Which financial item is used to apply sales tax to line items?

• A. Subtotal
• B. Payment item
• C. Sales tax items
• D. Group items

Answer: (C)

Sales tax items are the mechanism QuickBooks uses to apply tax to a sale. When you add a sales tax item to an invoice or sales receipt, QuickBooks calculates the tax for the taxable line items at the correct rate and shows that amount as a separate line on the form. The tax item is linked to the tax agency and rate so you can track and remit the tax properly.

Subtracts to note: Subtotal is just the pre-tax total of all line items, not something that adds tax. A payment item is used to record money received, not to compute tax. Group items are for combining multiple items on a line for easier entry, not for applying tax.