,000 for each offense, up to one year in jail, or both

D. Payment of the sales tax that would have been due if the certificate had not been used

E. Interest payment on the tax due

Group of answer choices

All of these are penalties for illegal use

None of these are penalties for illegal use

A, B, D and E

A, C, D and E

14. Pretend that you are working for a construction company. Your boss has asked you to determine how to calculate sales tax on a small prefabricated building that is NOT physically attached to real property. Use what you know about Industry Specific guides to answer your boss's question.

a)The entire sales price is non-taxable

b) Sales tax is required only on the cost of the materials

c) Sales tax is required on the markup on the materials

d) The entire sales price is taxable

15.  If you attended each of the National League baseball stadiums in California, what is the Tax Area and Sales Tax Rate that you would pay if you bought a t-shirt or hat at each location? The tax area will be displayed when you use the address search option to find the tax rate. (This question is worth 6 points)

(Hint: You will need to use Google, Bing or another search engine to look up the address for each of these locations and use the actual address, including zip code, to determine the sales tax rate)

The Tax Area for Petco Park is ........................ and the current sales tax rate is ..........................

The Tax Area for Dodger Stadium is ............... and the current sales tax rate for Dodger Stadium is ............

The Tax Area for AT&T Park is .................. and the current sales tax rate is .......................

16. When the sales tax calculated in the previous assignment question is paid, what is the journal entry that will be recorded?

a) Debit Sales Tax Paid Expense, Credit Cash on Hand

b) Debit Cash in Bank, Credit Sales Tax Payable

c) Debit Sales Tax Payable, Credit Cash in Bank

d) Debit Cash in Bank, Credit Sales Tax Paid Expense

17. According to the California Department of Tax and Fee Administration website, which of the following is NOT a filing frequency that could be assigned to a business based on their reported sales tax or anticipated taxable sales at the time of registration:

a) Quarterly Prepay

b) Quarterly

c) Montly

d) Yearly Prepay

e) Yearly

18) Which of the following full deductions are NOT reported on Section A of the sales tax return?

a) Nontaxable Labor

b) Bad Debt Losses on Taxable Sales

c) Sales to the US Government

d) Resale Sales

19. What is the purpose of Schedule A1 or A2?

a) To report taxable sales inside of each of the tax districts with special taxes

b) To report taxable sales outside of districts with special taxes

c) To report taxable sales in every California location

d) To report total gross sales (taxable and nontaxable) in every California location

20. Which of the following is the preferred method for filing sales tax returns:

a) Complete a fill-in PDF form and submit to CDTFA via email

b) Login to CDTFA.ca.gov website

c) Complete the pre-printed form and mail it along with payment

d) Login to eFile.boe.ca.gov website with Accountant Login

Answer 1

(1) Which of the following statement is not true regarding sales tax:

Ans: (E) Consumers pay sales tax directly to the state.

Explanation:

Sales tax is collected by the retailer and passed on to the government, therefore statement ( E) is incorrect.

Sales tax is a consumption tax,which applies to certain goods and services at point of sale.

It is collected by retailer and passed to the government . And if business forget to collect the sales tax they are still responsibld to pay for it.

Hence all the statements are true except (e).