Recognizing the sale will require Yang to recognize a sales tax liability of $180.
The amount that a person, company, or other entity owes to a federal, state or local tax authority is known as their tax liability. The selling of an investment or other item that generates income generally results in the creation of a tax burden. When purchasing items, one may be required to pay a municipal or state sales tax. (Although several nations do, the United States does not impose a national sales tax.)
If a person's overall tax debt was nil or if their income was too low to necessitate filing tax returns, they might not have any income tax burden.
Types of Taxes
A form of consumption tax is sales tax. It is the tax assessed on merchandise sales. The value added tax is one illustration.
Excise tax is a charge applied at the point of sale to specific goods and services. Typically, this tax is imposed on products whose consumption the government intends to discourage. as in tobacco
This equation would be used to calculate Yang's tax obligation:
sales tax x cost of products sold
9% x $2000
0.09 x $2000
= $180.
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