Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

Which one of the following taxes is collected by businesses but not an expense to them?

1. Income Taxes

2. Corporate Taxes

3. Sales Taxes

4. Property Taxes

The correct answer is: Sales Taxes

Sales taxes are collected by businesses on behalf of the government when they sell goods or services to consumers. While businesses may be responsible for collecting this tax, it is important to note that it is not considered an expense to the business itself. Instead, sales tax is a liability that businesses must remit to the government. When a customer pays sales tax, the business simply collects that amount, adding it to the purchase price, and holds it temporarily until it is passed on to the tax authorities. In contrast, income taxes, corporate taxes, and property taxes represent expenses that businesses incur. These taxes reduce the company's profits and are accounted for as part of their overall operating expenses. Thus, they affect the bottom line and the overall financial health of the business. Sales tax, however, is neither an expense nor an income for the business; it is merely a conduit for transferring funds from consumers to the government.