Q4: Do revenue and expense accounts of a firm typically include or exclude GST? Why is this the case?
A: Study Guide Chapter 4 Section 4.1 page 4-4:
“We discussed Goods and Services Tax (GST) in Chapter 2 (Section 2.2, page 2-6). In that section, we saw that typically all the revenue and expense accounts of a firm will exclude GST (that is, be on a GST-exclusive basis) and GST will be handled separately in special GST accounts. This is done so that the various cash flows between a firm and the government in relation to GST can be carefully identified and managed by a firm.”