A credit to a liability account would happen upon the sale of a product because the Merchandise that was sold is subject to state sales tax.
What do credit do to liabilities?
In accounting, a credit is always been positioned on the right side of an entry and it effect is that it increases liability, revenue or equity accounts and decreases asset or expense accounts.
Because the state sales tax is seen as expenses, then, a credit to a liability account would happen upon the sale of a product because the Merchandise that was sold is subject to state sales tax.
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