Capital gains have historically been taxed at a lower rate than ordinary income. A trial balance is a list of all the accounts in your business with their corresponding debits and credits. Accounts and bookkeepers used the trial balance report with manual accounting systems to locate errors; with the advent of accounting software, it is not as necessary as it once was. Net profit is the difference between the gross profit and all the other expenses. This is the money that your business has left after it pays for everything else. Gross profit is the difference between the revenue and the cost of goods sold.
The informal phrase “closing the books” describes an accountant’s finalization and approval of the bookkeeping data covering a particular accounting period. When an accountant “closes the books,” they endorse the relevant financial records. These records may then be used in official financial reports such as balance sheets and income statements.
Marginal Tax Rate
Cash Flow is the term that describes the inflow and outflow of cash in a business. The Net Cash Flow for a period of time is found by taking the Beginning Cash Balance and subtracting the Ending Cash Balance. A positive number indicates that more cash flowed into the business than out, where a negative number indicates the opposite. The term Allocation describes the procedure of assigning funds to various accounts or periods.
A valid transfer of property from one taxpayer to another without consideration or compensation. A gift may be subject to the unified estate and gift transfer tax. Collection of all ASSET, LIABILITY, owners EQUITY, REVENUE, and expense accounts.
Variable Costs
Distribution of earnings to owners of a CORPORATION in CASH, other ASSETS of the corporation, or the corporation’s CAPITAL STOCK. Arrangement in which the TRUSTEE has the authority to make INVESTMENT decisions and has control over investments within the framework of the TRUST instrument. A material that will become part of a finished product and can be easily and economically traced to specific product units. The labor cost is for specific work that can be easily and economically traced to an end product. This exists when a control necessary to meet the control objective is missing or an existing control is not properly designed so that even if the control operates as designed, the control objective is not always met. The postponement of the date that an expense already paid or incurred, or of a REVENUE already received, is entered in the LEDGER.
- This sets out the period within which actions may be brought upon claims or within which rights may be enforced.
- ACCOUNTANT who has satisfied the education, experience, and examination requirements of his or her jurisdiction necessary to be certified as a public accountant.
- GAAP are endorsed by organizations including the Financial Accounting Standards Board and the U.S.
- Business owned by an individual without the limited liability protection of a CORPORATION or a LIMITED LIABILITY COMPANY (LLC).
- FINANCIAL STATEMENTS that report the operations of an entity for less than one year.
Accounts Receivable include all of the revenue (sales) that a company has provided but has not yet collected payment on. This account is on the Balance Sheet, recorded as an asset that will likely convert to cash in the short-term. A wash sale occurs if stock or securities are sold at a LOSS and the seller acquires substantially identical stock or SECURITIES 30 days before or after the sale.
Revenue (Sales) (Rev)
An overall operating philosophy of INVENTORY management in which all resources, including materials, personnel, and facilities, are used only as needed. If the IRS believes that collection of tax appears to be in jeopardy (danger of being uncollected), it may immediately assess and collect such tax. Shares of a CORPORATION, authorized in the corporate charter, which have been issued and are outstanding.
- Gross profit is the difference between the revenue and the cost of goods sold.
- Brokerage firm account whose transactions are settled on a cash basis.
- Gross income for an individual is the individual’s total earnings before taxes and other deductions are taken out.
- A balance sheet is a financial statement that reflects a business’s liabilities, assets, and shareholder equity during a specific point in time.
New ASSETS invested largely in companies that are developing new ideas, products, or processes. Increase in the number of shares of a company’s COMMON STOCK outstanding that result from the issuance of additional shares proportionally to existing stockholders without additional capital investment. Right to purchase or sell a specified number of shares of stock at specified prices and times. Organized, national EXCHANGES where securities, options, and futures contracts are traded by members for their own accounts and for the accounts of customers.
Materials Inventory Account
Grouping of expenses reported on a company’s PROFIT and LOSS statement between COST OF GOODS SOLDand INCOME deductions. Most individuals that are in business for themselves, such as SOLE PROPRIETORS, PARTNERS or independent contractor, are subject to self employment taxes. The taxes provide coverage for the self employed individual for social security (OASDI) and Medicare benefits (HI) similar to the taxes withheld by employers from wages it pays the employees. A BOND that gives the bondholders a pledge of certain company assets as a guarantee of repayment. Agency authorized by the United States Congress to regulate the financial reporting practices of most public corporations. A CORPORATION which, under the INTERNAL REVENUE CODE, is generally not subject to federal income taxes.
Method of bookkeeping by which REVENUES and EXPENDITURES are recorded when they are received and paid. Collection of formal, written rules governing the conduct of a CORPORATION’S affairs (such as what officers it will have, what their responsibilities are, and how they are to be chosen). Bylaws are approved by a corporation’s stockholders, if a stock corporation, or other owners, if a non-stock corporation. Any division of an organization authorized to operate, within prescribed or otherwise established limitations, under substantial control by its own management. A person who owns a BOND certificate issued by a government or CORPORATION.
