Final answer:
Sales taxes collected by a retailer are recorded as a liability, not as revenue, asset, or expense. They represent money owed to the government, to be remitted in the future.
Step-by-step explanation:
Sales taxes collected by the retailer are recorded as a liability. When a retailer collects sales tax, they do so as an agent for the government. The collected taxes are not the retailer's revenue or income; instead, they are funds that the retailer owes to the government. Therefore, until the retailer remits the collected taxes to the government, they are recorded on the balance sheet as a current liability, specifically a tax payable.
Revenue represents the income that businesses earn from selling goods or services before any expenses are deducted. In contrast, a liability is something a business owes, usually a sum of money. Since the collected sales taxes are eventually paid out and do not represent an economic benefit to the retailer, they do not fit the definitions of an asset or an expense, which are respectively the resources owned by a company and the costs of operating a business.