ANSWERS BELOW
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Is This Considered Income?
1. Interest earned on savings account – YES
2. Referral commission – YES
3. Collected sales tax – NO sales tax is a liability because you are just holding it for the state
4. Refunded a customer – YES
5. Applied a discount – YES
6. Returned office supplies for refund – NO it’s coded to original expense acct
7. Investment money/contributed capital – NO this is an equity transaction
8. Cash back rewards on credit card – YES Uncle Sam wants his cut of everything

Is This a Business Expense?
1. Office utilities – YES
2. Paid sales tax to state – NO goes to the same liability account as when you collected it
3. Interest on credit card – YES
4. Cell phone – YES
5. Purchase of machinery – NO large purchases are generally assets
6. You withdraw money – NO this is owner’s draw (or shareholder loans)
7. Loan payments – TRICK QUESTION! The interest is an expense, but the principal is not
8. Self-employment taxes – NO this is a personal, not business, expense